Bill Text: HB 1719

HB 1719

2003

A bill to be entitled

An act relating to consumer protection in the construction

lien law; creating s. 713.015, F.S.; providing mandatory

contract provisions for construction contracts; amending

s. 713.06, F.S.; limiting lien amounts of persons not in

privity; providing a contractor's affidavit form; amending

s. 713.08, F.S.; providing a time limit for recording a

claim of lien; amending s. 713.135, F.S.; requiring the

lien law summary to contain an explanation of owners'

rights; requiring the issuing authority to mail the lien

law summary to the owner; amending s. 713.31, F.S.;

requiring a prosecuting entity to provide a copy of the

charging document to the Department of Business and

Professional Regulation; amending s. 713.345, F.S.;

providing permissive inferences that a person knowingly

and intentionally failed to properly apply construction

payments; requiring a prosecuting entity to provide a copy

of the charging document to the Department of Business and

Professional Regulation; amending s. 713.3471, F.S.;

requiring contracts between lenders and owners to contain

clauses providing owners with the option to be endorsers

of checks on construction loans; requiring contractors to

provide a list of unpaid entities to the lender and owner

before seeking disbursements under construction loans;

amending s. 713.35, F.S.; requiring a prosecuting entity

to provide a copy of the charging document to the

Department of Business and Professional Regulation;

providing an effective date.

Be It Enacted by the Legislature of the State of Florida:

Section 1. Section 713.015, Florida Statutes, is created

to read:

713.015 Mandatory provisions for direct contracts.--Any

direct contract between an owner and a contractor, related to

improvements to real property governed by the provisions in this

part, must contain the following provision printed in no less

than 18-point, capitalized, boldfaced type:

ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001-

713.37, FLORIDA STATUTES,) THOSE WHO WORK ON YOUR PROPERTY OR

PROVIDE MATERIALS AND ARE NOT PAID-IN-FULL HAVE A RIGHT TO

ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS

CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR FAILS

TO PAY SUBCONTRACTORS OR MATERIAL SUPPLIERS OR NEGLECTS TO MAKE

OTHER LEGALLY REQUIRED PAYMENTS, THE PEOPLE WHO ARE OWED MONEY

MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE PAID

YOUR CONTRACTOR IN FULL. THIS MEANS IF A LIEN IS FILED AGAINST

YOUR PROPERTY, IT COULD BE SOLD AGAINST YOUR WILL TO PAY FOR

LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR MAY

HAVE FAILED TO PAY. FLORIDA'S CONSTRUCTION LIEN LAW IS COMPLEX

AND IT IS RECOMMENDED THAT WHENEVER A SPECIFIC PROBLEM ARISES,

YOU CONSULT AN ATTORNEY.

Section 2. Subsection (1) and paragraph (d) of subsection

(3) of section 713.06, Florida Statutes, are amended to read:

713.06 Liens of persons not in privity; proper payments.--

(1) A materialman or laborer, either of whom is not in

privity with the owner, or a subcontractor or sub-subcontractor

who complies with the provisions of this part and is subject to

the limitations thereof, has a lien on the real property

improved for any money that is owed to him or her for labor,

services, or materials furnished in accordance with his or her

contract and with the direct contract and for any unpaid finance

charges due under the lienor's contract. A materialman or

laborer, either of whom is not in privity with the owner, or a

subcontractor or sub-subcontractor who complies with the

provisions of this part and is subject to the limitations

thereof, also has a lien on the owner's real property for labor,

services, or materials furnished to improve public property if

the improvement of the public property is furnished in

accordance with his or her contract and with the direct

contract. The lien amount of any person who has a lien under

this section may not exceed the amount the owner owes the

contractor at the time the owner receives the notice of lien.

When multiple notices of liens are received by the owner on the

same date, the amounts of each lien must be prorated in

accordance with subsection (3) and s. 713.07, but the total

amount of all liens may not exceed the amount the owner owes the

contractor at the time the owner receives the notices of liens.

The total amount of all liens allowed under this part for

furnishing labor, services, or material covered by any certain

direct contract must not exceed the amount of the contract price

fixed by the direct contract except as provided in subsection

(3). No person may have a lien under this section except those

lienors specified in it, as their designations are defined in s.

