AN ACT CONCERNING THE DEPARTMENT OF CONSUMER PROTECTION'S RECOMMENDATIONS REGARDING VARIOUS GUARANTY FUNDS.

House of Representatives
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General Assembly File No. 185
February Session, 2026 Substitute House Bill No. 5224

House of Representatives, March 26, 2026

The Committee on General Law reported through REP. LEMAR
of the 96th Dist., Chairperson of the Committee on the part of
the House, that the substitute bill ought to pass.

AN ACT CONCERNING THE DEPARTMENT OF CONSUMER
PROTECTION'S RECOMMENDATIONS REGARDING VARIOUS
GUARANTY FUNDS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. Section 20 -324a of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective from passage): 2
The commission shall establish, and the department shall maintain, a 3
Real Estate Guaranty Fund from which, subject to the provisions of this 4
section and sections 20-324b to 20-324i, inclusive, any person aggrieved 5
by any action of a real estate licensee, duly licensed in this state under 6
section 20-312, by reason of the embezzlement of money or property, or 7
money or property unlawfully obtained from any person by false 8
pretenses, artifice or forgery or by reason of any fraud, 9
misrepresentation or deceit by or on the part of any such real estate 10
licensee or the unlicensed employee of any such real estate licensee, may 11
recover, upon approval by the [commission] department of an 12
application brought pursuant to the provisions of section 20 -324e, as 13
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amended by this act, compensation in an amount not exceeding in the 14
aggregate the sum of twenty -five thousand dollars in connection with 15
any one real estate transaction or claim, regardless of the number of 16
persons aggrieved or parcels of real estate involved in such real estate 17
transaction or claim. 18
Sec. 2. Section 20 -324c of the general statutes is repealed and the 19
following is substituted in lieu thereof (Effective from passage): 20
The [commission] department shall maintain the Real Estate 21
Guaranty Fund at a level not to exceed five hundred thousand dollars 22
and to this intent moneys received under section 20 -324b shall be 23
credited to said fund whenever the fund balance is below five hundred 24
thousand dollars. Any such moneys may be invested or reinvested in 25
the same manner as funds of the state employees retirement system. The 26
interest arising from such investments shall be credited to the Real 27
Estate Guaranty Fund whenever the fund balance is below five hundred 28
thousand dollars, and to the General Fund whenever the fund balance 29
is equal to or greater than five hundred thousand dollars. Any moneys 30
received under section 20-324b not required to maintain the Real Estate 31
Guaranty Fund balance shall be deposited to the General Fund. All 32
moneys in the Real Estate Guaranty Fund in excess of five hundred 33
thousand dollars, shall be transferred by the State Treasurer to the 34
General Fund. 35
Sec. 3. Section 20 -324d of the general statutes is repealed and the 36
following is substituted in lieu thereof (Effective from passage): 37
No application to recover compensation under sections 20-324a to 20-38
324i, inclusive, as amended by this act, which might subsequently result 39
in an order for collection from the Real Estate Guaranty Fund shall be 40
brought later than two years from the final determination of, or 41
expiration of time for appeal in connection with, any binding arbitration 42
decision or any court judgment, order or decree. 43
Sec. 4. Subsection (e) of section 20-324e of the 2026 supplement to the 44
general statutes is repealed and the following is substituted in lieu 45
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thereof (Effective from passage): 46
(e) If the [department] Department of Consumer Protection pays 47
from the Real Estate Guaranty Fund any amount in settlement of a claim 48
or toward satisfaction of a decision, judgment, order or decree against a 49
real estate licensee or an unlicensed employee of a real estate licensee 50
pursuant to an order under subsection (d) of this section, such person 51
shall not be eligible to receive a new license until such person has repaid 52
such amount in full [,] plus interest at the rate of ten per cent per year , 53
which interest shall accrue from the date on which the Department of 54
Consumer Protection makes such payment from the fund until the date 55
on which the Commissioner of Consumer Protection refers the unpaid 56
amount to the Department of Administrative Services for collection . A 57
discharge in bankruptcy shall not relieve a person from the penalties 58
and disabilities provided in this subsection. 59
Sec. 5. Section 20 -324f of the general statutes is repealed and the 60
following is substituted in lieu thereof (Effective from passage): 61
Any person filing with the [commission] department any notice, 62
statement or other document required under the provisions of section 63
20-324e, as amended by this act, which is false or untrue or contains any 64
material misstatement of fact shall be fined not less than two hundred 65
dollars. 66
Sec. 6. Section 20 -324h of the general statutes is repealed and the 67
following is substituted in lieu thereof (Effective from passage): 68
When the [commission] department has caused to be paid from the 69
Real Estate Guaranty Fund any sum to the [judgment] creditor under a 70
