Senate Bill sb1016

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    Florida Senate - 2005                                  SB 1016

    By Senator Argenziano





    3-973-05                                            See HB 113

  1                      A bill to be entitled

  2         An act relating to construction contracting;

  3         amending s. 255.05, F.S.; making certain

  4         restrictions in bonds issued for public works

  5         projects unenforceable; amending ss. 489.129

  6         and 489.533, F.S.; increasing an administrative

  7         fine under certain disciplinary proceeding

  8         provisions; amending s. 713.015, F.S.; revising

  9         a direct contract provision requirement;

10         providing that failure to include such

11         provision in such contracts limits certain lien

12         rights under the contract; providing

13         construction relating to validity and

14         enforceability; preserving lien rights of

15         certain persons; amending s. 713.02, F.S.;

16         protecting the rights of certain persons to

17         enforce certain contract, lien, or bond

18         remedies or contractual obligations under

19         certain circumstances; precluding certain

20         defenses; amending s. 713.04, F.S.; revising

21         certain final payment requirements; amending s.

22         713.08, F.S.; requiring a claim of lien to be

23         served on an owner; amending s. 713.13, F.S.;

24         revising provisions authorizing use of certain

25         payment bonds to transfer certain recorded

26         liens; specifying application of certain notice

27         requirements to certain claims; revising time

28         limits for serving certain required notices;

29         amending s. 713.135, F.S.; revising certain

30         notice of commencement and applicability of

31         lien requirements for certain authorities

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1         issuing building permits; providing

 2         construction; amending s. 713.24, F.S.;

 3         preserving certain lien rights when filing a

 4         transfer bond after commencing certain lien

 5         enforcement proceedings; amending s. 713.345,

 6         F.S.; increasing certain criminal penalties for

 7         misapplication of construction funds; amending

 8         s. 713.3471, F.S.; revising a provision

 9         requiring a lender to provide notice to a

10         property owner when making a first loan

11         disbursement on a construction loan secured by

12         residential real property; revising a notice

13         form; providing an effective date.

14  

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

16  

17         Section 1.  Paragraph (a) of subsection (1) of section

18  255.05, Florida Statutes, is amended to read:

19         255.05  Bond of contractor constructing public

20  buildings; form; action by materialmen.--

21         (1)(a)  Any person entering into a formal contract with

22  the state or any county, city, or political subdivision

23  thereof, or other public authority, for the construction of a

24  public building, for the prosecution and completion of a

25  public work, or for repairs upon a public building or public

26  work shall be required, before commencing the work or before

27  recommencing the work after a default or abandonment, to

28  execute, deliver to the public owner, and record in the public

29  records of the county where the improvement is located, a

30  payment and performance bond with a surety insurer authorized

31  to do business in this state as surety. A public entity may

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  not require a contractor to secure a surety bond under this

 2  section from a specific agent or bonding company. The bond

 3  must state on its front page: the name, principal business

 4  address, and phone number of the contractor, the surety, the

 5  owner of the property being improved, and, if different from

 6  the owner, the contracting public entity; the contract number

 7  assigned by the contracting public entity; and a description

 8  of the project sufficient to identify it, such as a legal

 9  description or the street address of the property being

10  improved, and a general description of the improvement. Such

11  bond shall be conditioned upon the contractor's performance of

12  the construction work in the time and manner prescribed in the

13  contract and promptly making payments to all persons defined

14  in s. 713.01 who furnish labor, services, or materials for the

15  prosecution of the work provided for in the contract. Any

16  claimant may apply to the governmental entity having charge of

17  the work for copies of the contract and bond and shall

18  thereupon be furnished with a certified copy of the contract

19  and bond. The claimant shall have a right of action against

20  the contractor and surety for the amount due him or her,

21  including unpaid finance charges due under the claimant's

22  contract. Such action shall not involve the public authority

23  in any expense. When such work is done for the state and the

24  contract is for $100,000 or less, no payment and performance

25  bond shall be required. At the discretion of the official or

26  board awarding such contract when such work is done for any

27  county, city, political subdivision, or public authority, any

28  person entering into such a contract which is for $200,000 or

29  less may be exempted from executing the payment and

30  performance bond. When such work is done for the state, the

31  Secretary of the Department of Management Services may

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  delegate to state agencies the authority to exempt any person

