A homeowner hired an unlicensed contractor who abandoned the job. Under SC law, what is the maximum amount the Recovery Fund will pay for this claim?
Correct Answer
D) $40,000
The South Carolina Residential Builders Recovery Fund has a maximum payout of $40,000 per claim for damages caused by licensed contractors or unlicensed persons acting as contractors.
Why This Is the Correct Answer
The South Carolina Residential Builders Recovery Fund provides a maximum payment of $40,000 per claim. The fund exists to compensate homeowners harmed by licensed residential builders — or by unlicensed persons acting as residential builders — who fail to complete work, do defective work, or otherwise cause financial harm. Coverage of claims against unlicensed contractors is a key protection for consumers who may not know to verify licensing.
Why the Other Options Are Wrong
Option A: $50,000
$50,000 exceeds the statutory cap. Some students confuse the SC Recovery Fund maximum with limits in other state recovery fund programs or with general liability policy limits.
Option B: $15,000
$15,000 is far below the actual maximum. This figure might be confused with the minimum bond amount or with small-claims court limits, but it is not the Recovery Fund cap.
Option C: $25,000
$25,000 is half the correct amount. This could be confused with the maximum per-licensee aggregate or with recovery fund caps in neighboring states.
Memory Technique
Associate $40,000 with 'forty grand for a bad contractor': the SC Recovery Fund will pay up to $40,000 to make a homeowner whole after a licensed or unlicensed contractor causes harm. It is less than $50,000, so round down in your memory.
More South Carolina Questions
What is the maximum contract value a Tier 1 residential contractor can undertake in South Carolina?
Under South Carolina law, a contractor discovers a material defect in their work 6 months after project completion. The owner demands immediate correction. What is the contractor's legal obligation?
A contractor has 15 employees and annual payroll of $780,000. The workers compensation rate is $4.25 per $100 of payroll. What is the annual premium?
According to SC building codes, what is the maximum allowable deflection for a residential floor joist with a 16-foot span under live load?
A subcontractor completes $25,000 of electrical work but is not paid by the general contractor. The general contractor was paid by the owner. What is the subcontractor's lien priority against the property?
A contractor receives a stop work order from the building official. Work continues for 3 additional days before stopping. What penalty applies per South Carolina building codes?
Under South Carolina workers compensation law, which of the following employees would be exempt from coverage requirements?
Under South Carolina contractor licensing law, how many hours of continuing education are required annually for license renewal?
A Class B contractor wants to bid on a $750,000 commercial project. What must the contractor do to be eligible?
A contractor's license expires on June 30th. They submit renewal application and fees on July 15th. What additional penalty must they pay?
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