HB 1719, Engrossed 1 2003
   
1 A bill to be entitled
2          An act relating to consumer protection in the construction
3    lien law; creating s. 713.015, F.S.; providing mandatory
4    contract provisions for residential construction
5    contracts; amending s. 713.06, F.S.; providing an
6    additional warning statement on a notice to owner;
7    providing a form for a contractor's final payment
8    affidavit; amending s. 713.08, F.S.; providing a warning
9    statement on a claim of lien; amending s. 713.135, F.S.;
10    requiring the lien law summary to contain an explanation
11    of owners' rights; requiring the issuing authority to mail
12    the lien law summary to the owner; amending s. 713.31,
13    F.S.; requiring a prosecuting entity to provide a copy of
14    the charging document to the Department of Business and
15    Professional Regulation; amending s. 713.345, F.S.;
16    providing permissive inferences that a person knowingly
17    and intentionally failed to properly apply construction
18    payments; requiring a prosecuting entity to provide a copy
19    of the charging document to the Department of Business and
20    Professional Regulation; amending s. 713.3471, F.S.;
21    requiring lenders to give certain notices regarding direct
22    loan disbursements to borrowers; amending s. 713.35, F.S.;
23    requiring a prosecuting entity to provide a copy of the
24    charging document to the Department of Business and
25    Professional Regulation; providing effective dates.
26         
27          Be It Enacted by the Legislature of the State of Florida:
28         
29          Section 1. Section 713.015, Florida Statutes, is created
30    to read:
31          713.015 Mandatory provisions for direct contracts.--Any
32    direct contract between an owner and a contractor, related to
33    improvements to real property consisting of single or multiple
34    family dwellings up to and including four units, must contain
35    the following provision printed in no less than 18-point,
36    capitalized, boldfaced type:
37         
38          ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001-
39    713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR
40    PROVIDE MATERIALS AND ARE NOT PAID IN FULL HAVE A RIGHT TO
41    ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS
42    CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A
43    SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS,
44    OR MATERIAL SUPPLIERS OR NEGLECTS TO MAKE OTHER LEGALLY REQUIRED
45    PAYMENTS, THE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR
46    PROPERTY FOR PAYMENT, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN
47    FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY
48    ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF A LIEN IS FILED
49    YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO PAY FOR LABOR,
50    MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A
51    SUBCONTRACTOR MAY HAVE FAILED TO PAY. FLORIDA'S CONSTRUCTION
52    LIEN LAW IS COMPLEX AND IT IS RECOMMENDED THAT WHENEVER A
53    SPECIFIC PROBLEM ARISES, YOU CONSULT AN ATTORNEY.
54          Section 2. Paragraph (c) of subsection (2) of section
55    713.06, Florida Statutes, is amended to read:
56          713.06 Liens of persons not in privity; proper payments.--
57          (2)
58          (c) The notice may be in substantially the following form
59    and must include the information and the warning contained in
60    the following form:
61         
62          WARNING! FLORIDA’S CONSTRUCTION LIEN LAW ALLOWS SOME UNPAID
63    CONTRACTORS, SUBCONTRACTORS, AND MATERIAL SUPPLIERS TO FILE
64    LIENS AGAINST YOUR PROPERTY EVEN IF YOU HAVE MADE PAYMENT
65    IN FULL.
66         
67          WARNING TO OWNER:UNDER FLORIDA LAW, YOUR FAILURE TO MAKE SURE
68    THAT WE ARE PAID MAY RESULT IN A LIEN AGAINST YOUR PROPERTY AND
69    YOUR PAYING TWICE.
70         
71          TO AVOID A LIEN AND PAYING TWICE, YOU MUST OBTAIN A WRITTEN
72    RELEASE FROM US EVERY TIME YOU PAY YOUR CONTRACTOR.
73         
74 NOTICE TO OWNER
75         
76          To ... (Owner's name and address) ...
77         
78          The undersigned hereby informs you that he or she has furnished
79    or is furnishing services or materials as follows:
80          ... (General description of services or materials) ... for the
81    improvement of the real property identified as ... (property
82    description) ... under an order given by_______________.
83         
84          Florida law prescribes the serving of this notice and restricts
85    your right to make payments under your contract in accordance
86    with Section 713.06, Florida Statutes.