decision, judgment, order or decree, the [commission] department shall 71
be subrogated to all of the rights of the [judgment] creditor up to the 72
amount paid, and the [judgment] creditor shall assign all of [his] the 73
creditor's right, title and interest in the decision, judgment, order or 74
decree up to such amount paid to the [commission] department, and 75
any amount and interest recovered by the [commission] department on 76
the decision, judgment, order or decree shall be deposited to the fund. 77
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Sec. 7. Subsection (o) of section 20-417i of the 2026 supplement to the 78
general statutes is repealed and the following is substituted in lieu 79
thereof (Effective from passage): 80
(o) If the commissioner orders the payment of an amount as a result 81
of a guaranty fund claim against a new home construction contractor, 82
the commissioner may, after notice and hearing in accordance with the 83
provisions of chapter 54, revoke the certificate of such contractor and 84
such contractor shall not be eligible to receive a new or renewed 85
certificate until such contractor has repaid such amount in full [,] plus 86
interest [from the time such payment is made from the New Home 87
Construction Guaranty Fund,] at a rate to be in accordance with section 88
37-3b, [except that] which interest shall accrue from the date on which 89
such payment is made from the New Home Construction Guaranty 90
Fund until the date on which the commissioner refers the unpaid 91
amount to the Department of Administrative Services for collection. 92
Notwithstanding the provisions of this subsection, the commissioner 93
may, in the commissioner's sole discretion, permit a new home 94
construction contractor to receive a new or renewed certificate after such 95
contractor has entered into an agreement with the commissioner 96
whereby such contractor agrees to repay the fund in full in the form of 97
periodic payments over a set period of time. Any such agreement shall 98
include a provision providing for the summary suspension of any and 99
all certificates held by the new home construction contractor if payment 100
is not made in accordance with the terms of the agreement. 101
Sec. 8. Subsections (d) to (p), inclusive, of section 20-432 of the general 102
statutes are repealed and the following is substituted in lieu thereof 103
(Effective from passage): 104
(d) Whenever an owner obtains a binding arbitration decision, a court 105
judgment, order or decree against any contractor holding a certificate or 106
who has held a certificate under this chapter, or against a proprietor, 107
within two years of the date such contractor entered into the contract 108
with the owner, for loss or damages sustained by reason of performance 109
of or offering to perform a home improvement within this state by a 110
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contractor holding a certificate under this chapter, such owner may, 111
upon the final determination of, or expiration of time for, taking an 112
appeal in connection with any such decision, judgment, order or decree, 113
apply to the commissioner for an order directing payment out of said 114
guaranty fund of the amount unpaid upon the decision, judgment, 115
order or decree, for actual damages and costs taxed by the court against 116
the contractor or proprietor, exclusive of punitive damages. The 117
application shall be made on forms provided by the commissioner and 118
shall be accompanied by a copy of the decision, court judgment, order 119
or decree obtained against the contractor or proprietor together with a 120
statement signed and sworn to by the owner, affirming that the owner 121
has made a good faith effort to satisfy such decision, judgment, order or 122
decree in accordance with the provisions of chapter 906. Such good faith 123
effort may include causing to be issued a writ of execution upon such 124
decision, judgment, order or decree, provided the officer executing such 125
writ has made a return (1) showing that no bank accounts or personal 126
property of the contractor or proprietor liable to be levied upon in 127
satisfaction of such decision, judgment, order or decree could be found, 128
or that the amount realized on the sale of such accounts or property or 129
of such accounts or property as were found, under the execution, was 130
insufficient to satisfy the actual damage portion of such decision, 131
judgment, order or decree, or (2) stating the amount realized and the 132
balance remaining due on such decision, judgment, order or decree after 133
such application on such decision, judgment, order or decree of the 134
amount realized. The requirements of this subsection shall not apply to 135
a judgment, order or decree obtained by the owner in small claims court. 136
No application for an order directing payment out of the guaranty fund 137
shall be made later than two years after the final determination of, or 138
expiration of time for, taking an appeal of [said] such decision, court 139
judgment, order or decree. 140
(e) Upon receipt of [said] such application together with [said] such 141
copy of the decision, court judgment, order or decree, such statement 142
and, except as provided in subsection (d) of this section, such true and 143
attested copy of the executing officer's return, the commissioner or the 144
