Senate Bill sb2458

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    Florida Senate - 2003                                  SB 2458

    By Senator Argenziano





    3-1397-03

  1                      A bill to be entitled

  2         An act relating to consumer protection in the

  3         construction lien law; creating s. 713.015,

  4         F.S.; providing mandatory contract provisions

  5         for construction contracts; amending s. 713.06,

  6         F.S.; limiting lien amounts of persons not in

  7         privity; providing a contractor's affidavit

  8         form; amending s. 713.08, F.S.; providing a

  9         time limit for recording a claim of lien;

10         amending s. 713.135, F.S.; requiring the lien

11         law summary to contain an explanation of

12         owners' rights; requiring the issuing authority

13         to mail the lien law summary to the owner;

14         amending s. 713.31, F.S.; requiring a

15         prosecuting entity to provide a copy of the

16         charging document to the Department of Business

17         and Professional Regulation; amending s.

18         713.345, F.S.; providing permissive inferences

19         that a person knowingly and intentionally

20         failed to properly apply construction payments;

21         requiring a prosecuting entity to provide a

22         copy of the charging document to the Department

23         of Business and Professional Regulation;

24         amending s. 713.3471, F.S.; requiring contracts

25         between lenders and owners to contain clauses

26         providing owners with the option to be

27         endorsers of checks on construction loans;

28         requiring contractors to provide a list of

29         unpaid entities to the lender and owner before

30         seeking disbursements under construction loans;

31         amending s. 713.35, F.S.; requiring a

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    Florida Senate - 2003                                  SB 2458
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 1         prosecuting entity to provide a copy of the

 2         charging document to the Department of Business

 3         and Professional Regulation; providing an

 4         effective date.

 5  

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

 7  

 8         Section 1.  Section 713.015, Florida Statutes, is

 9  created to read:

10         713.015  Mandatory provisions for direct

11  contracts.--Any direct contract between an owner and a

12  contractor, related to improvements to real property governed

13  by the provisions in this part, must contain the following

14  provision printed in no less than 18-point, capitalized,

15  boldfaced type:

16  

17  ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS

18  713.001-713.37, FLORIDA STATUTES,) THOSE WHO WORK ON YOUR

19  PROPERTY OR PROVIDE MATERIALS AND ARE NOT PAID-IN-FULL HAVE A

20  RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR

21  PROPERTY. THIS CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR

22  CONTRACTOR FAILS TO PAY SUBCONTRACTORS OR MATERIAL SUPPLIERS

23  OR NEGLECTS TO MAKE OTHER LEGALLY REQUIRED PAYMENTS, THE

24  PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR

25  PAYMENT, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN FULL. THIS

26  MEANS IF A LIEN IS FILED AGAINST YOUR PROPERTY, IT COULD BE

27  SOLD AGAINST YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER

28  SERVICES THAT YOUR CONTRACTOR MAY HAVE FAILED TO PAY.

29  FLORIDA'S CONSTRUCTION LIEN LAW IS COMPLEX AND IT IS

30  RECOMMENDED THAT WHENEVER A SPECIFIC PROBLEM ARISES, YOU

31  CONSULT AN ATTORNEY.

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    Florida Senate - 2003                                  SB 2458
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 1         Section 2.  Subsection (1) and paragraph (d) of

 2  subsection (3) of section 713.06, Florida Statutes, are

 3  amended to read:

 4         713.06  Liens of persons not in privity; proper

 5  payments.--

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

 7  privity with the owner, or a subcontractor or

 8  sub-subcontractor who complies with the provisions of this

 9  part and is subject to the limitations thereof, has a lien on

10  the real property improved for any money that is owed to him

11  or her for labor, services, or materials furnished in

12  accordance with his or her contract and with the direct

13  contract and for any unpaid finance charges due under the

14  lienor's contract.  A materialman or laborer, either of whom

15  is not in privity with the owner, or a subcontractor or

16  sub-subcontractor who complies with the provisions of this

17  part and is subject to the limitations thereof, also has a

18  lien on the owner's real property for labor, services, or

19  materials furnished to improve public property if the

20  improvement of the public property is furnished in accordance

21  with his or her contract and with the direct contract. The

22  lien amount of any person who has a lien under this section

23  may not exceed the amount the owner owes the contractor at the

24  time the owner receives the notice of lien. When multiple

25  notices of liens are received by the owner on the same date,

26  the amounts of each lien must be prorated in accordance with

27  subsection (3) and s. 713.07, but the total amount of all

28  liens may not exceed the amount the owner owes the contractor

29  at the time the owner receives the notices of liens. The total

30  amount of all liens allowed under this part for furnishing

31  labor, services, or material covered by any certain direct

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    Florida Senate - 2003                                  SB 2458
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 1  contract must not exceed the amount of the contract price

 2  fixed by the direct contract except as provided in subsection

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

 4  lienors specified in it, as their designations are defined in

 5  s. 713.01.