87         
88 IMPORTANT INFORMATION FOR
89 YOUR PROTECTION
90         
91          Under Florida's laws, those who work on your property or
92    provide materials and are not paid have a right to enforce their
93    claim for payment against your property. This claim is known as
94    a construction lien.
95          If your contractor fails to pay subcontractors or material
96    suppliers or neglects to make other legally required payments,
97    the people who are owed money may look to your property for
98    payment, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN FULL.
99         
100          PROTECT YOURSELF:
101          --RECOGNIZE that this Notice to Owner may result in a lien
102    against your property unless all those supplying a Notice to
103    Owner have been paid.
104          --LEARN more about the Construction Lien Law, Chapter 713,
105    Part I, Florida Statutes, and the meaning of this notice by
106    contacting an attorney or the Florida Department of Business and
107    Professional Regulation.
108          ... (Lienor's Signature) ...
109          ... (Lienor's Name) ...
110          ... (Lienor's Address) ...
111         
112          Copies to: ... (Those persons listed in Section 713.06(2)(a)
113    and (b), Florida Statutes) ...
114          The form may be combined with a notice to contractor given under
115    s. 255.05 or s. 713.23 and, if so, may be entitled "NOTICE TO
116    OWNER/NOTICE TO CONTRACTOR."
117          Section 3. Effective January 1, 2004, paragraph (d) of
118    subsection (3) of section 713.06, Florida Statutes, is amended
119    to read:
120          713.06 Liens of persons not in privity; proper payments.--
121          (3) The owner may make proper payments on the direct
122    contract as to lienors under this section, in the following
123    manner:
124          (d) When the final payment under a direct contract becomes
125    due the contractor:
126          1. The contractor shall give to the owner a final payment
127    anaffidavit stating, if that be the fact, that all lienors
128    under his or her direct contract who have timely served a notice
129    to owner on the owner and the contractor have been paid in full
130    or, if the fact be otherwise, showing the name of each such
131    lienor who has not been paid in full and the amount due or to
132    become due each for labor, services, or materials furnished. The
133    affidavit must be in substantially the following form:
134         
135 CONTRACTOR’S FINAL PAYMENT AFFIDAVIT
136          State of Florida
137          County of ______
138          Before me, the undersigned authority, personally appeared (name
139    of affiant), who, after being first duly sworn, deposes and says
140    of his or her personal knowledge the following:
141          1. He or she is the (title of affiant), of (name of
142    contractor’s business), which does business in the State of
143    Florida, hereinafter referred to as the “Contractor.”
144          2. Contractor, pursuant to a contract with (name of
145    owner), hereinafter referred to as the “Owner,” has furnished or
146    caused to be furnished labor, materials, and services for the
147    construction of certain improvements to real property as more
148    particularly set forth in said contract.
149          3. This affidavit is executed by the Contractor in
150    accordance with section 713.06 of the Florida Statutes for the
151    purposes of obtaining final payment from the Owner in the amount
152    of $ .
153          4. All work to be performed under the contract has been
154    fully completed, and all lienors under the direct contract have
155    been paid in full, except the following listed lienors:
156          NAME OF LIENOR______________________________AMOUNT DUE
157          Signed, sealed, and delivered this .... day of ...., ....,
158          By______________(name of affiant)
159          _______________(title of affiant)
160          __(name of contractor’s business)
161         
162          Sworn to and subscribed before me this .....day of ....by
163    (name of affiant), who is personally known to me or
164    produced..... as identification, and did take an oath.
165          _______________________________(name of notary public)
166          Notary Public
167          My Commission Expires:
168          (date of expiration of commission)
169         
170          The contractor shall have no lien or right of action against the
171    owner for labor, services, or materials furnished under the
172    direct contract while in default for not giving the owner the
173    affidavit; however, the negligent inclusion or omission of any
174    information in the affidavit which has not prejudiced the owner
175    does not constitute a default that operates to defeat an
176    otherwise valid lien. The contractor shall execute the affidavit
177    and deliver it to the owner at least 5 days before instituting
178    an action as a prerequisite to the institution of any action to
179    enforce his or her lien under this chapter, even if the final
180    payment has not become due because the contract is terminated
181    for a reason other than completion and regardless of whether the
182    contractor has any lienors working under him or her or not.
