Minnesota Contractor Recovery Fund: How to Get Paid

A licensed contractor took your money, did poor work or left the job. Minnesota’s Contractor Recovery Fund may pay you back, but only after you win in court.

The steps, in order

The “How to Apply” instructions from the Department of Labor and Industry (DLI) list what you must finish first.

1. Check the license. Your contractor needs to have had a residential building contractor (BC) or residential remodeler (CR) license, active both on the day you signed and when the work was done. See how to check a license. A registration, with an “IR” number, is not a license.
2. Sue the contractor and get a final judgment. DLI’s instructions say a loss of $20,000 or less goes to Conciliation Court, using the county of the contractor’s business. A larger loss goes to District Court where the project took place. DLI’s warranty dispute page gives $15,000 as the conciliation court threshold, so the state’s pages differ. Ask the court which limit applies. The judgment must show the contractor is legally responsible for your loss, state the amount owed to you, rest on qualifying misconduct, and be issued against the correct licensed contractor or business entity.
3. Have the judgment docketed in District Court. Ask the District Court in the county where the judgment was filed how.
4. Try to collect, in writing. DLI says you must make reasonable efforts to collect on the judgment first. Anything you collect reduces what the fund may pay.
5. Apply within two years, with every document on the checklist.
6. Sign the assignment. Before the fund pays, you sign an Assignment of Judgment, which hands the commissioner your right to collect what the fund paid you.

Who can apply

DLI’s fund page says you may be eligible if all of these are true:

• You are a Minnesota homeowner, residential lessee or homeowners association.
• Your loss was on owner-occupied residential property in Minnesota.
• Your loss was “actual and direct” and out of pocket, and its cause was the contractor’s “fraudulent, deceptive, or dishonest practices, conversion of funds or failure of performance”.
• You meet the license, judgment and two-year rules in the steps above.

DLI’s instructions add that the contractor must have been performing at least one “special skill”: excavation, masonry and concrete, carpentry, interior finishing, exterior finishing, drywall and plaster, residential roofing, or general installation specialties. Minnesota Statutes 326B.89 has the same condition.

That statute also says the judgment must be based on a contract directly between you and the licensed contractor, entered into before the cause of action, that requires a residential building contractor or remodeler license.

Roofers. DLI’s instructions list residential roofing as a special skill that a licensed BC or CR contractor may have been doing. They also say work by contractors not licensed as BC or CR is not covered. No DLI page we read says a roofer (RR) license qualifies. If your contractor held only an RR license, ask the fund at 651-284-5057 before you pay to sue.

What counts as a loss

DLI’s instructions say losses must be documented. The right column is not covered even if a court judgment includes it.

May count	Does not count
Payments for work not completed	Attorney fees, interest and statutory court costs
Payments for defective or substandard work	The value of your own labor
Costs to repair or complete work in the original contract that you paid for	Upgrades or new items not in the original contract
Duplicate payments to subcontractors or suppliers when you already paid the contractor	Storage, rental, hotel or motel costs
Property damage during the contracted work	Landscaping, fences, pools, sheds and accessory buildings, retaining walls, driveways

The fund page adds that the fund does not pay the costs of applying, and cannot pay more than the amount awarded in your judgment, even if repair bids are higher.

Garages. DLI’s list excludes accessory buildings, but the statute counts a detached garage intended for storing vehicles as residential real estate. For a garage loss, ask the fund.

Dollar limits

Limit	Amount	Where it appears
To one applicant	$100,000	Statute, instructions, fact sheet
All claims against one contractor	$550,000	Statute, instructions, fact sheet, consumer guide
All claims against one contractor, paid during Cycle One	$275,000	Statute, instructions

The statute says “$550,000 per licensee”. DLI’s instructions and fact sheet call it a lifetime limit.

The state’s documents differ. The statute, DLI’s application instructions and its fact sheet say $100,000 per applicant. DLI’s consumer guide says $75,000 per claim. The statute is the law. Ask the fund at 651-284-5057 if it matters to you.

When claims pass the $550,000 limit. DLI’s instructions say the money left is divided among eligible applicants, and each gets a reduced payment. Once the limit is reached, the fund cannot pay any more claims against that contractor. The statute also calls for proration if claims exhaust the fund as a whole.