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

 7  contract as to lienors under this section, in the following

 8  manner:

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

10  becomes due the contractor:

11         1.  The contractor shall give to the owner an affidavit

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

13  her direct contract who have timely served a notice to owner

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

15  the fact be otherwise, showing the name of each such lienor

16  who has not been paid in full and the amount due or to become

17  due each for labor, services, or materials furnished. The

18  affidavit must be in the following form:

19                      CONTRACTOR'S AFFIDAVIT

20  State of Florida

21  County of ....

22  Before me, the undersigned authority, personally appeared

23  (name of affiant), who, after being first duly sworn, deposes

24  and says of his or her personal knowledge the following:

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

26         (name of contractor's business), which does

27         business in the State of Florida, hereinafter

28         referred to as the "Contractor."

29         2.  Contractor, pursuant to a contract dated

30         ...., ...., with (name of owner), hereinafter

31         referred to as the "Owner," has furnished or

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    Florida Senate - 2003                                  SB 2458
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 1         caused to be furnished labor, materials, and

 2         services for the construction of certain

 3         improvements to real property as more

 4         particularly set forth in said contract.

 5         3.  This affidavit is executed by the

 6         Contractor in accordance with section 713.06 of

 7         the Florida Statutes for the purpose of

 8         obtaining payment from the Owner in the amount

 9         of .....

10         4.  All work to be performed under the contract

11         has been fully completed, and all lienors under

12         the direct contract have been paid in full,

13         except the following listed lienors:

14  

15  NAME OF LIENOR                             AMOUNT DUE 

16                                                        

17                                                        

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

19  .....

20                        By            (name of affiant)

21                                     (title of affiant) 

22                         (name of contractor's business)

23  

24        Sworn to and subscribed before me this .... day

25  of ...., ...., by (name of affiant), who is personally

26  known to me or produced .... as identification, and

27  did take an oath.

28                                 (name of notary public)

29                                           Notary Public

30  My Commission Expires:

31  (date of expiration of commission)

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    Florida Senate - 2003                                  SB 2458
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 1  

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

 3  the owner for labor, services, or materials furnished under

 4  the direct contract while in default for not giving the owner

 5  the affidavit; however, the negligent inclusion or omission of

 6  any information in the affidavit which has not prejudiced the

 7  owner does not constitute a default that operates to defeat an

 8  otherwise valid lien. The contractor shall execute the

 9  affidavit and deliver it to the owner at least 5 days before

10  instituting an action as a prerequisite to the institution of

11  any action to enforce his or her lien under this chapter, even

12  if the final payment has not become due because the contract

13  is terminated for a reason other than completion and

14  regardless of whether the contractor has any lienors working

15  under him or her or not.

16         2.  If the contractor's affidavit required in this

17  subsection recites any outstanding bills for labor, services,

18  or materials, the owner may, after giving the contractor at

19  least 10 days' written notice, pay such bills in full direct

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

21  due on a direct contract at the time the affidavit is given is

22  sufficient to pay them and lienors giving notice, and shall

23  deduct the amounts so paid from the balance due the

24  contractor. Lienors listed in said affidavit not giving

25  notice, whose 45-day notice time has not expired, shall be

26  paid in full or pro rata, as appropriate, from any balance

27  then remaining due the contractor; but no lienor whose notice

28  time has expired shall be paid by the owner or by any other

29  person except the person with whom that lienor has a contract.

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

31  all lienors listed in the affidavit and entitled to payment

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    Florida Senate - 2003                                  SB 2458
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 1  from the owner under this part and other lienors giving

 2  notice, the owner shall pay no money to anyone until such time

 3  as the contractor has furnished him or her with the

 4  difference; however, if the contractor fails to furnish the

 5  difference within 10 days from delivery of the affidavit or

 6  notice from the owner to the contractor to furnish the

 7  affidavit, the owner shall determine the amount due each

 8  lienor and shall disburse to them the amounts due from him or

 9  her on a direct contract in accordance with the procedure

10  established by subsection (4).