183          2. If the contractor's affidavit required in this
184    subsection recites any outstanding bills for labor, services, or
185    materials, the owner may, after giving the contractor at least
186    10 days' written notice, pay such bills in full direct to the
187    person or firm to which they are due, if the balance due on a
188    direct contract at the time the affidavit is given is sufficient
189    to pay them and lienors giving notice, and shall deduct the
190    amounts so paid from the balance due the contractor. Lienors
191    listed in said affidavit not giving notice, whose 45-day notice
192    time has not expired, shall be paid in full or pro rata, as
193    appropriate, from any balance then remaining due the contractor;
194    but no lienor whose notice time has expired shall be paid by the
195    owner or by any other person except the person with whom that
196    lienor has a contract.
197          3. If the balance due is not sufficient to pay in full all
198    lienors listed in the affidavit and entitled to payment from the
199    owner under this part and other lienors giving notice, the owner
200    shall pay no money to anyone until such time as the contractor
201    has furnished him or her with the difference; however, if the
202    contractor fails to furnish the difference within 10 days from
203    delivery of the affidavit or notice from the owner to the
204    contractor to furnish the affidavit, the owner shall determine
205    the amount due each lienor and shall disburse to them the
206    amounts due from him or her on a direct contract in accordance
207    with the procedure established by subsection (4).
208          4. The owner shall have the right to rely on the
209    contractor's affidavit given under this paragraph in making the
210    final payment, unless there are lienors giving notice who are
211    not listed in the affidavit. If there are lienors giving notice
212    who are not so listed, the owner may pay such lienors and any
213    persons listed in the affidavit that are entitled to be paid by
214    the owner under subparagraph (d)2. and shall thereupon be
215    discharged of any further responsibility under the direct
216    contract, except for any balance that may be due to the
217    contractor.
218          5. The owner shall retain the final payment due under the
219    direct contract that shall not be disbursed until the
220    contractor's affidavit under subparagraph (d)1. has been
221    furnished to the owner.
222          6. When final payment has become due to the contractor and
223    the owner fails to withhold as required by subparagraph (d)5.,
224    the property improved shall be subject to the full amount of all
225    valid liens of which the owner has notice at the time the
226    contractor furnishes his or her affidavit.
227          Section 4. Subsection (3) of section 713.08, Florida
228    Statutes, is amended to read:
229          713.08 Claim of lien.--
230          (3) The claim of lien shall be sufficient if it is in
231    substantially the following form, and includes the following
232    warning:
233 WARNING!
234          THIS LEGAL DOCUMENT REFLECTS THAT A CONSTRUCTION LIEN HAS
235    BEEN PLACED ON THE REAL PROPERTY LISTED HEREIN. UNLESS THE
236    OWNER OF SUCH PROPERTY TAKES ACTION TO SHORTEN THE TIME
237    PERIOD, THIS LIEN MAY REMAIN VALID FOR ONE YEAR FROM THE
238    DATE OF RECORDING, AND SHALL EXPIRE AND BECOME NULL AND
239    VOID THEREAFTER UNLESS LEGAL PROCEEDINGS HAVE BEEN
240    COMMENCED TO FORECLOSE OR TO DISCHARGE THIS LIEN.
241         
242 CLAIM OF LIEN
243          State of _____
244          County of _____
245          Before me, the undersigned notary public, personally
246    appeared _____, who was duly sworn and says that she or he is
247    (the lienor herein) (the agent of the lienor herein _____),
248    whose address is _____; and that in accordance with a contract
249    with _____, lienor furnished labor, services, or materials
250    consisting of _____ on the following described real property in
251    _____ County, Florida:
252         
253 (Legal description of real property)
254         
255          owned by _____ of a total value of $_____, of which there
256    remains unpaid $_____, and furnished the first of the items on
257    _____, ... (year) ..., and the last of the items on _____, ...
258    (year) ...; and (if the lien is claimed by one not in privity
259    with the owner) that the lienor served her or his notice to
260    owner on _____, ... (year) ..., by _____; and (if required)
261    that the lienor served copies of the notice on the contractor on
262    _____, ... (year) ..., by _____ and on the subcontractor,
263    _____, on _____, ... (year) ..., by _____.
264          ... (Signature) ...
265         
266          Sworn to (or affirmed) and subscribed before me this _____
267    day of _____, ... (year) ..., by ... (name of person making
268    statement) ....
269         
270          ... (Signature of Notary Public - State of Florida) ...