 2  entering into such a contract amounting to more than $100,000

 3  but less than $200,000 from executing the payment and

 4  performance bond. In the event such exemption is granted, the

 5  officer or officials shall not be personally liable to persons

 6  suffering loss because of granting such exemption. The

 7  Department of Management Services shall maintain information

 8  on the number of requests by state agencies for delegation of

 9  authority to waive the bond requirements by agency and project

10  number and whether any request for delegation was denied and

11  the justification for the denial. Any provision in a bond

12  furnished for public work contracts as provided by this

13  subsection restricting the classes or persons protected by

14  such bond or the venue of any proceeding relating to such bond

15  is unenforceable.

16         Section 2.  Subsection (1) of section 489.129, Florida

17  Statutes, is amended to read:

18         489.129  Disciplinary proceedings.--

19         (1)  The board may take any of the following actions

20  against any certificateholder or registrant: place on

21  probation or reprimand the licensee, revoke, suspend, or deny

22  the issuance or renewal of the certificate, registration, or

23  certificate of authority, require financial restitution to a

24  consumer for financial harm directly related to a violation of

25  a provision of this part, impose an administrative fine not to

26  exceed $10,000 $5,000 per violation, require continuing

27  education, or assess costs associated with investigation and

28  prosecution, if the contractor, financially responsible

29  officer, or business organization for which the contractor is

30  a primary qualifying agent, a financially responsible officer,

31  

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  or a secondary qualifying agent responsible under s. 489.1195

 2  is found guilty of any of the following acts:

 3         (a)  Obtaining a certificate, registration, or

 4  certificate of authority by fraud or misrepresentation.

 5         (b)  Being convicted or found guilty of, or entering a

 6  plea of nolo contendere to, regardless of adjudication, a

 7  crime in any jurisdiction which directly relates to the

 8  practice of contracting or the ability to practice

 9  contracting.

10         (c)  Violating any provision of chapter 455.

11         (d)  Performing any act which assists a person or

12  entity in engaging in the prohibited uncertified and

13  unregistered practice of contracting, if the certificateholder

14  or registrant knows or has reasonable grounds to know that the

15  person or entity was uncertified and unregistered.

16         (e)  Knowingly combining or conspiring with an

17  uncertified or unregistered person by allowing his or her

18  certificate, registration, or certificate of authority to be

19  used by the uncertified or unregistered person with intent to

20  evade the provisions of this part. When a certificateholder or

21  registrant allows his or her certificate or registration to be

22  used by one or more business organizations without having any

23  active participation in the operations, management, or control

24  of such business organizations, such act constitutes prima

25  facie evidence of an intent to evade the provisions of this

26  part.

27         (f)  Acting in the capacity of a contractor under any

28  certificate or registration issued hereunder except in the

29  name of the certificateholder or registrant as set forth on

30  the issued certificate or registration, or in accordance with

31  the personnel of the certificateholder or registrant as set

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  forth in the application for the certificate or registration,

 2  or as later changed as provided in this part.

 3         (g)  Committing mismanagement or misconduct in the

 4  practice of contracting that causes financial harm to a

 5  customer. Financial mismanagement or misconduct occurs when:

 6         1.  Valid liens have been recorded against the property

 7  of a contractor's customer for supplies or services ordered by

 8  the contractor for the customer's job; the contractor has

 9  received funds from the customer to pay for the supplies or

10  services; and the contractor has not had the liens removed

11  from the property, by payment or by bond, within 75 days after

12  the date of such liens;

13         2.  The contractor has abandoned a customer's job and

14  the percentage of completion is less than the percentage of

15  the total contract price paid to the contractor as of the time

16  of abandonment, unless the contractor is entitled to retain

17  such funds under the terms of the contract or refunds the

18  excess funds within 30 days after the date the job is

19  abandoned; or

20         3.  The contractor's job has been completed, and it is

21  shown that the customer has had to pay more for the contracted

22  job than the original contract price, as adjusted for

23  subsequent change orders, unless such increase in cost was the

24  result of circumstances beyond the control of the contractor,

25  was the result of circumstances caused by the customer, or was

26  otherwise permitted by the terms of the contract between the

27  contractor and the customer.