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

12  contractor's affidavit given under this paragraph in making

13  the final payment, unless there are lienors giving notice who

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

15  notice who are not so listed, the owner may pay such lienors

16  and any persons listed in the affidavit that are entitled to

17  be paid by the owner under subparagraph (d)2. and shall

18  thereupon be discharged of any further responsibility under

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

20  the contractor.

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

22  the direct contract that shall not be disbursed until the

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

24  furnished to the owner.

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

26  and the owner fails to withhold as required by subparagraph

27  (d)5., the property improved shall be subject to the full

28  amount of all valid liens of which the owner has notice at the

29  time the contractor furnishes his or her affidavit.

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

31  Statutes, is amended to read:

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    Florida Senate - 2003                                  SB 2458
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 1         713.08  Claim of lien.--

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

 3  during the progress of the work or thereafter but not later

 4  than 45 90 days after the final furnishing of the labor or

 5  services or materials by the lienor; or, with respect to

 6  rental equipment, within 45 90 days after the date that the

 7  rental equipment was last on the job site available for use;

 8  however, provided if the original contractor defaults or the

 9  contract is terminated under s. 713.07(4), a no claim for a

10  lien attaching prior to such default may not shall be recorded

11  more than 45 90 days after from the date of such default or 90

12  days after the final performance of labor or services or

13  furnishing of materials, whichever occurs first. The time

14  period for recording a claim of lien shall be measured from

15  the last day of furnishing labor, services, or materials by

16  the lienor and shall not be measured by other standards, such

17  as the issuance of a certificate of occupancy or the issuance

18  of a certificate of substantial completion. The claim of lien

19  shall be recorded in the clerk's office. If such real property

20  is situated in two or more counties, the claim of lien shall

21  be recorded in the clerk's office in each of such counties.

22  The recording of the claim of lien shall be constructive

23  notice to all persons of the contents and effect of such

24  claim. The validity of the lien and the right to record a

25  claim therefor shall not be affected by the insolvency,

26  bankruptcy, or death of the owner before the claim of lien is

27  recorded.

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

29  section 713.135, Florida Statutes, are amended to read:

30         713.135  Notice of commencement and applicability of

31  lien.--

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    Florida Senate - 2003                                  SB 2458
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 1         (1)  When any person applies for a building permit, the

 2  authority issuing such permit shall:

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

 4  property upon which improvements are to be constructed with a

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

 6  of the person who has contracted for the improvement may be

 7  subject to attachment under the Construction Lien Law. The

 8  Department of Business and Professional Regulation shall

 9  furnish, for distribution, the statement described in this

10  paragraph, and the statement must be a summary of the

11  Construction Lien Law and must include an explanation of the

12  provisions of the Construction Lien Law relating to the

13  recording, and the posting of copies, of notices of

14  commencement and a statement encouraging the owner to record a

15  notice of commencement and post a copy of the notice of

16  commencement in accordance with s. 713.13. The statement must

17  also contain an explanation of the owner's rights if a lienor

18  fails to furnish the owner with a notice as provided in s.

19  713.06(2) and an explanation of the owner's rights as provided

20  in s. 713.22. The authority that issues the building permit

21  must obtain from the Department of Business and Professional

22  Regulation the statement required by this paragraph and must

23  mail that statement to the owner. However, the failure by the

24  authorities to provide the summary does not subject the

25  issuing authority to liability.

26         (c)  In addition to providing the owner with the

27  statement as required by paragraph (b), inform each applicant

28  who is not the person whose right, title, and interest is

29  subject to attachment that, as a condition to the issuance of

30  a building permit, the applicant must promise in good faith

31  

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 1  that the statement will be delivered to the person whose

 2  property is subject to attachment.

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

 4  Statutes, is amended to read:

 5         713.31  Remedies in case of fraud or collusion.--

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

 7  as defined in this section, commits a felony of the third

 8  degree, punishable as provided in s. 775.082, s. 775.083, or

 9  s. 775.084. A state attorney or the statewide prosecutor, upon

10  the filing of an indictment or information against a

11  contractor, subcontractor, or sub-subcontractor which charges

12  such person with a violation of this subsection, shall forward

13  a copy of the indictment or information to the Department of

14  Business and Professional Regulation.

15         Section 6.  Section 713.345, Florida Statutes, is

16  amended to read:

17         713.345  Moneys received for real property

18  improvements; penalty for misapplication.--

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

20  officer, or employee thereof, who receives any payment on

21  account of improving real property must apply such portion of

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

23  for services and labor which were performed on, or materials

24  which were furnished for, such improvement prior to receipt of

25  the payment.  This paragraph does not prevent any person from

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

27  accordance with the terms of a contract for services, labor,

28  or materials, or pursuant to a bona fide dispute regarding the

29  amount due, if any, for such services, labor, or materials.

