agency
recovery fund
A recovery fund is a state-administered fund, typically financed by licensee fees, that compensates members of the public who suffer financial loss due to a licensee's fraud, misrepresentation, or other wrongful acts and cannot collect a court judgment from the licensee. Claimants usually must first obtain a judgment and show it is uncollectible. When the fund pays, the licensee's license is commonly suspended until the fund is repaid. Not every state has one, and caps vary.
- Exam tip
- Key points: claimant generally needs a court judgment first; payouts are capped; the licensee usually loses the license until repaying the fund.
- Example
- A buyer wins a $30,000 judgment against an agent who stole his deposit, but the agent has no assets; the buyer applies to the state recovery fund.
Related terms & state variants
Sources
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Last verified: 2026-10-23