28         (h)  Being disciplined by any municipality or county

29  for an act or violation of this part.

30  

31  

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1         (i)  Failing in any material respect to comply with the

 2  provisions of this part or violating a rule or lawful order of

 3  the board.

 4         (j)  Abandoning a construction project in which the

 5  contractor is engaged or under contract as a contractor. A

 6  project may be presumed abandoned after 90 days if the

 7  contractor terminates the project without just cause or

 8  without proper notification to the owner, including the reason

 9  for termination, or fails to perform work without just cause

10  for 90 consecutive days.

11         (k)  Signing a statement with respect to a project or

12  contract falsely indicating that the work is bonded; falsely

13  indicating that payment has been made for all subcontracted

14  work, labor, and materials which results in a financial loss

15  to the owner, purchaser, or contractor; or falsely indicating

16  that workers' compensation and public liability insurance are

17  provided.

18         (l)  Committing fraud or deceit in the practice of

19  contracting.

20         (m)  Committing incompetency or misconduct in the

21  practice of contracting.

22         (n)  Committing gross negligence, repeated negligence,

23  or negligence resulting in a significant danger to life or

24  property.

25         (o)  Proceeding on any job without obtaining applicable

26  local building department permits and inspections.

27         (p)  Intimidating, threatening, coercing, or otherwise

28  discouraging the service of a notice to owner under part I of

29  chapter 713 or a notice to contractor under chapter 255 or

30  part I of chapter 713.

31  

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1         (q)  Failing to satisfy within a reasonable time, the

 2  terms of a civil judgment obtained against the licensee, or

 3  the business organization qualified by the licensee, relating

 4  to the practice of the licensee's profession.

 5  

 6  For the purposes of this subsection, construction is

 7  considered to be commenced when the contract is executed and

 8  the contractor has accepted funds from the customer or lender.

 9  A contractor does not commit a violation of this subsection

10  when the contractor relies on a building code interpretation

11  rendered by a building official or person authorized by s.

12  553.80 to enforce the building code, absent a finding of fraud

13  or deceit in the practice of contracting, or gross negligence,

14  repeated negligence, or negligence resulting in a significant

15  danger to life or property on the part of the building

16  official, in a proceeding under chapter 120.

17         Section 3.  Paragraph (c) of subsection (2) of section

18  489.533, Florida Statutes, is amended to read:

19         489.533  Disciplinary proceedings.--

20         (2)  When the board finds any applicant, contractor, or

21  business organization for which the contractor is a primary

22  qualifying agent or secondary qualifying agent responsible

23  under s. 489.522 guilty of any of the grounds set forth in

24  subsection (1), it may enter an order imposing one or more of

25  the following penalties:

26         (c)  Imposition of an administrative fine not to exceed

27  $10,000 $5,000 for each count or separate offense.

28         Section 4.  Section 713.015, Florida Statutes, is

29  amended to read:

30         713.015  Mandatory provisions for direct

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

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  contractor, related to improvements to real property

 2  consisting of single or multiple family dwellings up to and

 3  including four units, must contain the following provision

 4  printed in capital letters no less than the same size as the

 5  18-point, capitalized, boldfaced type used in the body of the

 6  contract:

 7  

 8  ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS

 9  713.001-713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR

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

11  RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR

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

13  CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS,

14  SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS OR NEGLECTS TO MAKE

15  OTHER LEGALLY REQUIRED PAYMENTS, THE PEOPLE WHO ARE OWED MONEY

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

17  YOUR CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR,

18  YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY. THIS

19  MEANS IF A LIEN IS FILED YOUR PROPERTY COULD BE SOLD AGAINST

20  YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER SERVICES THAT

21  YOUR CONTRACTOR OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY.

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

23  RECOMMENDED THAT WHENEVER A SPECIFIC PROBLEM ARISES, YOU

24  CONSULT AN ATTORNEY.

25  

26  Nothing in this section shall be construed to adversely affect

27  the lien and bond rights of lienors who are not in privity

28  with the owner. This section does not apply when the owner is

29  also a licensed contractor or a construction professional who

30  is in the business of developing property.

