To Catch a Contractor

‘It Makes Zero Sense': Homeowners Criticize State Fund Meant to Recoup Losses After Shoddy Contractor Work

The NBC10 Boston "To Catch a Contractor" investigative series has exposed problems with the system that is supposed to provide oversight of home improvement contractors. Now, we are raising questions about the state fund meant to help consumers recoup money if they get ripped off or have to repair damage from shoddy work.

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Only a fraction of the funds intended to help consumers recruit money if they get ripped off are being paid out.

When Dawn Beauregard and Jeff Wagner invited us into their Dennisport property, it wasn't exactly the kind of tour they wanted to give us.

After buying the Cape Cod property last year, the Mansfield couple decided to hire a contractor and gut the 1935 cottage they planned to use for summer and weekend getaways.

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However, once the work began, the couple told us the problems started to quickly pile up.

As they took us around the 730-square-foot property, they listed off issues with the workmanship: holes in the drywall, missing screws and insulation, uneven walls, and an electrical panel that could not be fastened into its opening to cover live wires.

Dawn Beauregard and Jeff Wagner

"It was an absolute mess," Beauregard said. "It just continued to snowball and we decided we had to terminate the contract."

The couple said they are now out approximately $50,000 to have a different contractor come in rip out material and do the job right.

"It takes a toll, for sure," Beauregard said. "We're both exhausted. We don't trust anyone anymore. We're just so skittish about hiring anyone and pulling the trigger."

Dawn Beauregard and Jeff Wagner with Ryan Kath

The couple thought they could get some relief from a state fund meant to help consumers who lose money on projects performed by registered contractors.

But that's when they learned they could not file a Guaranty Fund claim because the Cape home is not their primary residence.

The provision also meant they could not submit a complaint about the contractor that could be investigated by the Office of Consumer Affairs and potentially provide useful background information for a future consumer looking to hire someone.

"It is incredibly frustrating, and infuriating is probably a better word," Beauregard said. "It makes zero sense. Any individual that is using a home improvement contractor should be eligible for a fund they're paying into. How does that protect the consumer?"

The NBC10 Boston Investigators are asking if the Guaranty Fund is working as intended.

We learned the $10,000 cap for payments hasn't changed since the program was created in the early 1990s.

Konstantin and Zoya Derman never even broke ground on their home addition in Bedford because their contractor declared bankruptcy just weeks after cashing their $35,000 deposit.

The Guaranty Fund rules require homeowners to show they have exhausted all other options to collect after securing a judgement through arbitration or civil court.

Konstantin and Zoya Derman with Ryan Kath

That's why the couple isn't sure it's worth it to spend potentially more money on legal fees and to have a constable serve the judgement to the contractor.

"Do I want to commit another $50,000 to get my $10,000 back?" Zoya Derman asked. "It just didn't make sense. It just seemed like it was stacked up against us."

The Guaranty Fund figures obtained by the NBC10 Boston Investigators via public records request show the program is only paying out a fraction of the money it generates each year to homeowners.

As a result, the balance has ballooned from $750,000 in 2016 all the way up to $4.4 million this year. During fiscal year 2022, the fund generated $800,614 in revenue and paid out $170,615 to homeowners in approved claims.

"We're trying to really close off these loopholes that are hurting consumers," said Sen. Susan Moran, who sits on the legislature's consumer protection committee. "We can look at getting more money to more people more quickly."

That's why Moran is filing legislation that would raise the Guaranty Fund limit up to $30,000 per consumer.

Sen. Susan Moran

The proposed bill would also require background checks for contractors when the register or renew with the Commonwealth. The agency that oversees contractors would be empowered to prohibit registration if a contractor has a conviction for gross fraud.

That type of review would have flagged a contractor who was the focus of a previous "To Catch a Contractor" investigation.

Steve Docchio was banned in Connecticut in Rhode Island, but still working as a registered contractor in Massachusetts. Docchio does not have a successful Guaranty Fund claim against him, despite homeowners winning hundreds of thousands of dollars in civil judgments for failed projects.

Moran said that detail also reveals that the process for the Guaranty Fund is "tough" and is in need of review.

"This is a direct result of your investigative reporting," Moran said. "You've done an incredible job of bringing those consumer complaints to the forefront."

Moran said it is also worth exploring whether the fund should be opened up to secondary property owners, especially Massachusetts taxpayers like Beauregard and Wagner.

"Change the law, close the loophole, and actually protect us," Beauregard said.

Ryan Kath can be reached at ryan.kath@nbcuni.com. You can follow him on Twitter or connect on Facebook.

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