A Tennessee residential contractor fails to complete a $45,000 project and disappears. The homeowner files a claim with the Recovery Fund. What is the maximum recovery amount available?
Correct Answer
B) $25,000
The Tennessee Residential Contractor Recovery Fund provides maximum recovery of $25,000 per claim regardless of the contract amount.
Why This Is the Correct Answer
The Tennessee Residential Contractor Recovery Fund has a statutory maximum recovery limit of $25,000 per claim. This cap applies regardless of the actual contract amount or damages incurred. Even though the project value was $45,000, the fund's maximum payout is limited to $25,000 to protect the fund's solvency and ensure availability for multiple claimants.
Why the Other Options Are Wrong
Option A: $45,000
$45,000 represents the full contract amount, but recovery funds have statutory caps that are typically lower than project values. The fund doesn't provide 100% reimbursement of contract amounts to maintain fund sustainability.
Option C: $15,000
$15,000 is below Tennessee's actual recovery fund maximum. This amount might be confused with other states' limits or older statutory amounts that have since been updated.
Option D: $35,000
$35,000 exceeds Tennessee's statutory maximum recovery amount. This figure doesn't correspond to any established limit in Tennessee's contractor recovery fund regulations.
Memory Technique
Tennessee Twenty-Five: Remember 'TN = 25' - Tennessee's recovery fund caps at $25,000, a quarter of $100,000.
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