It is called a homeowners' fund of "last resort."
For the 100-plus customers who fell prey to now-defunct Coral Bay Construction, the state's construction recovery fund represents their only hope to recoup some of the thousands of dollars lost.
The company's demise began in 2006 and culminated Wednesday with a 20-year prison sentence for its president, Steven Bartlett. Any prospect for restitution to the victims — with total losses estimated in the millions — is unlikely.
Now, to make matters worse, many of those homeowners are realizing the state fund they trusted won't help everyone.
The main obstacle is math. At least 73 former Coral Bay customers have applied for a total $3.3-million. But the law caps damages per builder at $500,000.
To date, four claims have been paid, amounting to about $145,400.
"It doesn't feel like there is a recovery fund," said a frustrated Luis Pereira, who estimates he lost $100,000 and never received a finished home. "I thought the state was on our side, but they are letting us down."
His sentiment reflects the feelings of many former Coral Bay customers. Outside the courtroom last week, they gathered in small groups and swapped stories about their difficulties navigating the complicated recovery fund process.
In their minds, it wasn't supposed to end this way. With Bartlett's trial concluding, many hoped to move forward. They already lost dream homes, life savings and, for some, good health.
But now they feel entangled in a bureaucratic ordeal. Victim Diana Pollard said it means the dark legacy of Coral Bay "is not over yet."
State law limits claims
The Florida Homeowners' Construction Recovery Fund was established in 1993 after Hurricane Andrew as a way to compensate homeowners who suffered financial damages because of a contractor's mismanagement or misconduct.
It is endowed primarily by a half-cent-per-square-foot surcharge on building permits. So, in essence, it is financed by homeowners because permit costs are built into most contracts.
In 2004, the fund doubled the limit on eligible claims to cover actual damages up to $50,000 per victim.
Another change — one not noted widely in the fund's explanatory materials — capped the amount of damages per builder at $500,000. It means that if each claimant gets the maximum allowed, only 10 will get payments.
It makes the rush to file a claim important because they are accepted first-come, first-served.
To start the process, homeowners need an order of restitution from the state contractors licensing board or a judgment from a competent court demonstrating they were harmed. They have one year to file the claim after a judgment is ordered.
Many Coral Bay customers initiated the process by filing complaints against Bartlett with the Department of Business and Professional Regulation. The agency revoked Bartlett's license and ordered him to pay $1.6-million in punitive damages — money state officials hold no illusions of ever receiving.
At the same time, Coral Bay customers also filed claims for part of Bartlett's assets during his bankruptcy hearings. But the homeowners were relegated to the lowest-class status, meaning most pulled out and those that persisted received checks totaling about $166. The law does allow them to still file for more money through the recovery fund.
Questions plague claims process
In early fall 2006, months after Coral Bay collapsed and weeks before Bartlett's arrest, officials with the state business regulation agency realized they were looking at a monstrous crisis.
At the time, the company's demise left one of the largest claims ever against the fund. "It is a large group of cases that will likely be the first to exhaust the $500,000 limit," said Alexis Antonacci, a spokeswoman for the state agency that controls the money.
Agency officials traveled from Tallahassee to Hernando County for a series of meetings with Coral Bay customers about the state's recovery fund. They passed out information and answered questions, according to numerous homeowners who attended.
The officials even offered two solutions to make the situation better.
They suggested the pool of money available could be $1-million because homeowners could file claims against the builder and the business. But the agency now acknowledges the plan never materialized because Coral Bay didn't have a license, state officials said.
They also proposed collecting all the claims and then dividing the money equally, so that everyone would get some payment. With about 75 claims and $500,000 available, each customer would have received about $6,700. But likewise, that plan never came to fruition. Agency officials blamed the customers for failing to reach a consensus about the divided shares.
More than anything, victims say, fund officials made it feel like the state would help — that the recovery fund would act as a rescue net. But now, after experiencing the process, some feel betrayed.
At least a handful of Coral Bay customers were told the fund had run out of money already, but agency officials deny that account and suggest they are still accepting new claims.
"It's a waste of the time, paper, postage and effort," said Mark Moran, a Coral Bay customer who lost $140,000. "We are getting absolutely nowhere … and there's nothing to help the victim."
"It is an absolute joke," said Walter Harfmann, another victim.
Unlike many others who hired attorneys, Harfmann decided to handle the matter himself. It took six weeks of back-and-forth with the agency before his claim was accepted.
Then the 56-year-old Brooksville man also grew dismayed halfway through when he learned he can file a claim for only one house even though he contracted with Coral Bay to build four houses for different family members.
"They make you jump through so many hoops," he added. "It's like they don't want you to get any help."
Sam Farkas, another agency spokesman, acknowledged the process is protracted by the regulations.
"It takes a long time before a customer is even eligible to file a claim," he said in a written response to questions. "They are often frustrated by the time they are allowed to file a claim."
He added, "All things considered, the recovery fund portion of the process moves as fast as it legally can."
John Frank can be reached at firstname.lastname@example.org or (352) 754-6114.