WSR 26-03-091
PROPOSED RULES
DEPARTMENT OF
LABOR AND INDUSTRIES
[Filed January 20, 2026, 4:45 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 25-10-080.
Title of Rule and Other Identifying Information: Homeowner recovery program under the contractor registration rule. Chapter 296-200A WAC, Contractor certificate of registration renewals—Security—Insurance.
Hearing Location(s): On February 26, 2026, at 10:00 a.m., at the Department of Labor and Industries (L&I), 7273 Linderson Way S.W., Room S117, Tumwater, WA 98501; or join electronically at https://lni-wa-gov.zoom.us/j/85717144509?pwd=1oIO2fE8h5JLMJI3JEdaTIXiaUqXrK.1, Passcode hearing@6!; or join by phone at 253-215-8782 US, Webinar ID 857 1714 4509, Passcode 8360438160. The in-person and virtual/telephonic hearing starts at 10:00 a.m. and will continue until all oral comments are received.
Date of Intended Adoption: April 21, 2026.
Submit Written Comments to: Alicia Curry, L&I, Customer Service, Compliance, and Public Safety Division, P.O. Box 44400, Olympia, WA 98504-4400, email CSCPSRules@Lni.wa.gov, fax 360-704-1980, beginning January 21, 2026, at 8:00 a.m., by February 26, 2026, at 5:00 p.m.
Assistance for Persons with Disabilities: Contact Alicia Curry, phone 360-902-6244, fax 360-704-1980, email CSCPSRules@Lni.wa.gov, by February 13, 2026.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: L&I is proposing amendments to the contractor registration rules to implement a new homeowner recovery program. The program provides a safeguard and a path to financial recovery for consumers harmed by registered construction contractors.
In 2023, the legislature passed 2SHB 1534 (chapter 213, Laws of 2023), concerning strengthening protections for consumers in the construction industry. The legislation directed L&I to establish a new homeowner recovery fund and begin depositing all fines and penalties received or collected under chapter
18.27 RCW to the fund by July 1, 2024. Beginning July 1, 2026, eligible homeowners can apply for recovery payments from the program for financial losses stemming from work by registered construction contractors. This rule making proposes new sections to administer the newly established program and ensure eligible construction consumers have access to the program's recovery payments.
In addition to the homeowner recovery program, 2SHB 1534 introduced several other statutory amendments that strengthen consumer protection in Washington's construction industry. L&I is adopting rules to implement the legislation in three phases. This rule making is the final stage. The phase one rule making was adopted under WSR 23-17-145 and phase two was adopted under WSR 24-10-086.
Proposed amendments to this chapter are as follows:
WAC 296-200A-9100 Definitions applicable to homeowner recovery program, establishes new definitions to define terms that are applicable to the homeowner recovery program.
WAC 296-200A-9105 Claim eligibility, establishes eligibility requirements for claimants applying to the homeowner recovery program.
WAC 296-200A-9110 Claim filing, establishes the process for filing a claim and documentation required.
WAC 296-200A-9115 Processing of claims, establishes L&I's process for approving and denying claims and when funds are not available.
WAC 296-200A-9120 Compensation amount, specifies the highest amount of an unpaid judgment that L&I will compensate a claimant.
WAC 296-200A-9125 Claim denial, establishes the reasons that L&I may deny a claim.
WAC 296-200A-9130 Fund waitlist, establishes criteria for when an applicant is placed on the waitlist and L&I's notification process.
WAC 296-200A-9135 Payment and reimbursement requirements, establishes payment and reimbursement requirements for claimants and contractors.
Reasons Supporting Proposal: L&I is amending the rules for consistency with the statutory amendments under 2SHB 1534 that take effect July 1, 2026. Rules are required to implement the legislation.
Statutory Authority for Adoption: 2SHB 1534 (chapter 213, Laws of 2023), SB 5795 (chapter 155, Laws of 2019), and chapter
18.27 RCW.
Statute Being Implemented: 2SHB 1534 (chapter 213, Laws of 2023), SB 5795 (chapter 155, Laws of 2019), and chapter
18.27 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: L&I, governmental.
Name of Agency Personnel Responsible for Drafting: Melissa McBride, Program Manager, Tumwater, Washington, 360-338-5526; Implementation and Enforcement: Randy Littlefield, Acting Assistant, Director, Tumwater, Washington, 360-584-8228.
A school district fiscal impact statement is not required under RCW
28A.305.135.