30  

31  

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 1         (b)  Any person who knowingly and intentionally fails

 2  to comply with paragraph (a) is guilty of misapplication of

 3  construction funds, punishable as follows:

 4         1.  If the amount of payments misapplied have an

 5  aggregate value of $100,000 or more, the violator is guilty of

 6  a felony of the first degree, punishable as provided in s.

 7  775.082, s. 775.083, or s. 775.084.

 8         2.  If the amount of payments misapplied have an

 9  aggregate value of $20,000 or more but less than $100,000, the

10  violator is guilty of a felony of the second degree,

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

12  775.084.

13         3.  If the amount of payments misapplied have an

14  aggregate value of less than $20,000, the violator is guilty

15  of a felony of the third degree, punishable as provided in s.

16  775.082, s. 775.083, or s. 775.084.

17         (c)  An affidavit executed under s. 713.06 which does

18  not comply with paragraph (a) creates a permissive inference

19  that the person executing the affidavit knowingly and

20  intentionally misapplied construction funds in violation of

21  paragraph (b).

22         (d)  A permissive inference that a person knowingly and

23  intentionally misapplied construction funds in violation of

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

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

26  or services ordered by the contractor for the contractor's

27  job; the contractor has remitted funds to pay for the supplies

28  or services; and the contractor has not had the lien removed

29  from the property by 30 days after the date any valid lien has

30  been recorded.

31  

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

 2  the filing of an indictment or information against a

 3  contractor, subcontractor, or sub-subcontractor which charges

 4  such person with a violation of paragraph (b), shall forward a

 5  copy of the indictment or information to the Department of

 6  Business and Professional Regulation.

 7         (2)  The provisions of This section does do not apply

 8  to mortgage bankers or their agents, servants, or employees

 9  for their acts in the usual course of the business of lending

10  or disbursing mortgage funds.

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

12  713.3471, Florida Statutes, are redesignated as subsections

13  (3) and (4), respectively, and new subsections (1) and (2) are

14  added to that section, to read:

15         713.3471  Lender responsibilities with construction

16  loans.--

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

18  contain a clause providing the owner with the option of being

19  a required endorser on all checks issued pursuant to a

20  construction loan.

21         (2)  Five business days before requesting a

22  disbursement pursuant to a construction loan, the contractor

23  must provide the lender and the owner with a list of all

24  subcontractors, sub-subcontractors, and suppliers who have a

25  contract with the contractor and who have not been paid, in

26  part or in full, as of the date the list is provided to the

27  lender and the owner.

28         Section 8.  Section 713.35, Florida Statutes, is

29  amended to read:

30         713.35  Making or furnishing false statement.--Any

31  person, firm, or corporation who knowingly and intentionally

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    Florida Senate - 2003                                  SB 2458
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 1  makes or furnishes to another person, firm, or corporation, a

 2  written statement in the form of an affidavit, whether or not

 3  under oath, containing false information about the payment

 4  status of subcontractors, sub-subcontractors, or suppliers in

 5  connection with the improvement of real property in this

 6  state, knowing that the one to whom it was furnished might

 7  rely on it, and the one to whom it was furnished will part

 8  with draw payments or final payment relying on the truth of

 9  such statement as an inducement to do so is guilty of a felony

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

11  s. 775.083. A state attorney or the statewide prosecutor, upon

12  the filing of an indictment or information against a

13  contractor, subcontractor, or sub-subcontractor which charges

14  such person with a violation of this section, shall forward a

15  copy of the indictment or information to the Department of

16  Business and Professional Regulation.

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

18  

19            *****************************************

20                          SENATE SUMMARY

21    Provides for consumer protection in the construction lien
      law. Provides for mandatory provisions in construction
22    contracts. Limits the lien amounts of persons who are not
      in privity. Provides a contractor's affidavit form.
23    Provides a time limit for recording a claim of lien.
      Requires the lien law summary to contain an explanation
24    of owners' rights. Requires the issuing authority to mail
      the lien law summary. Requires a prosecuting entity to
25    provide a copy of the charging document to the Department
      of Business and Professional Regulation in various
26    specified circumstances. Provides permissive inferences
      that a person knowingly and intentionally failed to
27    properly apply construction payments. Requires contracts
      between lenders and owners to contain clauses providing
28    owners with the option to be endorsers of checks on
      construction loans. Requires contractors to provide a
29    list of unpaid entities to the lender and owner before
      seeking disbursements under construction loans.
30  

31  

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