271          ... (Print, Type, or Stamp Commissioned Name of Notary Public)
272    ...
273         
274          Personally Known _____ OR Produced Identification _____
275         
276          Type of Identification Produced_______________
277         
278          However, the negligent inclusion or omission of any information
279    in the claim of lien which has not prejudiced the owner does not
280    constitute a default that operates to defeat an otherwise valid
281    lien.
282          Section 5. Effective January 1, 2004, paragraphs (b) and
283    (c) of subsection (1) of section 713.135, Florida Statutes, are
284    amended to read:
285          713.135 Notice of commencement and applicability of
286    lien.--
287          (1) When any person applies for a building permit, the
288    authority issuing such permit shall:
289          (b) Provide the applicant and the owner of the real
290    property upon which improvements are to be constructed with a
291    printed statement stating that the right, title, and interest of
292    the person who has contracted for the improvement may be subject
293    to attachment under the Construction Lien Law. The Department of
294    Business and Professional Regulation shall furnish, for
295    distribution, the statement described in this paragraph, and the
296    statement must be a summary of the Construction Lien Law and
297    must include an explanation of the provisions of the
298    Construction Lien Law relating to the recording, and the posting
299    of copies, of notices of commencement and a statement
300    encouraging the owner to record a notice of commencement and
301    post a copy of the notice of commencement in accordance with s.
302    713.13. The statement must also contain an explanation of the
303    owner's rights if a lienor fails to furnish the owner with a
304    notice as provided in s. 713.06(2) and an explanation of the
305    owner's rights as provided in s. 713.22. The authority that
306    issues the building permit must obtain from the Department of
307    Business and Professional Regulation the statement required by
308    this paragraph and must mail that statement to any owner making
309    improvements to real property consisting of a single or multiple
310    family dwelling up to and including 4 units.However, the
311    failure by the authorities to provide the summary does not
312    subject the issuing authority to liability.
313          (c) In addition to providing the owner with the statement
314    as required by paragraph (b),inform each applicant who is not
315    the person whose right, title, and interest is subject to
316    attachment that, as a condition to the issuance of a building
317    permit, the applicant must promise in good faith that the
318    statement will be delivered to the person whose property is
319    subject to attachment.
320          Section 6. Effective January 1, 2004, subsection (3) of
321    section 713.31, Florida Statutes, is amended to read:
322          713.31 Remedies in case of fraud or collusion.--
323          (3) Any person who willfully files a fraudulent lien, as
324    defined in this section, commits a felony of the third degree,
325    punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
326    A state attorney or the statewide prosecutor, upon the filing of
327    an indictment or information against a contractor,
328    subcontractor, or sub-subcontractor which charges such person
329    with a violation of this subsection, shall forward a copy of the
330    indictment or information to the Department of Business and
331    Professional Regulation. The Department of Business and
332    Professional Regulation shall promptly open an investigation
333    into the matter, and if probable cause is found, shall furnish a
334    copy of any investigative report to the state attorney or
335    statewide prosecutor who furnished a copy of the indictment or
336    information and to the owner of the property which is the
337    subject of the investigation.
338          Section 7. Section 713.345, Florida Statutes, is amended
339    to read:
340          713.345 Moneys received for real property improvements;
341    penalty for misapplication.--
342          (1)(a) A person, firm, or corporation, or an agent,
343    officer, or employee thereof, who receives any payment on
344    account of improving real property must apply such portion of
345    any payment to the payment of all amounts then due and owing for
346    services and labor which were performed on, or materials which
347    were furnished for, such improvement prior to receipt of the
348    payment. This paragraph does not prevent any person from
349    withholding any payment, or any part of a payment, in accordance
350    with the terms of a contract for services, labor, or materials,
351    or pursuant to a bona fide dispute regarding the amount due, if
352    any, for such services, labor, or materials.
353          (b) Any person who knowingly and intentionally fails to
354    comply with paragraph (a) is guilty of misapplication of
355    construction funds, punishable as follows:
356          1. If the amount of payments misapplied have an aggregate
357    value of $100,000 or more, the violator is guilty of a felony of
358    the first degree, punishable as provided in s. 775.082, s.
359    775.083, or s. 775.084.
360          2. If the amount of payments misapplied have an aggregate
361    value of $20,000 or more but less than $100,000, the violator is
362    guilty of a felony of the second degree, punishable as provided
363    in s. 775.082, s. 775.083, or s. 775.084.
