1 | The Committee on State Administration recommends the following: |
2 |
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3 | Committee Substitute |
4 | Remove the entire bill and insert: |
5 | A bill to be entitled |
6 | An act relating to construction contracting; amending s. |
7 | 255.05, F.S.; making certain restrictions in bonds issued |
8 | for public works projects unenforceable; deleting obsolete |
9 | language; amending ss. 489.129 and 489.533, F.S.; |
10 | increasing an administrative fine under certain |
11 | disciplinary proceeding provisions; amending s. 713.015, |
12 | F.S.; revising a direct contract provision requirement; |
13 | providing that failure to include such provision in such |
14 | contracts limits certain lien rights under the contract; |
15 | providing construction relating to validity and |
16 | enforceability; preserving lien rights of certain persons; |
17 | amending s. 713.02, F.S.; protecting the rights of certain |
18 | persons to enforce certain contract, lien, or bond |
19 | remedies or contractual obligations under certain |
20 | circumstances; precluding certain defenses; amending s. |
21 | 713.04, F.S.; revising certain final payment requirements; |
22 | amending s. 713.08, F.S.; requiring a claim of lien to be |
23 | served on an owner; amending s. 713.13, F.S.; clarifying |
24 | use of a payment bond as a transfer bond; amending s. |
25 | 713.135, F.S., revising certain notice of commencement and |
26 | applicability of lien requirements for certain authorities |
27 | issuing building permits; amending s. 713.24, F.S.; |
28 | preserving certain lien rights when filing a transfer bond |
29 | after commencing certain lien enforcement proceedings; |
30 | amending s. 713.345, F.S.; increasing certain criminal |
31 | penalties for misapplication of construction funds; |
32 | amending s. 713.3471, F.S.; revising a provision requiring |
33 | a lender to provide notice to a property owner when making |
34 | a first loan disbursement on a construction loan secured |
35 | by residential real property; revising a notice form; |
36 | providing an effective date. |
37 |
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38 | Be It Enacted by the Legislature of the State of Florida: |
39 |
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40 | Section 1. Paragraph (a) of subsection (1) and subsection |
41 | (5) of section 255.05, Florida Statutes, are amended to read: |
42 | 255.05 Bond of contractor constructing public buildings; |
43 | form; action by materialmen.-- |
44 | (1)(a) Any person entering into a formal contract with the |
45 | state or any county, city, or political subdivision thereof, or |
46 | other public authority, for the construction of a public |
47 | building, for the prosecution and completion of a public work, |
48 | or for repairs upon a public building or public work shall be |
49 | required, before commencing the work or before recommencing the |
50 | work after a default or abandonment, to execute, deliver to the |
51 | public owner, and record in the public records of the county |
52 | where the improvement is located, a payment and performance bond |
53 | with a surety insurer authorized to do business in this state as |
54 | surety. A public entity may not require a contractor to secure a |
55 | surety bond under this section from a specific agent or bonding |
56 | company. The bond must state on its front page: the name, |
57 | principal business address, and phone number of the contractor, |
58 | the surety, the owner of the property being improved, and, if |
59 | different from the owner, the contracting public entity; the |
60 | contract number assigned by the contracting public entity; and a |
61 | description of the project sufficient to identify it, such as a |
62 | legal description or the street address of the property being |
63 | improved, and a general description of the improvement. Such |
64 | bond shall be conditioned upon the contractor's performance of |
65 | the construction work in the time and manner prescribed in the |
66 | contract and promptly making payments to all persons defined in |
67 | s. 713.01 who furnish labor, services, or materials for the |
68 | prosecution of the work provided for in the contract. Any |
69 | claimant may apply to the governmental entity having charge of |
70 | the work for copies of the contract and bond and shall thereupon |
71 | be furnished with a certified copy of the contract and bond. The |
