Indiana Real Estate Recovery Fund: Purpose & Claim Process

Instructor: Janice Chretien
The Indiana Real Estate Recovery Fund was established to protect consumers from cash losses due to unlawful practices by real estate licensees. This lesson will look at the Recovery Fund, including its purpose and the process for filing a claim.

Fraud Has Occurred

Rhonda awoke to a broken pipe in her kitchen. Water was spraying everywhere. Luckily, she was able to get a plumber to her home in a short amount of time.

The plumber told Rhonda that the pipe broke due to settlement of her home. He suggested she contact a foundation repair company because she had major foundation damage.

How could this be? She had just moved into her home two months ago. The seller had provided disclosures that stated the home did not have any foundation issues. Surely the home had not shifted enough to break a pipe in only two months.

An investigation revealed that the seller's disclosures that Rhonda was provided had been forged. The seller's real estate agent was afraid that no one would want to buy the home if they knew there were costly foundation issues, so she discarded the disclosures provided by the seller. The agent created new disclosures and forged the seller's signature.

The court awarded Rhonda a large sum of money for the damages, but the real estate agent is in jail for forgery. How will the agent be able to pay Rhonda? The broker's errors and omission insurance does not cover fraud.

The Indiana Real Estate Recovery Fund

The Indiana Real Estate Recovery Fund was established to protect consumers and clients, like Rhonda, from cash losses due to unlawful practices by real estate licensees. The fund specifically protects individuals who have lost money due to a real estate licensee stealing money or property using false claims, trickery, or forgery.

The fund aims to maintain a balance of $600,000, but if it dips below $450,000, the Indiana Real Estate Commission will raise money for the account by increasing licensing and renewal fees.

The funds are available for people who have been awarded a final judgment in any court in Indiana. The maximum payment by the recovery fund is $20,000, but Rhonda only has one year from the final day of the court hearings to file an application to receive money from the fund.

How to File a Claim

Rhonda will file an application for the amount of her judgment and all court costs to be paid to her from the Indiana Real Estate Recovery Fund. The application will be filed in the court that awarded her the judgment.

The court will conduct a hearing on the application. The Indiana Real Estate Commission will be the defendant in this case. The court will order the Real Estate Commission to pay Rhonda from the fund if the court finds:

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