364          3. If the amount of payments misapplied have an aggregate
365    value of less than $20,000, the violator is guilty of a felony
366    of the third degree, punishable as provided in s. 775.082, s.
367    775.083, or s. 775.084.
368          (c) A permissive inference that a person knowingly and
369    intentionally misapplied construction funds in violation of
370    subsection (1) is created when a valid lien has been recorded
371    against the property of an owner for labor, services, or
372    materials; the person who ordered the labor, services, or
373    materials has received sufficient funds to pay for such labor,
374    services, or materials; and the person has failed, for a period
375    of at least 45 days from receipt of the funds, to remit
376    sufficient funds to pay for such labor, services, or materials,
377    except for funds withheld pursuant to paragraph (1)(a).
378          (d) A state attorney or the statewide prosecutor, upon the
379    filing of an indictment or information against a contractor,
380    subcontractor, or sub-subcontractor which charges such person
381    with a violation of paragraph (b), shall forward a copy of the
382    indictment or information to the Department of Business and
383    Professional Regulation. The Department of Business and
384    Professional Regulation shall promptly open an investigation
385    into the matter and, if probable cause is found, shall furnish a
386    copy of any investigative report to the state attorney or
387    statewide prosecutor who furnished a copy of the indictment or
388    information and to the owner of the property which is the
389    subject of the investigation.
390          (2) The provisions of This section doesdonot apply to
391    mortgage bankers or their agents, servants, or employees for
392    their acts in the usual course of the business of lending or
393    disbursing mortgage funds.
394          Section 8. Present subsections (1) and (2) of section
395    713.3471, Florida Statutes, are renumbered as subsections (2)
396    and (3), respectively, and a new subsection (1) is added to said
397    section, to read:
398          713.3471 Lender responsibilities with construction
399    loans.--
400          (1) Prior to a lender making any loan disbursement
401    directly to the owner, or jointly to the owner and any other
402    party, the lender shall give the following written notice to the
403    borrowers in bold type larger than any other type on the page:
404
405 WARNING!
406          YOUR LENDER IS MAKING A LOAN DISBURSEMENT DIRECTLY TO YOU
407    AS THE BORROWER, OR JOINTLY TO YOU AND ANOTHER PARTY. TO
408    PROTECT YOURSELF FROM HAVING TO PAY TWICE FOR THE SAME
409    LABOR, SERVICES, OR MATERIALS USED IN MAKING THE
410    IMPROVEMENTS TO YOUR PROPERTY, BE SURE THAT YOU REQUIRE
411    YOUR CONTRACTOR TO GIVE YOU LIEN RELEASES FROM EACH LIENOR
412    WHO HAS SENT YOU A NOTICE TO OWNER EACH TIME YOU MAKE A
413    PAYMENT TO YOUR CONTRACTOR.
414          Section 9. Effective January 1, 2004, section 713.35,
415    Florida Statutes, is amended to read:
416          713.35 Making or furnishing false statement.--Any person,
417    firm, or corporation who knowingly and intentionally makes or
418    furnishes to another person, firm, or corporation, a written
419    statement in the form of an affidavit, whether or not under
420    oath, containing false information about the payment status of
421    subcontractors, sub-subcontractors, or suppliers in connection
422    with the improvement of real property in this state, knowing
423    that the one to whom it was furnished might rely on it, and the
424    one to whom it was furnished will part with draw payments or
425    final payment relying on the truth of such statement as an
426    inducement to do so is guilty of a felony of the third degree,
427    punishable as provided in s. 775.082 or s. 775.083. A state
428    attorney or the statewide prosecutor, upon the filing of an
429    indictment or information against a contractor, subcontractor,
430    or sub-subcontractor which charges such person with a violation
431    of this section, shall forward a copy of the indictment or
432    information to the Department of Business and Professional
433    Regulation. The Department of Business and Professional
434    Regulation shall promptly open an investigation into the matter
435    and, if probable cause is found, shall furnish a copy of any
436    investigative report to the state attorney or statewide
437    prosecutor who furnished a copy of the indictment or information
438    and to the owner of the property which is the subject of the
439    investigation.
440          Section 10. Except as otherwise provided herein, this act
441    shall take effect October 1, 2003.