72 | claimant shall have a right of action against the contractor and |
73 | surety for the amount due him or her, including unpaid finance |
74 | charges due under the claimant's contract. Such action shall not |
75 | involve the public authority in any expense. When such work is |
76 | done for the state and the contract is for $100,000 or less, no |
77 | payment and performance bond shall be required. At the |
78 | discretion of the official or board awarding such contract when |
79 | such work is done for any county, city, political subdivision, |
80 | or public authority, any person entering into such a contract |
81 | which is for $200,000 or less may be exempted from executing the |
82 | payment and performance bond. When such work is done for the |
83 | state, the Secretary of the Department of Management Services |
84 | may delegate to state agencies the authority to exempt any |
85 | person entering into such a contract amounting to more than |
86 | $100,000 but less than $200,000 from executing the payment and |
87 | performance bond. In the event such exemption is granted, the |
88 | officer or officials shall not be personally liable to persons |
89 | suffering loss because of granting such exemption. The |
90 | Department of Management Services shall maintain information on |
91 | the number of requests by state agencies for delegation of |
92 | authority to waive the bond requirements by agency and project |
93 | number and whether any request for delegation was denied and the |
94 | justification for the denial. Any provision in a bond furnished |
95 | for public work contracts as provided by this subsection |
96 | restricting the classes or persons protected by such bond or the |
97 | venue of any proceeding relating to such bond is unenforceable. |
98 | (5) In addition to the provisions of chapter 47, any |
99 | action authorized under this section may be brought in the |
100 | county in which the public building or public work is being |
101 | constructed or repaired. This subsection shall not apply to an |
102 | action instituted prior to May 17, 1977. |
103 | Section 2. Subsection (1) of section 489.129, Florida |
104 | Statutes, is amended to read: |
105 | 489.129 Disciplinary proceedings.-- |
106 | (1) The board may take any of the following actions |
107 | against any certificateholder or registrant: place on probation |
108 | or reprimand the licensee, revoke, suspend, or deny the issuance |
109 | or renewal of the certificate, registration, or certificate of |
110 | authority, require financial restitution to a consumer for |
111 | financial harm directly related to a violation of a provision of |
112 | this part, impose an administrative fine not to exceed $10,000 |
113 | $5,000 per violation, require continuing education, or assess |
114 | costs associated with investigation and prosecution, if the |
115 | contractor, financially responsible officer, or business |
116 | organization for which the contractor is a primary qualifying |
117 | agent, a financially responsible officer, or a secondary |
118 | qualifying agent responsible under s. 489.1195 is found guilty |
119 | of any of the following acts: |
120 | (a) Obtaining a certificate, registration, or certificate |
121 | of authority by fraud or misrepresentation. |
122 | (b) Being convicted or found guilty of, or entering a plea |
123 | of nolo contendere to, regardless of adjudication, a crime in |
124 | any jurisdiction which directly relates to the practice of |
125 | contracting or the ability to practice contracting. |
126 | (c) Violating any provision of chapter 455. |
127 | (d) Performing any act which assists a person or entity in |
128 | engaging in the prohibited uncertified and unregistered practice |
129 | of contracting, if the certificateholder or registrant knows or |
130 | has reasonable grounds to know that the person or entity was |
131 | uncertified and unregistered. |
132 | (e) Knowingly combining or conspiring with an uncertified |
133 | or unregistered person by allowing his or her certificate, |
134 | registration, or certificate of authority to be used by the |
135 | uncertified or unregistered person with intent to evade the |
136 | provisions of this part. When a certificateholder or registrant |
137 | allows his or her certificate or registration to be used by one |
138 | or more business organizations without having any active |
