HB 113

1	A bill to be entitled
2	An act relating to construction contracting; amending s.
3	255.05, F.S.; making certain restrictions in bonds issued
4	for public works projects unenforceable; amending s.
5	489.118, F.S.; postponing a date for submitting an
6	application for a certificate as a registered contractor;
7	amending ss. 489.129 and 489.533, F.S.; increasing an
8	administrative fine under certain disciplinary proceeding
9	provisions; amending s. 713.015, F.S.; revising form
10	criteria for a direct contract provision; preserving lien
11	and bond rights of certain persons; specifying
12	nonapplication to certain contractors or construction
13	professionals; amending s. 713.02, F.S.; protecting the
14	rights of certain persons to enforce certain contract,
15	lien, or bond remedies or contractual obligations under
16	certain circumstances; precluding certain defenses;
17	amending s. 713.04, F.S.; revising certain final payment
18	requirements; amending s. 713.08, F.S.; requiring a claim
19	of lien to be served on an owner; amending s. 713.13,
20	F.S.; revising provisions authorizing use of certain
21	payment bonds to transfer certain recorded liens;
22	specifying application of certain notice requirements to
23	certain claims; revising time limits for serving certain
24	required notices; amending s. 713.23, F.S.; clarifying
25	provisions relating to payment bonds;  amending s. 713.24,
26	F.S.; providing construction to preserve county court
27	jurisdiction over certain transfer bond claims for
28	nonpayment; preserving certain lien rights when filing a
29	transfer bond after commencing certain lien enforcement
30	proceedings; amending s. 713.345, F.S.; revising criteria
31	for certain criminal penalties for misapplication of
32	construction funds; amending s. 713.3471, F.S.; revising a
33	provision requiring a lender to provide notice to a
34	property owner when making a disbursement on a
35	construction loan secured by residential property;
36	specifying nonapplication; providing an effective date.
37
38	Be It Enacted by the Legislature of the State of Florida:
39
40	Section 1.  Paragraph (a) of subsection (1) of section
41	255.05, Florida Statutes, is 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 payment bond
95	furnished for public work contracts as provided by this
96	subsection which restricts the classes of persons as defined in
97	s. 713.01 protected by the bond or the venue of any proceeding
98	relating to such bond is unenforceable.
99	Section 2.  Section 489.118, Florida Statutes, is amended
100	to read:
101	489.118  Certification of registered contractors;
102	grandfathering provisions.--The board shall, upon receipt of a
103	completed application and appropriate fee, issue a certificate
104	in the appropriate category to any contractor registered under
105	this part who makes application to the board and can show that
106	he or she meets each of the following requirements:
107	(1)  Currently holds a valid registered local license in
108	one of the contractor categories defined in s. 489.105(3)(a)-
109	(p).
110	(2)  Has, for that category, passed a written examination
111	that the board finds to be substantially similar to the
112	examination required to be licensed as a certified contractor
113	under this part. For purposes of this subsection, a written,
114	proctored examination such as that produced by the National
115	Assessment Institute, Block and Associates, NAI/Block, Experior
116	Assessments, Professional Testing, Inc., or Assessment Systems,
117	Inc., shall be considered to be substantially similar to the
118	examination required to be licensed as a certified contractor.
119	The board may not impose or make any requirements regarding the
120	nature or content of these cited examinations.
121	(3)  Has at least 5 years of experience as a contractor in
122	that contracting category, or as an inspector or building
123	administrator with oversight over that category, at the time of
124	application. For contractors, only time periods in which the
125	contractor license is active and the contractor is not on
126	probation shall count toward the 5 years required by this
127	subsection.
128	(4)  Has not had his or her contractor's license revoked at
129	any time, had his or her contractor's license suspended within
130	the last 5 years, or been assessed a fine in excess of $500
131	within the last 5 years.
132	(5)  Is in compliance with the insurance and financial
133	responsibility requirements in s. 489.115(5).
134
135	Applicants wishing to obtain a certificate pursuant to this
136	section must make application by November 1, 2005 2004.
137	Section 3.  Subsection (1) of section 489.129, Florida
138	Statutes, is amended to read:
139	489.129  Disciplinary proceedings.--
140	(1)  The board may take any of the following actions
141	against any certificateholder or registrant: place on probation
142	or reprimand the licensee, revoke, suspend, or deny the issuance
143	or renewal of the certificate, registration, or certificate of
144	authority, require financial restitution to a consumer for
145	financial harm directly related to a violation of a provision of
146	this part, impose an administrative fine not to exceed $10,000
147	$5,000 per violation, require continuing education, or assess
148	costs associated with investigation and prosecution, if the
149	contractor, financially responsible officer, or business
150	organization for which the contractor is a primary qualifying
151	agent, a financially responsible officer, or a secondary
152	qualifying agent responsible under s. 489.1195 is found guilty
153	of any of the following acts:
154	(a)  Obtaining a certificate, registration, or certificate
155	of authority by fraud or misrepresentation.
156	(b)  Being convicted or found guilty of, or entering a plea
157	of nolo contendere to, regardless of adjudication, a crime in
158	any jurisdiction which directly relates to the practice of
159	contracting or the ability to practice contracting.
160	(c)  Violating any provision of chapter 455.
161	(d)  Performing any act which assists a person or entity in
162	engaging in the prohibited uncertified and unregistered practice
163	of contracting, if the certificateholder or registrant knows or
164	has reasonable grounds to know that the person or entity was
165	uncertified and unregistered.