commissioner's designee shall inspect such documents for their veracity 145
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and upon a determination that such documents are complete and 146
authentic, and a determination that the owner has not been paid, the 147
commissioner shall order payment out of the guaranty fund of the 148
amount unpaid upon the decision, judgment, order or decree for actual 149
damages and costs taxed by the court against the contractor or, if the 150
contractor is a business entity, a proprietor, exclusive of punitive 151
damages. 152
(f) Whenever an owner is awarded an order of restitution against any 153
contractor or, if the contractor is a business entity, any proprietor for 154
loss or damages sustained by reason of performance of or offering to 155
perform a home improvement in this state by a contractor holding a 156
certificate or who has held a certificate under this chapter within two 157
years of the date of entering into the contract with the owner, in a 158
proceeding brought by the commissioner pursuant to this section or 159
subsection (d) of section 42 -110d, or in a proceeding brought by the 160
Attorney General pursuant to subsection (a) of section 42 -110m or 161
subsection (d) of section 42 -110d, or a criminal proceeding pursuant to 162
section 20 -427, such owner may, upon the final determination of, or 163
expiration of time for, taking an appeal in connection with any such 164
order of restitution, apply to the commissioner for an order directing 165
payment out of said guaranty fund of the amount unpaid upon the 166
order of restitution. The commissioner may issue [said] such order upon 167
a determination that the owner has not been paid. 168
(g) Whenever the commissioner orders payment to an owner out of 169
the guaranty fund based upon a decision, court judgment, order or 170
decree of restitution against any [proprietor] individual or business 171
entity that holds or has held a certificate under this chapter , such 172
[proprietor and the] individual or business entity [that holds or held a 173
certificate under this chapter] shall be liable for the resulting debt to the 174
guaranty fund. 175
(h) Before the commissioner may issue any order directing payment 176
out of the guaranty fund to an owner pursuant to subsection (e) or (f) of 177
this section, the commissioner shall first notify the contractor of the 178
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owner's application for an order directing payment out of the guaranty 179
fund and of the contractor's right to a hearing to contest the 180
disbursement in the event that the contractor or proprietor has already 181
paid the owner or is complying with a payment schedule in accordance 182
with a court judgment, order or decree. Such notice shall be given to the 183
contractor not later than fifteen days after receipt by the commissioner 184
of the owner's application for an order directing payment out of the 185
guaranty fund. If the contractor requests a hearing, in writing, by 186
certified mail not later than fifteen days after receiving the notice from 187
the commissioner, the commissioner shall grant such request and shall 188
conduct a hearing in accordance with the provisions of chapter 54. If the 189
commissioner does not receive a request by certified mail from the 190
contractor for a hearing not later than fifteen days after the contractor's 191
receipt of such notice, the commissioner shall determine that the owner 192
has not been paid, and the commissioner shall issue an order directing 193
payment out of the guaranty fund for the amount unpaid upon the 194
judgment, order or decree for actual damages and costs taxed by the 195
court against the contractor or proprietor, exclusive of punitive 196
damages, or for the amount unpaid upon the order of restitution. 197
(i) The commissioner or the commissioner's designee may proceed 198
against any contractor holding a certificate or who has held a certificate 199
under this chapter within the past two years of the effective date of 200
entering into the contract with the owner, for an order of restitution 201
arising from loss or damages sustained by any person by reason of such 202
contractor's or the proprietor's performance of or offering to perform a 203
home improvement in this state. Any such proceeding shall be held in 204
accordance with the provisions of chapter 54. In the course of such 205
proceeding, the commissioner or the commissioner's designee shall 206
decide whether to exercise the commissioner's powers pursuant to 207
section 20-426; whether to order restitution arising from loss or damages 208
sustained by any person by reason of such contractor's or proprietor's 209
performance or offering to perform a home improvement in this state; 210
and whether to order payment out of the guaranty fund. 211
Notwithstanding the provisions of chapter 54, the decision of the 212
commissioner or the commissioner's designee shall be final with respect 213
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to any proceeding to order payment out of the guaranty fund and the 214
commissioner and the commissioner's designee shall not be subject to 215
the requirements of chapter 54 as they relate to appeal from any such 216
decision. The commissioner or the commissioner's designee may hear 217
complaints of all owners submitting claims against a single contractor 218
in one proceeding. 219
(j) No application for an order directing payment out of the guaranty 220