139 | participation in the operations, management, or control of such |
140 | business organizations, such act constitutes prima facie |
141 | evidence of an intent to evade the provisions of this part. |
142 | (f) Acting in the capacity of a contractor under any |
143 | certificate or registration issued hereunder except in the name |
144 | of the certificateholder or registrant as set forth on the |
145 | issued certificate or registration, or in accordance with the |
146 | personnel of the certificateholder or registrant as set forth in |
147 | the application for the certificate or registration, or as later |
148 | changed as provided in this part. |
149 | (g) Committing mismanagement or misconduct in the practice |
150 | of contracting that causes financial harm to a customer. |
151 | Financial mismanagement or misconduct occurs when: |
152 | 1. Valid liens have been recorded against the property of |
153 | a contractor's customer for supplies or services ordered by the |
154 | contractor for the customer's job; the contractor has received |
155 | funds from the customer to pay for the supplies or services; and |
156 | the contractor has not had the liens removed from the property, |
157 | by payment or by bond, within 75 days after the date of such |
158 | liens; |
159 | 2. The contractor has abandoned a customer's job and the |
160 | percentage of completion is less than the percentage of the |
161 | total contract price paid to the contractor as of the time of |
162 | abandonment, unless the contractor is entitled to retain such |
163 | funds under the terms of the contract or refunds the excess |
164 | funds within 30 days after the date the job is abandoned; or |
165 | 3. The contractor's job has been completed, and it is |
166 | shown that the customer has had to pay more for the contracted |
167 | job than the original contract price, as adjusted for subsequent |
168 | change orders, unless such increase in cost was the result of |
169 | circumstances beyond the control of the contractor, was the |
170 | result of circumstances caused by the customer, or was otherwise |
171 | permitted by the terms of the contract between the contractor |
172 | and the customer. |
173 | (h) Being disciplined by any municipality or county for an |
174 | act or violation of this part. |
175 | (i) Failing in any material respect to comply with the |
176 | provisions of this part or violating a rule or lawful order of |
177 | the board. |
178 | (j) Abandoning a construction project in which the |
179 | contractor is engaged or under contract as a contractor. A |
180 | project may be presumed abandoned after 90 days if the |
181 | contractor terminates the project without just cause or without |
182 | proper notification to the owner, including the reason for |
183 | termination, or fails to perform work without just cause for 90 |
184 | consecutive days. |
185 | (k) Signing a statement with respect to a project or |
186 | contract falsely indicating that the work is bonded; falsely |
187 | indicating that payment has been made for all subcontracted |
188 | work, labor, and materials which results in a financial loss to |
189 | the owner, purchaser, or contractor; or falsely indicating that |
190 | workers' compensation and public liability insurance are |
191 | provided. |
192 | (l) Committing fraud or deceit in the practice of |
193 | contracting. |
194 | (m) Committing incompetency or misconduct in the practice |
195 | of contracting. |
196 | (n) Committing gross negligence, repeated negligence, or |
197 | negligence resulting in a significant danger to life or |
198 | property. |
199 | (o) Proceeding on any job without obtaining applicable |
200 | local building department permits and inspections. |
201 | (p) Intimidating, threatening, coercing, or otherwise |
202 | discouraging the service of a notice to owner under part I of |
203 | chapter 713 or a notice to contractor under chapter 255 or part |
204 | I of chapter 713. |
205 | (q) Failing to satisfy within a reasonable time, the terms |
206 | of a civil judgment obtained against the licensee, or the |
207 | business organization qualified by the licensee, relating to the |
208 | practice of the licensee's profession. |
209 |
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210 | For the purposes of this subsection, construction is considered |
211 | to be commenced when the contract is executed and the contractor |
212 | has accepted funds from the customer or lender. A contractor |