31  

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1         Section 5.  Subsection (7) of section 713.02, Florida

 2  Statutes, is amended to read:

 3         713.02  Types of lienors and exemptions.--

 4         (7)  Notwithstanding any other provision of this part,

 5  no lien shall exist in favor of any contractor, subcontractor,

 6  or sub-subcontractor who is unlicensed as provided in s.

 7  489.128 or s. 489.532. Notwithstanding any other provision of

 8  this part, if a contract is rendered unenforceable by an

 9  unlicensed contractor, subcontractor, or sub-subcontractor

10  pursuant to s. 489.128 or s. 489.532, such unenforceability

11  shall not affect the rights of any other persons to enforce

12  contract, lien, or bond remedies and shall not affect the

13  obligations of a surety that has provided a bond on behalf of

14  the unlicensed contractor, subcontractor, or

15  sub-subcontractor. It shall not be a defense to any claim on a

16  bond or indemnity agreement that the principal or indemnitor

17  is unlicensed as provided in s. 489.128 or s. 489.532.

18         Section 6.  Subsection (3) of section 713.04, Florida

19  Statutes, is amended, and subsection (4) is added to that

20  section, to read:

21         713.04  Subdivision improvements.--

22         (3)  The owner shall not pay any money on account of a

23  direct contract before actual furnishing of labor and services

24  or materials for subdivision improvements. Any such The

25  payment not complying with such requirement shall not qualify

26  as a proper payment under this chapter section.

27         (4)  The owner shall make final payment on account of a

28  direct contract only after the contractor complies with s.

29  713.06(3)(d). Any such payment not complying with such

30  requirement shall not qualify as a proper payment under this

31  chapter.

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1         Section 7.  Paragraph (c) of subsection (4) of section

 2  713.08, Florida Statutes, is amended to read:

 3         713.08  Claim of lien.--

 4         (4)

 5         (c)  The claim of lien shall be served on the owner.

 6  Failure to serve any claim of lien in the manner provided in

 7  s. 713.18 before recording or within 15 days after recording

 8  shall render the claim of lien voidable to the extent that the

 9  failure or delay is shown to have been prejudicial to any

10  person entitled to rely on the service.

11         Section 8.  Paragraph (e) of subsection (1) of section

12  713.13, Florida Statutes, is amended to read:

13         713.13  Notice of commencement.--

14         (1)

15         (e)  A copy of any payment bond must be attached at the

16  time of recordation of the notice of commencement. The failure

17  to attach a copy of the bond to the notice of commencement

18  when the notice is recorded negates the exemption provided in

19  s. 713.02(6). However, if such a proper payment bond under s.

20  713.23 exists but was is not attached at the time of

21  recordation of the notice of commencement, the bond may be

22  used to transfer any recorded lien of a lienor except that of

23  the contractor by the recordation of a notice of bond pursuant

24  to s. 713.23(2). The notice requirements of s. 713.23 apply to

25  any claim against the bond; however, the time limits for

26  serving any required notices shall run from the later of the

27  time specified in s. 713.23 or the date the notice of bond is

28  served on the lienor recorded, the bond may be used as a

29  transfer bond pursuant to s. 713.24.

30         Section 9.  Paragraph (b) of subsection (1) and

31  subsection (4) of section 713.135, Florida Statutes, are

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  amended, and paragraph (e) is added to subsection (1) of that

 2  section, to read:

 3         713.135  Notice of commencement and applicability of

 4  lien.--

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

 6  authority issuing such permit shall:

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

 8  property upon which improvements are to be constructed with a

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

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

11  subject to attachment under the Construction Lien Law. The

12  Department of Business and Professional Regulation shall

13  furnish, for distribution, the statement described in this

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

15  Construction Lien Law and must include an explanation of the

16  provisions of the Construction Lien Law relating to the

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

18  commencement and a statement encouraging the owner to record a

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

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

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

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

23  713.06(2) and an explanation of the owner's rights as provided

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

25  must obtain from the Department of Business and Professional

26  Regulation the statement required by this paragraph and must

27  mail, deliver by electronic mail or other electronic format or

28  facsimile, or personally deliver that statement to the owner

29  or, in a case in which the owner is required to personally

30  appear to obtain the permit, provide that statement to any

31  owner making improvements to real property consisting of a

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  single or multiple family dwelling up to and including four

 2  units. However, the failure by the authorities to provide the

 3  summary does not subject the issuing authority to liability.