Cycle One. The statute defines Cycle One as July 1 to December 31 and Cycle Two as January 1 to June 30. Its $275,000 cap applies to payments made during Cycle One. DLI’s instructions label the cycles differently, by when an application is verified complete, so ask the fund which payment date applies to you. DLI says that if Cycle One payments would exceed the cap, they move to Cycle Two.

Deadlines and payment dates

• Two years to apply. The fund page, the fact sheet and the consumer guide count from the date the judgment was entered. The statute and the instructions count from when the judgment became final, with all reviews and appeals over. To be safe, count from the entry date.
• July 1 and January 1 cutoffs. The statute says the fund pays by December 31 for applications submitted by July 1, and by June 30 for applications submitted by January 1. DLI’s instructions give the same dates, counted from when your application is “verified complete”. One section says DLI must have received your signed application and every required document. Another is stricter: the documents must be received and reviewed. File well before the cutoff.
• The consumer guide differs here. It says June 1 to be considered for payment in December, and December 1 for the following June. Aim for the earlier dates, or ask the fund.
• 120 days for a decision. The statute gives the commissioner that long, after receiving a complete verified application, to reach an agreement with you or issue an order on it.
• 30 days to ask for a hearing. After you receive an order, you have that long to serve a written request for a hearing on the commissioner. Miss the deadline and the order becomes final and, in the statute’s words, “may not be reviewed by any court or agency”. The statute adds a caution: if your judgment was by default, stipulation or consent, you have the burden of proving the misconduct behind it at the hearing.

Documents checklist

DLI’s instructions list these, with the completed application form:

• Conciliation Court papers: Statement of Claim and Summons, and Order for Judgment.
• District Court papers: Summons and Complaint, the Findings of Fact, Conclusions of Law, and Order for Judgment, and any court notices or correspondence.
• Either court: the District Court Notice of Entry and Docketing of Judgment.
• Contract: the complete signed contract, all change orders, allowance sheets, plans and specifications.
• Proof of payment: a payment chart, plus copies of checks (front and back), money orders, cashier’s checks or loan-draw documents. If the back of a check is missing, or shows no bank processing information, add proof that the check cleared your account. If applicable, add endorsed insurance checks and the Closing Disclosure or HUD Settlement Statement.
• Proof of loss: estimates or invoices from other contractors, receipts for materials, inspection reports if available, and court-filed liens with the county notice of filing if applicable.
• Proof you tried to collect, in writing, such as a Writ of Execution or a demand letter sent after docketing.
• Insurance documents, if applicable.

How to apply

• Online, which DLI prefers. Start at DLI’s Contractor Recovery Fund page and create an iMS account. Online applicants must use DLI’s payment chart.
• By mail. Send the completed paper application with all required documents. Do not submit the paper form through iMS.

Special cases

• You cannot find the contractor. DLI’s instructions say state law lets you serve the DLI commissioner instead. You must then mail the contractor a copy, by certified mail to the last known address, and give the court an affidavit of compliance. They cite Minnesota Statutes 326B.855.
• The contractor filed for bankruptcy. You may still be able to sue solely to get a judgment for the fund. DLI says you must petition the Bankruptcy Court to lift the automatic stay.
• You bought the home later. You may qualify only if your judgment is based on a breach of the statutory home warranty in chapter 327A. DLI says the judgment must clearly reference that warranty. See Minnesota’s home warranty law.

Who to call

• The fund: 651-284-5057 or contractor.recoveryfund@state.mn.us.
• A contractor dispute or unlicensed work: DLI at 651-284-5069. See contractor problems in Minnesota.

What to do next

• Note the judgment’s entry date and count two years.
• Ask the fund whether other claims are pending against your contractor.
• If the license was RR only, call the fund first.

Common questions

Sources

Every rule, number and deadline in this guide comes from these official pages, read on November 12, 2026. Rules change. The source is always the final word.

• Contractor Recovery Fund (Minnesota Department of Labor and Industry)
• How to apply to the Minnesota Contractor Recovery Fund (Minnesota Department of Labor and Industry)
• Fact sheet: Contractor Recovery Fund (Minnesota Department of Labor and Industry)
• Minnesota Statutes 326B.89: Contractor Recovery Fund
• A Consumer's Guide to Hiring a Residential Building Contractor (Minnesota Department of Labor and Industry)
• Tips for hiring a contractor (Minnesota Department of Labor and Industry)
• Home warranty dispute resolution process (Minnesota Department of Labor and Industry)

This guide is general information, not legal advice.