213 | does not commit a violation of this subsection when the |
214 | contractor relies on a building code interpretation rendered by |
215 | a building official or person authorized by s. 553.80 to enforce |
216 | the building code, absent a finding of fraud or deceit in the |
217 | practice of contracting, or gross negligence, repeated |
218 | negligence, or negligence resulting in a significant danger to |
219 | life or property on the part of the building official, in a |
220 | proceeding under chapter 120. |
221 | Section 3. Paragraph (c) of subsection (2) of section |
222 | 489.533, Florida Statutes, is amended to read: |
223 | 489.533 Disciplinary proceedings.-- |
224 | (2) When the board finds any applicant, contractor, or |
225 | business organization for which the contractor is a primary |
226 | qualifying agent or secondary qualifying agent responsible under |
227 | s. 489.522 guilty of any of the grounds set forth in subsection |
228 | (1), it may enter an order imposing one or more of the following |
229 | penalties: |
230 | (c) Imposition of an administrative fine not to exceed |
231 | $10,000 $5,000 for each count or separate offense. |
232 | Section 4. Section 713.015, Florida Statutes, is amended |
233 | to read: |
234 | 713.015 Mandatory provisions for direct contracts.-- |
235 | (1) Any direct contract between an owner and a contractor, |
236 | related to improvements to real property consisting of single or |
237 | multiple family dwellings up to and including four units, must |
238 | contain the following provision printed in capital letters no |
239 | less than the same size 18-point, capitalized, boldfaced type |
240 | used in the body of the contract: |
241 |
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242 | ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001- |
243 | 713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR |
244 | PROVIDE MATERIALS AND ARE NOT PAID IN FULL HAVE A RIGHT TO |
245 | ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS |
246 | CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A |
247 | SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS, |
248 | OR MATERIAL SUPPLIERS OR NEGLECTS TO MAKE OTHER LEGALLY REQUIRED |
249 | PAYMENTS, THE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR |
250 | PROPERTY FOR PAYMENT, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN |
251 | FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY |
252 | ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF A LIEN IS FILED |
253 | YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO PAY FOR LABOR, |
254 | MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A |
255 | SUBCONTRACTOR MAY HAVE FAILED TO PAY. FLORIDA'S CONSTRUCTION |
256 | LIEN LAW IS COMPLEX AND IT IS RECOMMENDED THAT WHENEVER A |
257 | SPECIFIC PROBLEM ARISES, YOU CONSULT AN ATTORNEY. |
258 | (2) The failure of a contractor to include this provision |
259 | in the direct contract shall not invalidate or render the direct |
260 | contract unenforceable. Nothing in this section shall be |
261 | construed to adversely affect the lien and bond rights of |
262 | lienors who are not in privity with the owner. |
263 | Section 5. Subsection (7) of section 713.02, Florida |
264 | Statutes, is amended to read: |
265 | 713.02 Types of lienors and exemptions.-- |
266 | (7) Notwithstanding any other provision of this part, no |
267 | lien shall exist in favor of any contractor, subcontractor, or |
268 | sub-subcontractor who is unlicensed as provided in s. 489.128 or |
269 | s. 489.532. Notwithstanding any other provision of this part, if |
270 | a contract is rendered unenforceable by an unlicensed |
271 | contractor, subcontractor, or sub-subcontractor pursuant to s. |
272 | 489.128 or s. 489.532, such unenforceability shall not affect |
273 | the rights of any other persons to enforce contract, lien, or |
274 | bond remedies and shall not affect the obligations of a surety |
275 | that has provided a bond on behalf of the unlicensed contractor, |
276 | subcontractor, or sub-subcontractor. It shall not be a defense |
277 | to any claim on a bond or indemnity agreement that the principal |
278 | or indemnitor is unlicensed as provided in s. 489.128 or s. |
279 | 489.532. |
280 | Section 6. Subsection (3) of section 713.04, Florida |
281 | Statutes, is amended, and subsection (4) is added to said |
282 | section, to read: |
283 | 713.04 Subdivision improvements.-- |
