WSR 26-09-115
PERMANENT RULES
DEPARTMENT OF
LABOR AND INDUSTRIES
[Order 25-07—Filed April 21, 2026, 8:27 a.m., effective July 1, 2026]
Effective Date of Rule: July 1, 2026.
Purpose: The department of labor and industries (L&I) is adopting 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 adopts new sections to administer the newly established program and ensure eligible 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 completes 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.
The adopted amendments to chapter 296-200A WAC establish the following:
•New definitions to define terms that are applicable to the homeowner recovery program.
•Eligibility requirements for claimants applying to the homeowner recovery program.
•Process for filing a claim and documentation required.
•L&I's process for approving and denying claims and when funds are not available.
•The amount of an unpaid judgment that L&I will compensate a claimant.
•Reasons that L&I may deny a claim.
•Criteria for when an applicant is placed on the waitlist and L&I's notification process.
•Payment and reimbursement requirements for claimants and contractors.
Citation of Rules Affected by this Order: New WAC 296-200A-9100, 296-200A-9105, 296-200A-9110, 296-200A-9115, 296-200A-9120, 296-200A-9125, 296-200A-9130, and 296-200A-9135.
Statutory Authority for Adoption: 2SHB 1534 (chapter 213, Laws of 2023), SB 5795 (chapter 155, Laws of 2019), and chapter 18.27 RCW.
Adopted under notice filed as WSR 26-03-091 on January 20, 2026.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 8, Amended 0, Repealed 0.
Number of Sections Adopted at the Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's own Initiative: New 0, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: April 21, 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.