Real Estate Recovery Fund and Consumer Protection
Pennsylvania maintains a Real Estate Recovery Fund to compensate consumers harmed by licensee misconduct. This chapter covers the fund's purpose, the effect of a payment on the licensee, and the type of loss it covers.
Purpose of the Fund
The Recovery Fund reimburses a member of the public who obtains a final court judgment against a licensee based on fraud, misrepresentation, or certain RELRA violations in a transaction and cannot otherwise collect. It is a consumer-protection backstop, not an operating budget or a lending program, and it applies only after the consumer has pursued the judgment.
Effect on the Licensee
When the fund pays a claim on a licensee's behalf, that licensee's license is automatically suspended until the amount paid, plus interest, is repaid to the fund. This protects the fund's balance and encourages licensees to satisfy judgments. The suspension is tied to repayment rather than being automatically permanent.
Covered Losses
The fund addresses actual monetary loss a consumer suffered because of a licensee's covered misconduct in a licensed transaction. It does not cover a brokerage's business expenses, ordinary market fluctuations, or a buyer's general dissatisfaction unrelated to licensee wrongdoing.