Washington program helps homeowners after fraud. Prevent it instead | Opinion

When Todd and Brittany Gunderson decided to build a wheelchair ramp for Todd’s brother Travis, to help him visit their home, they did what homeowners do. They interviewed contractors, checked references and referrals, then decided on hiring Construction Kings of Bonney Lake.

A crew came out and swung some hammers, did some framing and left. That was the last time anyone ever came to work on their project. Nearly $50,000 disappeared into the wind when Construction Kings’ owner Zak Nash suddenly announced he was closing the business, telling homeowners and subcontractors he would be filing for bankruptcy.

A single case of a homeowner being caught up in a mismanaged business might be understandable, but the state attorney general is currently investigating dozens of similar stories from homeowners and subcontractors who say they have lost up to $2.88 million to Construction Kings.

Starting July 1, Washington finally has a program to help people like the Gundersons. In 2023, the state created the Homeowner Recovery Program which makes up to $25,000 available to homeowners victimized by bad actors. It is to be funded by fines Labor and Industries levies on contractors for violations such as using an unregistered subcontractor or failing to provide a lien disclosure statement.

First, though, a homeowner must file a lawsuit, win a court judgment, proceed against the contractor’s bond, prove the judgment remains unpaid and apply to L&I within 90 days of the court judgment. Attorney fees, costs, punitive damages — and condo owners — are excluded.

The Homeowner Recovery Program, while genuinely better than absolutely nothing, is still not good enough to protect consumers before they get scammed. Washington needs a system that protects homeowners’ money before it disappears — specifically, a mandatory escrow requirement, like those already proven to work in New York.

Establishing an escrow requirement is a faster way to stem predatory construction fraud that targets many homeowners and subcontractors every year.

New York requires that for any home improvement contract over $500, no matter whether it’s a roof, a driveway, a bathroom or a wheelchair ramp, deposits be placed into a protected account within five business days. It’s the contractor’s responsibility to set up the project’s Home Improvement Trust Account and deposit the funds. This keeps everyone’s money from being comingled with the contractor’s personal or business operating funds, and it remains the homeowner’s property until each phase of work is completed.

This protects the money if the contractor disappears. And a contractor who uses your money for anything other than your project is considered to be committing criminal larceny.

Washington’s version would apply to any home improvement contract over a reasonable threshold, say, $5,000 — a more contractor-friendly amount. As in New York, deposits go into a licensed escrow account within five business days. Funds release only when a specific work phase is verified as complete. A contractor who skips the deposit faces automatic civil liability and L&I registration suspension. And, as an alternative for legitimate contractors who don’t want the paperwork, they could instead post a project-specific surety bond or letter of credit.

Contractor and builders’ interest groups may object because escrow would impact the ability of a contractor to use funds from one household’s project to buy materials or pay workers for another job.

That’s exactly why we need mandatory escrow.

Legitimate contractors run their businesses ethically, pay their bills, don’t comingle project funds, and do not see mandatory escrow as a burden but as a competitive advantage.

The Homeowner Recovery Program is a nice start. Yet it still represents an outdated approach to a powerful industry the state supposedly regulates on behalf of consumers. It is a step toward a remedy for contractor fraud, but there is still nothing trying to prevent it from happening in the first place.

Right now, Attorney General Nick Brown’s investigators are digging in on Construction Kings’ customer and subcontractor complaints, as well as on a separate case involving dozens of people in a similar situation connected to a Lake Stevens contractor — their reported losses top $1.8 million. That’s a lot of complaints against just two contractors, both legally registered by the state.

Under escrow, the Gundersons’ money, and everyone else’s in these cases, would never have been at risk. There is still time this year for Brown to direct his team to draft mandatory escrow legislation and find a legislative sponsor to carry it in the 2027 session.

Journalist Robert Frank runs the Crooked Contractors of Washington Facebook page. Homeowner Jason Hesse was recently awarded a summary judgment in his fraud lawsuit against the owner of Construction Kings. Contractor Toly Filip is the creator of the Washington Scammers Beware Facebook page, where homeowners and subcontractors share information regarding their Construction Kings experiences.

This story was originally published July 11, 2026 at 4:00 AM with the headline "Washington program helps homeowners after fraud. Prevent it instead | Opinion."