284 | (3) The owner shall not pay any money on account of a |
285 | direct contract before actual furnishing of labor and services |
286 | or materials for subdivision improvements. Any such The payment |
287 | not complying with such requirement shall not qualify as a |
288 | proper payment under this chapter section. |
289 | (4) The owner shall make final payment on account of a |
290 | direct contract only after the contractor complies with s. |
291 | 713.06(3)(d). Any such payment not complying with such |
292 | requirement shall not qualify as a proper payment under this |
293 | chapter. |
294 | Section 7. Paragraph (c) of subsection (4) of section |
295 | 713.08, Florida Statutes, is amended to read: |
296 | 713.08 Claim of lien.-- |
297 | (4) |
298 | (c) The claim of lien shall be served on the owner. |
299 | Failure to serve any claim of lien in the manner provided in s. |
300 | 713.18 before recording or within 15 days after recording shall |
301 | render the claim of lien voidable to the extent that the failure |
302 | or delay is shown to have been prejudicial to any person |
303 | entitled to rely on the service. |
304 | Section 8. Paragraph (e) of subsection (1) of section |
305 | 713.13, Florida Statutes, is amended to read: |
306 | 713.13 Notice of commencement.-- |
307 | (1) |
308 | (e) A copy of any bond must be attached at the time of |
309 | recordation of the notice of commencement. The failure to attach |
310 | a copy of the bond to the notice of commencement when the notice |
311 | is recorded negates the exemption provided in s. 713.02(6). |
312 | However, if such a bond exists but is not recorded, the bond may |
313 | be used as a transfer bond pursuant to s. 713.24. The bond shall |
314 | be deemed a transfer bond under s. 713.24 for all purposes at |
315 | the time of recordation of the notice of bond and the clerk's |
316 | mailing as provided in s. 713.23(2). At the time of recordation |
317 | of the notice of bond, any notice requirements not contained in |
318 | s. 713.24 shall be deemed deleted from the bond. |
319 | Section 9. Paragraph (b) of subsection (1) and subsection |
320 | (4) of section 713.135, Florida Statutes, are amended, and |
321 | paragraph (e) is added to subsection (1) of said section, to |
322 | read: |
323 | 713.135 Notice of commencement and applicability of |
324 | lien.-- |
325 | (1) When any person applies for a building permit, the |
326 | authority issuing such permit shall: |
327 | (b) Provide the applicant and the owner of the real |
328 | property upon which improvements are to be constructed with a |
329 | printed statement stating that the right, title, and interest of |
330 | the person who has contracted for the improvement may be subject |
331 | to attachment under the Construction Lien Law. The Department of |
332 | Business and Professional Regulation shall furnish, for |
333 | distribution, the statement described in this paragraph, and the |
334 | statement must be a summary of the Construction Lien Law and |
335 | must include an explanation of the provisions of the |
336 | Construction Lien Law relating to the recording, and the posting |
337 | of copies, of notices of commencement and a statement |
338 | encouraging the owner to record a notice of commencement and |
339 | post a copy of the notice of commencement in accordance with s. |
340 | 713.13. The statement must also contain an explanation of the |
341 | owner's rights if a lienor fails to furnish the owner with a |
342 | notice as provided in s. 713.06(2) and an explanation of the |
343 | owner's rights as provided in s. 713.22. The authority that |
344 | issues the building permit must obtain from the Department of |
345 | Business and Professional Regulation the statement required by |
346 | this paragraph and must mail, deliver by electronic mail or |
347 | other electronic format or facsimile, or personally deliver that |
348 | statement to the owner or, in the case in which the owner is |
349 | required to personally appear to obtain the permit, provide that |
350 | statement to any owner making improvements to real property |
351 | consisting of a single or multiple family dwelling up to and |
352 | including four units. However, the failure by the authorities to |
353 | provide the summary does not subject the issuing authority to |
354 | liability. |
355 | (e) Nothing in this subsection shall be construed to |
356 | require a notice of commencement to be recorded as a condition |