fund shall be made later than two years from the final determination of, 221
or expiration of time for, appeal in connection with any decision, 222
judgment, order or decree of restitution. 223
(k) Whenever the owner satisfies the commissioner or the 224
commissioner's designee that it is not practicable to comply with the 225
requirements of subsection (d) of this section and that the owner has 226
taken all reasonable steps to collect the amount of the decision, 227
judgment, order or decree or the unsatisfied part thereof and has been 228
unable to collect the same, the commissioner or the commissioner's 229
designee may, in the commissioner's or such designee's discretion, 230
dispense with the necessity for complying with such requirement. 231
(l) In order to preserve the integrity of the guaranty fund, the 232
commissioner, in the commissioner's sole discretion, may order 233
payment out of said fund of an amount less than the actual loss or 234
damages incurred by the owner or less than the order of restitution 235
awarded by the commissioner or the Superior Court. In no event shall 236
any payment out of said guaranty fund be in excess of twenty -five 237
thousand dollars for any single claim by an owner. 238
(m) If the money deposited in the guaranty fund is insufficient to 239
satisfy any duly authorized claim or portion thereof, the commissioner 240
shall, when sufficient money has been deposited in the fund, satisfy 241
such unpaid claims or portions thereof, in the order that such claims or 242
portions thereof were originally determined. 243
(n) Whenever the commissioner has caused any sum to be paid from 244
the guaranty fund to an owner, the commissioner shall be subrogated to 245
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all of the rights of the owner up to the amount paid plus reasonable 246
interest, and prior to receipt of any payment from the guaranty fund, 247
the owner shall assign all of [this] the owner's right, title and interest in 248
the claim up to such amount to the commissioner, and any amount and 249
interest recovered by the commissioner on the claim shall be deposited 250
to the guaranty fund. 251
(o) If the commissioner orders the payment of any amount as a result 252
of a guaranty fund claim against a contractor or proprietor, the 253
commissioner shall determine if the contractor is possessed of assets 254
liable to be sold or applied in satisfaction of the claim on the guaranty 255
fund. If the commissioner discovers any such assets, the commissioner 256
may request that the Attorney General take any action necessary for the 257
reimbursement of the guaranty fund. 258
(p) If the commissioner orders the payment of an amount as a result 259
of a guaranty fund claim against a contractor, the commissioner may, 260
after notice and hearing in accordance with the provisions of chapter 54, 261
revoke the certificate of the contractor. [and the] Any contractor, or any 262
individual who has an ownership interest in a business entity that holds 263
or has held a certificate under this chapter, shall not be eligible to receive 264
a new or renewed certificate until the contractor or individual has 265
repaid such amount in full [,] plus interest [from the time said payment 266
is made from the guaranty fund, ] at a rate to be in accordance with 267
section 37-3b, [except that] which interest shall accrue from the date on 268
which payment is made from the guaranty fund until the commissioner 269
refers the unpaid amount to the Department of Administrative Services 270
for collection. Notwithstanding the provisions of this subsection, the 271
commissioner may, in the commissioner's sole discretion, permit a 272
contractor to receive a new or renewed certificate after that contractor 273
has entered into an agreement with the commissioner whereby the 274
contractor agrees to repay the guaranty fund in full in the form of 275
periodic payments over a set period of time. Any such agreement shall 276
include a provision providing for the summary suspension of any and 277
all certificates held by the contractor if payment is not made in 278
accordance with the terms of the agreement. 279
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Sec. 9. Subsection (h) of section 21a-226 of the 2026 supplement to the 280
general statutes is repealed and the following is substituted in lieu 281
thereof (Effective from passage): 282
(h) If the [commissioner] Department of Consumer Protection pays 283
any amount as a result of a claim against a health club pursuant to an 284
order under subsection (g) of this section, the health club shall [pay] 285
repay the amount due plus interest at the rate of ten per cent per year , 286
which interest shall accrue from the date on which the Department of 287
Consumer Protection makes such payment from the guaranty fund until 288
the date on which the Commissioner of Consumer Protection refers the 289
unpaid amount to the Department of Administrative Services for 290
collection. A health club shall not be eligible to receive a new or renewed 291
license until the health club has repaid such amount in full. All funds 292
[paid] repaid pursuant to this subsection shall be deposited in the 293
guaranty fund. 294
Sec. 10. Section 20-324g of the general statutes is repealed. ( Effective 295
from passage) 296
This act shall take effect as follows and shall amend the following
sections:

Section 1 from passage 20-324a
Sec. 2 from passage 20-324c
Sec. 3 from passage 20-324d
Sec. 4 from passage 20-324e(e)
Sec. 5 from passage 20-324f
Sec. 6 from passage 20-324h
Sec. 7 from passage 20-417i(o)
Sec. 8 from passage 20-432(d) to (p)
Sec. 9 from passage 21a-226(h)
Sec. 10 from passage Repealer section

Statement of Legislative Commissioners:
In Section 4(e), "repaid in full, plus" was changed to "repaid such
amount in full [,] plus" for clarity and internal consistency; in Sections
7(o) and 8(p), " to the contrary " was deleted for consistency with
standard drafting conventions; in Section 8(d)(2), " such" was added
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before " application" for clarity; and in Section 9(h), "shall pay" was
changed to "shall [pay] repay" and "funds paid" was changed to "funds
[paid] repaid" for internal consistency.

GL Joint Favorable Subst.

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The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of
the General Assembly, solely for purposes of information, summarization and explanation and do not
represent the intent of the General Assembly or either chamber thereof for any purpose. In general,
fiscal impacts are based upon a variety of informational sources, including the analyst’s professional
knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final
products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact:
Agency Affected Fund-Effect FY 27 $ FY 28 $
Consumer Protection, Dept. Various
Guaranty Funds -
Potential
Revenue Loss
See Below See Below
Note: Various=Various
Municipal Impact: None
Explanation
The bill specifies that interest charged to a person who caused harm
resulting in a payment from a Department of Consumer Protection
(DCP) Guaranty Fund 1 stops accruing once DCP transfers the unpaid
amount to the Department of Administrative Services (DAS). This
results in a potential revenue loss to the Guaranty Funds to the extent
DCP transfers unpaid amounts to DAS.
The bill also makes various changes to the DCP guaranty funds tha t
result in no fiscal impact to the state.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to the number of unpaid amounts
transferred to DAS.

