Customers of Arizona contractors are not getting the protection to which they are entitled by state law, a new report says.
State Auditor General Debbie Davenport said the Arizona Registrar of Contractors is closing out consumer complaints without first determining whether the issues they faced have been resolved. The result, she said, is homeowners left with problems -- and the state agency not following up.
Davenport also concluded that it can take more than a year to get some complaints resolved. She said that means not only that the homeowner is stuck without relief but that the contractor continues to do possibly shoddy work elsewhere in the interim.
And she took a shot of sorts at the Legislature itself which raided the Recovery Fund, money set aside to help homeowners perform repairs if the contractor refuses. She said $8.5 million was taken from the account.
The result, she said, is that homeowners are not getting money to which they are entitled for at least a year.
"Homeowners with property damage that needs to be repaired immediately may have to pay for the repair without any reimbursement for several years,'' Davenport wrote. "This can result in financial hardship for the homeowners.''
In a prepared response to the report, William Mundell said his agency has a "unique'' complaint process which does sometimes result in cases being closed before going through a full hearing process. He said, though, that can be because the homeowner believes the complaint has or will be resolved.
He also said his agency is working to speed up the complaint process.
The Registrar of Contractors, created by lawmakers in 1931, is responsible for licensing anyone who does certain kind of work for others. There are 238 different types of licenses, ranging from those who do broad general home construction down to specialties like installing a home's sound system.
Mundell's agency also administers the Recovery Fund which allows homeowners to get money after either getting a court judgment against a contractor, or if the contractor's license has been suspended or revoked because of the complaint. It is funded through regular fees as well as assessments made on contractors on whose behalf money has been paid out.
Davenport said her auditors, picking a random sample of complaints, found many where Mundell's agency closed the cases without verifying that the problems have been fixed.
For example, she said the agency got a complaint in 2010 about poor workmanship on a pool, including cracked deck tile, leaks in the pool and pipes sticking out too far.
The following month the agency inspected the problem and directed the contractor to fix the complaint within 15 days. At the end of that time, having heard nothing more from the homeowner, the agency closed the file without going back to check.
But months later, the homeowner resubmitted the complaint because the problem had not been resolved. Davenport said it ultimately took a full year before the contractor and the homeowner signed an agreement saying that the contractor would pay nearly $3,000.
She cited other cases where files were closed after a contractor promised to pay money but without ever checking to see if the payment was made.
Separately, Davenport said while only a small percentage of licensed contractors receive complaints, the few who do often receive multiple complaints. But she said Mundell's agency does not escalate discipline for those with such a history.
The related problem, Davenport said, is the time it takes to resolve complaints that do remain open. One is the fact that those "problem contractors'' continue to work. The other side of the issue is that the homeowners cannot get financial relief from the Recovery Fund until the complaint process is completed, the licensee is disciplined, and their claim is processed.
"This time is in addition to the time that a homeowner may have spent working with the contractor to address problems prior to submitting a complaint,'' Davenport wrote.
At the very least, Davenport said the agency needs to have a system to monitor open complaints.
"For example, one complaint that auditors reviewed was apparently lost and not worked on for 242 days after being reassigned to a different staff member,'' she wrote.
That leaves the problem of the drained Recovery Fund.
Davenport said that as of last July, there was $220,419 in the bank. But the unpaid claims totaled nearly $3.9 million.
One solution, she said, is increasing assessments.
She said contractors now pay $300 into the Recovery Fund for a 2-year license renewal. She said state law allows that to increase to $600.