A cost-benefit analysis is not required under RCW
34.05.328. This rule making is exempt under RCW
34.05.328 (5)(b)(iii) as it proposes to adopt or incorporate new statutory language into rule through interpretation and without material change and are not considered significant legislative rules under RCW
34.05.328 (5)(c)(ii).
This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:
Is exempt under RCW
19.85.025(3) as the rules are adopting or incorporating by reference without material change federal statutes or regulations, Washington state statutes, rules of other Washington state agencies, shoreline master programs other than those programs governing shorelines of statewide significance, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, if the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule.
Scope of exemption for rule proposal:
Is fully exempt.
January 20, 2026
Joel Sacks
Director
RDS-6837.5
HOMEOWNER RECOVERY PROGRAM
NEW SECTION
WAC 296-200A-9100Definitions applicable to homeowner recovery program.
(1) "Claimant" means the owner of an owner-occupied residential property in the state.
(2) "Residential property" means a single-family dwelling, or a multifamily dwelling consisting of four or fewer units, but does not include a condominium.
NEW SECTION
WAC 296-200A-9105Claim eligibility.
A claimant may file a claim with the department. To qualify, the claimant must:
(1) Own and occupy the residential property at the time the work was performed;
(2) Have obtained a final judgment from superior court for a claim filed against the bond as identified in RCW
18.27.040 that has not been satisfied in full; and
(3) Have made the claim within 90 days of the conclusion of the civil action.
NEW SECTION
WAC 296-200A-9110Claim filing.
(1) Claimants must submit:
(a) A completed claim on the department provided form;
(b) A certified copy of the final judgment;
(c) Proof of residency such as a deed, mortgage statement, or utility bill from the last 60 days showing the name and address of the claimant; and
(d) If applicable, a copy of the response letter from the bond company verifying proof of payment or a copy of the check.
(2) Claims may be submitted:
(a) Electronically through the department's designated online portal; or
(b) By mail to: Post Office Box 44450, Olympia, WA 98504-4450.
NEW SECTION
WAC 296-200A-9115Processing of claims.
After a claim is submitted, the department will:
(1) Review the documentation for completeness and eligibility.
(2) Make a decision to approve or deny the claim and notify the claimant in writing of the decision.
(a) If a claim is denied, the department will provide a reason for the denial.
(b) If more information is needed, the claimant may resubmit the application with the required information.
(c) If the claim is approved and funds are available, claimants must assign the final judgment to the department prior to a payment being made from the fund.
(d) If the claim is approved and funds are not available, the process described in WAC 296-200A-9130 will be followed.
NEW SECTION
WAC 296-200A-9120Compensation amount.
The department will pay the amount of the unpaid judgment up to $25,000 per contractor per parcel.
NEW SECTION
WAC 296-200A-9125Claim denial.
The department may deny a claim if:
(1) The claim is incomplete or contains false information;
(2) The judgment does not meet eligibility requirements;
(3) The judgment has been satisfied; or
(4) The application was not made within 90 days of the final judgment order.
NEW SECTION
WAC 296-200A-9130Fund waitlist.
(1) Claims will be reviewed in the order received.
(2) If there are not enough funds available for payment, claimants will be placed on a waitlist until funds become available.
(3) Claimants on the waitlist will be paid in the order of placement on the list.
(4) Claimants placed on the waitlist will receive a notice from the department of their status at the time of claim submission.
(5) Claimants will receive a second notice from the department when funds are available.
(6) Claimants must notify the department if the final judgment is fulfilled while on the waitlist.
NEW SECTION
WAC 296-200A-9135Payment and reimbursement requirements.
(1) Prior to payment, the claimant will assign their final judgment which includes their right, title, and interest to the department.
(2) Upon payment from the homeowner recovery account, the department will notify the contractor the existing final judgment has been assigned to the department and a payment has been made from the fund to the claimant including the amount paid.
(3) Prior to reinstatement of the contractor registration, the final judgment must be satisfied in full including any interest owed to the department.
(4) Reimbursement including any interest owed to the department from the contractor may include establishment of a payment plan.
(a) A payment plan may last up to 36 months.
(b) A payment plan will include interest at a rate of one percent per month.
(5) Interest owed to the department begins accruing on the date that funds are paid to the claimant.
(6) The department has discretion to waive interest pursuant to RCW
43.17.240.
(7) When a contractor fails to reimburse the department under this section, the collection of amounts will be handled pursuant to RCW
49.48.086.