713.01.

(3) The owner may make proper payments on the direct

contract as to lienors under this section, in the following

manner:

(d) When the final payment under a direct contract becomes

due the contractor:

1. The contractor shall give to the owner an affidavit

stating, if that be the fact, that all lienors under his or her

direct contract who have timely served a notice to owner on the

owner and the contractor have been paid in full or, if the fact

be otherwise, showing the name of each such lienor who has not

been paid in full and the amount due or to become due each for

labor, services, or materials furnished. The affidavit must be

in the following form:

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CONTRACTOR'S AFFIDAVIT

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State of Florida

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County of ....

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Before me, the undersigned authority, personally appeared (name

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of affiant), who, after being first duly sworn, deposes and says

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of his or her personal knowledge the following:

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1. He or she is the (title of affiant), of (name of

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contractor's business), which does business in the State of

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Florida, hereinafter referred to as the "Contractor."

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2. Contractor, pursuant to a contract dated ...., ....,

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with(name of owner), hereinafter referred to as the "Owner," has

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furnished or caused to be furnished labor, materials, and

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services for the construction of certain improvements to real

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property as more particularly set forth in said contract.

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3. This affidavit is executed by the Contractor in

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accordance with section 713.06 of the Florida Statutes for the

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purpose of obtaining payment from the Owner in the amount of

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.....

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4. All work to be performed under the contract has been

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fully completed, and all lienors under the direct contract have

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been paid in full, except the following listed lienors:

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NAME OF LIENOR AMOUNT DUE

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Signed, sealed, and delivered this .... day of...., .....

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By (name of affiant) (title of affiant)

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(name of contractor's business)

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Sworn to and subscribed before me this .... day of ...., ....,

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by (name of affiant), who is personally known to me or produced

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.... as identification, and did take an oath.

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(name of notary public)

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Notary Public

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My Commission Expires:

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(date of expiration of commission)

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The contractor shall have no lien or right of action against the

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owner for labor, services, or materials furnished under the

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direct contract while in default for not giving the owner the

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affidavit; however, the negligent inclusion or omission of any

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information in the affidavit which has not prejudiced the owner

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does not constitute a default that operates to defeat an

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otherwise valid lien. The contractor shall execute the affidavit

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and deliver it to the owner at least 5 days before instituting

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an action as a prerequisite to the institution of any action to

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enforce his or her lien under this chapter, even if the final

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payment has not become due because the contract is terminated

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for a reason other than completion and regardless of whether the

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contractor has any lienors working under him or her or not.

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2. If the contractor's affidavit required in this

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subsection recites any outstanding bills for labor, services, or

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materials, the owner may, after giving the contractor at least

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10 days' written notice, pay such bills in full direct to the

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person or firm to which they are due, if the balance due on a

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direct contract at the time the affidavit is given is sufficient

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to pay them and lienors giving notice, and shall deduct the

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amounts so paid from the balance due the contractor. Lienors

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listed in said affidavit not giving notice, whose 45-day notice

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time has not expired, shall be paid in full or pro rata, as

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appropriate, from any balance then remaining due the contractor;

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but no lienor whose notice time has expired shall be paid by the

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owner or by any other person except the person with whom that

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lienor has a contract.

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3. If the balance due is not sufficient to pay in full all

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lienors listed in the affidavit and entitled to payment from the

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owner under this part and other lienors giving notice, the owner

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shall pay no money to anyone until such time as the contractor

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has furnished him or her with the difference; however, if the

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contractor fails to furnish the difference within 10 days from

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delivery of the affidavit or notice from the owner to the

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contractor to furnish the affidavit, the owner shall determine

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the amount due each lienor and shall disburse to them the

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amounts due from him or her on a direct contract in accordance

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with the procedure established by subsection (4).

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4. The owner shall have the right to rely on the

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contractor's affidavit given under this paragraph in making the

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final payment, unless there are lienors giving notice who are

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not listed in the affidavit. If there are lienors giving notice

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who are not so listed, the owner may pay such lienors and any

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persons listed in the affidavit that are entitled to be paid by

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the owner under subparagraph (d)2. and shall thereupon be

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discharged of any further responsibility under the direct

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contract, except for any balance that may be due to the

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contractor.