357 | to the issuance of a building permit. |
358 | (4) The several boards of county commissioners, municipal |
359 | councils, or other similar bodies may by ordinance or resolution |
360 | establish reasonable fees for furnishing copies of the forms and |
361 | the printed statement provided in paragraphs (1)(b) and |
362 | paragraph (1)(d) in an amount not to exceed $5 to be paid by the |
363 | applicant for each permit in addition to all other costs of the |
364 | permit; however, no forms or statement need be furnished, |
365 | mailed, or otherwise provided to, nor may such additional fee be |
366 | obtained from, applicants for permits in those cases in which |
367 | the owner of a legal or equitable interest (including that of |
368 | ownership of stock of a corporate landowner) of the real |
369 | property to be improved is engaged in the business of |
370 | construction of buildings for sale to others and intends to make |
371 | the improvements authorized by the permit on the property and |
372 | upon completion will offer the improved real property for sale. |
373 | Section 10. Subsection (4) of section 713.24, Florida |
374 | Statutes, is amended to read: |
375 | 713.24 Transfer of liens to security.-- |
376 | (4) If a proceeding to enforce a transferred lien is not |
377 | commenced within the time specified in s. 713.22 or if it |
378 | appears that the transferred lien has been satisfied of record, |
379 | the clerk shall return said security upon request of the person |
380 | depositing or filing the same, or the insurer. If a proceeding |
381 | to enforce a lien is commenced in a court of competent |
382 | jurisdiction within the time specified in s. 713.22 and, |
383 | subsequent to the expiration of the proceeding, the lien is |
384 | transferred pursuant to s. 713.24, an action commenced to |
385 | recover against the security shall be deemed to have been |
386 | brought as of the date of filing the action to enforce the lien. |
387 | Section 11. Paragraph (b) of subsection (1) of section |
388 | 713.345, Florida Statutes, is amended to read: |
389 | 713.345 Moneys received for real property improvements; |
390 | penalty for misapplication.-- |
391 | (1) |
392 | (b) Any person who knowingly and intentionally fails to |
393 | comply with paragraph (a) is guilty of misapplication of |
394 | construction funds, punishable as follows: |
395 | 1. If the amount of payments misapplied has an aggregate |
396 | value of $100,000 or more, the violator is guilty of a felony of |
397 | the first degree, punishable as provided in s. 775.082, s. |
398 | 775.083, or s. 775.084. |
399 | 2. If the amount of payments misapplied has an aggregate |
400 | value of $20,000 or more but less than $100,000, the violator is |
401 | guilty of a felony of the second degree, punishable as provided |
402 | in s. 775.082, s. 775.083, or s. 775.084. |
403 | 3. If the amount of payments misapplied has an aggregate |
404 | value of less than $20,000, the violator is guilty of a felony |
405 | of the third degree, punishable as provided in s. 775.082, s. |
406 | 775.083, or s. 775.084. |
407 | Section 12. Subsection (1) of section 713.3471, Florida |
408 | Statutes, is amended to read: |
409 | 713.3471 Lender responsibilities with construction |
410 | loans.-- |
411 | (1) Prior to a lender making the first any loan |
412 | disbursement on any construction loan secured by residential |
413 | real property directly to the owner which, for purposes of this |
414 | subsection, means only a natural person, or jointly to the owner |
415 | and any other party, the lender shall give the following written |
416 | notice to the owner borrowers in bold type larger than any other |
417 | type on the page: |
418 |
|
419 | WARNING! |
420 |
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421 | THIS IS THE ONLY LOAN DISBURSEMENT NOTICE THAT YOU WILL |
422 | RECEIVE. YOUR LENDER IS MAKING A LOAN DISBURSEMENT DIRECTLY TO |
423 | YOU AS THE OWNER BORROWER, OR JOINTLY TO YOU AND ANOTHER PARTY. |
424 | TO PROTECT YOURSELF FROM HAVING TO PAY TWICE FOR THE SAME LABOR, |
425 | SERVICES, OR MATERIALS USED IN MAKING THE IMPROVEMENTS TO YOUR |
426 | PROPERTY, BE SURE THAT YOU REQUIRE YOUR CONTRACTOR TO GIVE YOU |
427 | LIEN RELEASES FROM EACH LIENOR WHO HAS SENT YOU A NOTICE TO |
428 | OWNER EACH TIME YOU MAKE A PAYMENT TO YOUR CONTRACTOR. |
429 | Section 13. This act shall take effect October 1, 2004. |