 4         (e)  Nothing in this subsection shall be construed to

 5  require a notice of commencement to be recorded as a condition

 6  to the issuance of a building permit.

 7         (4)  The several boards of county commissioners,

 8  municipal councils, or other similar bodies may by ordinance

 9  or resolution establish reasonable fees for furnishing copies

10  of the forms and the printed statement provided in paragraphs

11  paragraph (1)(b) and (d) in an amount not to exceed $5 to be

12  paid by the applicant for each permit in addition to all other

13  costs of the permit; however, no forms or statement need be

14  furnished, mailed, or otherwise provided to, nor may such

15  additional fee be obtained from, applicants for permits in

16  those cases in which the owner of a legal or equitable

17  interest (including that of ownership of stock of a corporate

18  landowner) of the real property to be improved is engaged in

19  the business of construction of buildings for sale to others

20  and intends to make the improvements authorized by the permit

21  on the property and upon completion will offer the improved

22  real property for sale.

23         Section 10.  Subsection (4) of section 713.24, Florida

24  Statutes, is amended to read:

25         713.24  Transfer of liens to security.--

26         (4)  If a proceeding to enforce a transferred lien is

27  not commenced within the time specified in s. 713.22 or if it

28  appears that the transferred lien has been satisfied of

29  record, the clerk shall return said security upon request of

30  the person depositing or filing the same, or the insurer. If a

31  proceeding to enforce a lien is commenced in a court of

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1  competent jurisdiction within the time specified in s. 713.22

 2  and, subsequent to such proceeding, the lien is transferred

 3  pursuant to this section or s. 713.13(1)(e), an action

 4  commenced in the same county or circuit court to recover

 5  against the security shall be deemed to have been brought as

 6  of the date of filing the action to enforce the lien, and the

 7  court shall have jurisdiction over the action.

 8         Section 11.  Paragraph (b) of subsection (1) of section

 9  713.345, Florida Statutes, is amended to read:

10         713.345  Moneys received for real property

11  improvements; penalty for misapplication.--

12         (1)

13         (b)  Any person who knowingly and intentionally fails

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

15  construction funds, punishable as follows:

16         1.  If the amount of payments misapplied has an

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

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

19  775.082, s. 775.083, or s. 775.084.

20         2.  If the amount of payments misapplied has an

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

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

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

24  775.084.

25         3.  If the amount of payments misapplied has an

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

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

28  775.082, s. 775.083, or s. 775.084.

29         Section 12.  Subsection (1) of section 713.3471,

30  Florida Statutes, is amended to read:

31  

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    Florida Senate - 2005                                  SB 1016
    3-973-05                                            See HB 113




 1         713.3471  Lender responsibilities with construction

 2  loans.--

 3         (1)  Prior to a lender making the first any loan

 4  disbursement on any construction loan secured by residential

 5  real property directly to the owner, which, for purposes of

 6  this subsection, means only a natural person, or jointly to

 7  the owner and any other party, the lender shall give the

 8  following written notice to the owner borrowers in bold type

 9  larger than any other type on the page:

10  

11                             WARNING!

12  

13         THIS IS THE ONLY LOAN DISBURSEMENT NOTICE THAT

14         YOU WILL RECEIVE. YOUR LENDER IS MAKING A LOAN

15         DISBURSEMENT DIRECTLY TO YOU AS THE OWNER

16         BORROWER, OR JOINTLY TO YOU AND ANOTHER PARTY.

17         TO PROTECT YOURSELF FROM HAVING TO PAY TWICE

18         FOR THE SAME LABOR, SERVICES, OR MATERIALS USED

19         IN MAKING THE IMPROVEMENTS TO YOUR PROPERTY, BE

20         SURE THAT YOU REQUIRE YOUR CONTRACTOR TO GIVE

21         YOU LIEN RELEASES FROM EACH LIENOR WHO HAS SENT

22         YOU A NOTICE TO OWNER EACH TIME YOU MAKE A

23         PAYMENT TO YOUR CONTRACTOR.

24         Section 13.  This act shall take effect October 1,

25  2005.

26  

27  

28  

29  

30  

31  

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