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5. The owner shall retain the final payment due under the

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direct contract that shall not be disbursed until the

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contractor's affidavit under subparagraph (d)1. has been

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furnished to the owner.

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6. When final payment has become due to the contractor and

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the owner fails to withhold as required by subparagraph (d)5.,

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the property improved shall be subject to the full amount of all

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valid liens of which the owner has notice at the time the

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contractor furnishes his or her affidavit.

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Section 3. Subsection (5) of section 713.08, Florida

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Statutes, is amended to read:

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713.08 Claim of lien.--

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(5) The claim of lien may be recorded at any time during

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the progress of the work or thereafter but not later than 4590

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days after the final furnishing of the labor or services or

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materials by the lienor; or, with respect to rental equipment,

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within 4590days after the date that the rental equipment was

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last on the job site available for use; however,~~provided~~if the

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original contractor defaults or the contract is terminated under

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s. 713.07(4), anoclaim for a lien attaching prior to such

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default may not~~shall~~ be recorded more than 45~~after 90~~ days

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after~~from~~the date of such default or 90 days after the final

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performance of labor or services or furnishing of materials,

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whichever occurs first. The time period for recording a claim of

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lien shall be measured from the last day of furnishing labor,

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services, or materials by the lienor and shall not be measured

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by other standards, such as the issuance of a certificate of

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occupancy or the issuance of a certificate of substantial

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completion. The claim of lien shall be recorded in the clerk's

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office. If such real property is situated in two or more

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counties, the claim of lien shall be recorded in the clerk's

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office in each of such counties. The recording of the claim of

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lien shall be constructive notice to all persons of the contents

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and effect of such claim. The validity of the lien and the right

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to record a claim therefor shall not be affected by the

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insolvency, bankruptcy, or death of the owner before the claim

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of lien is recorded.

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Section 4. Paragraphs (b) and (c) of subsection (1) of

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section 713.135, Florida Statutes, are amended to read:

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713.135 Notice of commencement and applicability of

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lien.--

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(1) When any person applies for a building permit, the

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authority issuing such permit shall:

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(b) Provide the applicant and the owner of the real

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property upon which improvements are to be constructed with a

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printed statement stating that the right, title, and interest of

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the person who has contracted for the improvement may be subject

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to attachment under the Construction Lien Law. The Department of

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Business and Professional Regulation shall furnish, for

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distribution, the statement described in this paragraph, and the

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statement must be a summary of the Construction Lien Law and

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must include an explanation of the provisions of the

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Construction Lien Law relating to the recording, and the posting

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of copies, of notices of commencement and a statement

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encouraging the owner to record a notice of commencement and

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post a copy of the notice of commencement in accordance with s.

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713.13. The statement must also contain an explanation of the

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owner's rights if a lienor fails to furnish the owner with a

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notice as provided in s. 713.06(2) and an explanation of the

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owner's rights as provided in s. 713.22. The authority that

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issues the building permit must obtain from the Department of

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Business and Professional Regulation the statement required by

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this paragraph and must mail that statement to the owner.

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However, the failure by the authorities to provide the summary

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does not subject the issuing authority to liability.

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as required by paragraph (b),inform each applicant who is not

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the person whose right, title, and interest is subject to

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attachment that, as a condition to the issuance of a building

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permit, the applicant must promise in good faith that the

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statement will be delivered to the person whose property is

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subject to attachment.

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Section 5. Subsection (3) of section 713.31, Florida

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Statutes, is amended to read:

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713.31 Remedies in case of fraud or collusion.--

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(3) Any person who willfully files a fraudulent lien, as

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defined in this section, commits a felony of the third degree,

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punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

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A state attorney or the statewide prosecutor, upon the filing of

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an indictment or information against a contractor,

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subcontractor, or sub-subcontractor which charges such person

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with a violation of this subsection, shall forward a copy of the

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indictment or information to the Department of Business and

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Professional Regulation.