1These include the Real Estate Guaranty Fund, New Home Construction Guaranty
Fund, Home Improvement Guaranty Fund, and the Health Club Guaranty Fund.
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OLR Bill Analysis
sHB 5224

AN ACT CONCERNING THE DEPARTMENT OF CONSUMER
PROTECTION'S RECOMMENDATIONS REGARDING VARIOUS
GUARANTY FUNDS.

SUMMARY
This bill makes a number of changes to various guaranty funds. It:
1. transfers, from the Real Estate Commission to the Department of
Consumer Protection (DCP), responsibility for maintaining and
operating the Real Estate Guaranty Fund, and makes conforming
and technical changes to fund procedures (§§ 1-6 & 10);
2. specifies that the interest charged a person who caused harm
resulting in an award from the Real Estate Guaranty Fund, New
Home Construction Guaranty Fund, Home Improvement
Guaranty Fund, or Health Club Guaranty Fund accrues until
DCP refers the unpaid amo unt to the Department of
Administrative Services for collection (as under existing law,
interest generally begins to accrue when a fund makes a
payment) (§§ 4, 7-9); and
3. requires an applicant for an award from the Home Improvement
Guaranty Fund to provide a signed, sworn statement that he or
she made a good faith effort to collect what is owed before
receiving a payment from the fund and changes some of the
provisions on repayments to the fund (§ 8).
EFFECTIVE DATE: Upon passage
§§ 3 & 6 — REAL ESTATE GUARANTY FUND CONFORMING
CHANGES
PA 25- 111, § 5, allowed someone to apply to the Real Estate Guaranty
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fund based on an arbitration decision , administrative decision, or a
court order or de cree, in addition to a court judgment which was
previously allowed. The bill makes conforming changes to require, as
with court judgments under existing law, that someone applying to the
fund based on a binding arbitration decision or court order or decree
apply within two years after the final determination or the end of the
time to appeal. The bill also makes similar changes regarding the fund’s
ability to recover payments based on each of these events, and not just
judgments.
§ 8 — HOME IMPROVEMENT GUARANTY FUND
Good Faith Effort to Collect
The bill requires an applicant for an award from the Home
Improvement Guaranty Fund to provide a signed, sworn statement that
he or she made a good faith effort to collect what the home improvement
contractor or proprietor owes using court procedures, such as a writ of
execution (this does not apply when the application is based on a small
claims court judgment, order, or decree against the contractor or
proprietor). The bill requires an application to include a statement from
the officer executing a writ of execution indicating:
1. that the officer could not find sufficient funds in a contractor’s or
proprietor’s bank account or from levying their personal
property to satisfy the actual damages under the court ruling and
2. the amount collected and the amount remaining due.
Repayment Requirements
Under current law, after payment from the fund based on a decision
or court ruling against a proprietor (an owner of a business th at is or
was a registered home improvement contractor), the proprietor and the
business entity that is or was registered are both liable to repay the fund.
The bill instead makes either an individual or a business entity that is or
was registered liable based on a decision or court ruling against the
individual or entity.
Under existing law, if the DCP commission er revokes a contractor’s
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registration after making a payment from the fund based on a claim
against the contractor, DCP cannot issue the contractor a registration
until the contractor repays the fund with interest. The bill also prohibits
registering an individual with an ownership interest in a business entity
that has or had a registrat ion until the contractor or individual repays
the fund with interest.
BACKGROUND
Guaranty Funds
The law establishes certain funds, such as the Real Estate Guaranty
Fund, New Home Construction Guaranty Fund, Home Improvement
Guaranty Fund, and Health Club Guaranty Fund , to pay c onsumers
harmed by the conduct of certain license es. Consumers can generally
apply to one of the se funds to recover damages awarded in a n
arbitration decision or a court proceeding against the licensee that the
consumer has been unable to recover from the licensee. Generally, the
licensee must pay back the fund for the amount the fund pays the
consumer plus interest.
COMMITTEE ACTION
General Law Committee
Joint Favorable Substitute
Yea 20 Nay 0 (03/11/2026)