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Section 6. Section 713.345, Florida Statutes, is amended

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to read:

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713.345 Moneys received for real property improvements;

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penalty for misapplication.--

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(1)(a) A person, firm, or corporation, or an agent,

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officer, or employee thereof, who receives any payment on

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account of improving real property must apply such portion of

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any payment to the payment of all amounts then due and owing for

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services and labor which were performed on, or materials which

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were furnished for, such improvement prior to receipt of the

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payment. This paragraph does not prevent any person from

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withholding any payment, or any part of a payment, in accordance

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with the terms of a contract for services, labor, or materials,

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or pursuant to a bona fide dispute regarding the amount due, if

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any, for such services, labor, or materials.

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(b) Any person who knowingly and intentionally fails to

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comply with paragraph (a) is guilty of misapplication of

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construction funds, punishable as follows:

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1. If the amount of payments misapplied have an aggregate

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value of $100,000 or more, the violator is guilty of a felony of

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the first degree, punishable as provided in s. 775.082, s.

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775.083, or s. 775.084.

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2. If the amount of payments misapplied have an aggregate

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value of $20,000 or more but less than $100,000, the violator is

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guilty of a felony of the second degree, punishable as provided

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in s. 775.082, s. 775.083, or s. 775.084.

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3. If the amount of payments misapplied have an aggregate

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value of less than $20,000, the violator is guilty of a felony

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of the third degree, punishable as provided in s. 775.082, s.

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775.083, or s. 775.084.

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comply with paragraph (a) creates a permissive inference that

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the person executing the affidavit knowingly and intentionally

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misapplied construction funds in violation of paragraph (b).

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(d) A permissive inference that a person knowingly and

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intentionally misapplied construction funds in violation of

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paragraph (b) is created when a valid lien has been recorded

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against the property of a contractor's customer for supplies or

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services ordered by the contractor for the contractor's job; the

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contractor has remitted funds to pay for the supplies or

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services; and the contractor has not had the lien removed from

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the property by 30 days after the date any valid lien has been

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recorded.

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(e) A state attorney or the statewide prosecutor, upon the

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filing of an indictment or information against a contractor,

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subcontractor, or sub-subcontractor which charges such person

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with a violation of paragraph (b), shall forward a copy of the

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indictment or information to the Department of Business and

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Professional Regulation.

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(2) ~~The provisions of~~ This section doesdonot apply to

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mortgage bankers or their agents, servants, or employees for

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their acts in the usual course of the business of lending or

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disbursing mortgage funds.

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Section 7. Present subsections (1) and (2) of section

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713.3471, Florida Statutes, are redesignated as subsections (3)

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and (4), respectively, and new subsections (1) and (2) are added

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to that section, to read:

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713.3471 Lender responsibilities with construction

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loans.--

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(1) A contract between a lender and an owner must contain

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a clause providing the owner with the option of being a required

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endorser on all checks issued pursuant to a construction loan.

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(2) Five business days before requesting a disbursement

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pursuant to a construction loan, the contractor must provide the

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lender and the owner with a list of all subcontractors, sub-

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subcontractors, and suppliers who have a contract with the

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contractor and who have not been paid, in part or in full, as of

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the date the list is provided to the lender and the owner.

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Section 8. Section 713.35, Florida Statutes, is amended to

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read:

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713.35 Making or furnishing false statement.--Any person,

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firm, or corporation who knowingly and intentionally makes or

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furnishes to another person, firm, or corporation, a written

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statement in the form of an affidavit, whether or not under

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oath, containing false information about the payment status of

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subcontractors, sub-subcontractors, or suppliers in connection

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with the improvement of real property in this state, knowing

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that the one to whom it was furnished might rely on it, and the

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one to whom it was furnished will part with draw payments or

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final payment relying on the truth of such statement as an

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inducement to do so is guilty of a felony of the third degree,

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punishable as provided in s. 775.082 or s. 775.083. A state

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attorney or the statewide prosecutor, upon the filing of an

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indictment or information against a contractor, subcontractor,

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or sub-subcontractor which charges such person with a violation

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of this section, shall forward a copy of the indictment or

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information to the Department of Business and Professional

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Regulation.

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Section 9. This act shall take effect July 1, 2003.