166	(e)  Knowingly combining or conspiring with an uncertified
167	or unregistered person by allowing his or her certificate,
168	registration, or certificate of authority to be used by the
169	uncertified or unregistered person with intent to evade the
170	provisions of this part. When a certificateholder or registrant
171	allows his or her certificate or registration to be used by one
172	or more business organizations without having any active
173	participation in the operations, management, or control of such
174	business organizations, such act constitutes prima facie
175	evidence of an intent to evade the provisions of this part.
176	(f)  Acting in the capacity of a contractor under any
177	certificate or registration issued hereunder except in the name
178	of the certificateholder or registrant as set forth on the
179	issued certificate or registration, or in accordance with the
180	personnel of the certificateholder or registrant as set forth in
181	the application for the certificate or registration, or as later
182	changed as provided in this part.
183	(g)  Committing mismanagement or misconduct in the practice
184	of contracting that causes financial harm to a customer.
185	Financial mismanagement or misconduct occurs when:
186	1.  Valid liens have been recorded against the property of
187	a contractor's customer for supplies or services ordered by the
188	contractor for the customer's job; the contractor has received
189	funds from the customer to pay for the supplies or services; and
190	the contractor has not had the liens removed from the property,
191	by payment or by bond, within 75 days after the date of such
192	liens;
193	2.  The contractor has abandoned a customer's job and the
194	percentage of completion is less than the percentage of the
195	total contract price paid to the contractor as of the time of
196	abandonment, unless the contractor is entitled to retain such
197	funds under the terms of the contract or refunds the excess
198	funds within 30 days after the date the job is abandoned; or
199	3.  The contractor's job has been completed, and it is
200	shown that the customer has had to pay more for the contracted
201	job than the original contract price, as adjusted for subsequent
202	change orders, unless such increase in cost was the result of
203	circumstances beyond the control of the contractor, was the
204	result of circumstances caused by the customer, or was otherwise
205	permitted by the terms of the contract between the contractor
206	and the customer.
207	(h)  Being disciplined by any municipality or county for an
208	act or violation of this part.
209	(i)  Failing in any material respect to comply with the
210	provisions of this part or violating a rule or lawful order of
211	the board.
212	(j)  Abandoning a construction project in which the
213	contractor is engaged or under contract as a contractor. A
214	project may be presumed abandoned after 90 days if the
215	contractor terminates the project without just cause or without
216	proper notification to the owner, including the reason for
217	termination, or fails to perform work without just cause for 90
218	consecutive days.
219	(k)  Signing a statement with respect to a project or
220	contract falsely indicating that the work is bonded; falsely
221	indicating that payment has been made for all subcontracted
222	work, labor, and materials which results in a financial loss to
223	the owner, purchaser, or contractor; or falsely indicating that
224	workers' compensation and public liability insurance are
225	provided.
226	(l)  Committing fraud or deceit in the practice of
227	contracting.
228	(m)  Committing incompetency or misconduct in the practice
229	of contracting.
230	(n)  Committing gross negligence, repeated negligence, or
231	negligence resulting in a significant danger to life or
232	property.
233	(o)  Proceeding on any job without obtaining applicable
234	local building department permits and inspections.
235	(p)  Intimidating, threatening, coercing, or otherwise
236	discouraging the service of a notice to owner under part I of
237	chapter 713 or a notice to contractor under chapter 255 or part
238	I of chapter 713.
239	(q)  Failing to satisfy within a reasonable time, the terms
240	of a civil judgment obtained against the licensee, or the
241	business organization qualified by the licensee, relating to the
242	practice of the licensee's profession.
243
244	For the purposes of this subsection, construction is considered
245	to be commenced when the contract is executed and the contractor
246	has accepted funds from the customer or lender. A contractor
247	does not commit a violation of this subsection when the
248	contractor relies on a building code interpretation rendered by
249	a building official or person authorized by s. 553.80 to enforce
250	the building code, absent a finding of fraud or deceit in the
251	practice of contracting, or gross negligence, repeated
252	negligence, or negligence resulting in a significant danger to
253	life or property on the part of the building official, in a
254	proceeding under chapter 120.
255	Section 4.  Paragraph (c) of subsection (2) of section
256	489.533, Florida Statutes, is amended to read:
257	489.533  Disciplinary proceedings.--
258	(2)  When the board finds any applicant, contractor, or
259	business organization for which the contractor is a primary
260	qualifying agent or secondary qualifying agent responsible under
261	s. 489.522 guilty of any of the grounds set forth in subsection
262	(1), it may enter an order imposing one or more of the following
263	penalties:
264	(c)  Imposition of an administrative fine not to exceed
265	$10,000 $5,000 for each count or separate offense.
266	Section 5.  Section 713.015, Florida Statutes, is amended
267	to read:
268	713.015  Mandatory provisions for direct contracts.--Any
269	direct contract between an owner and a contractor, related to
270	improvements to real property consisting of single or multiple
271	family dwellings up to and including four units, must contain
272	the following provision printed in no less than 14-point 18-
273	point, capitalized, boldfaced type on the front page of the
274	contract:
275
276	ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001-
277	713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR
278	PROVIDE MATERIALS AND ARE NOT PAID IN FULL HAVE A RIGHT TO
279	ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS
280	CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A
281	SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS,
282	OR MATERIAL SUPPLIERS OR NEGLECTS TO MAKE OTHER LEGALLY REQUIRED
283	PAYMENTS, THE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR
284	PROPERTY FOR PAYMENT, EVEN IF YOU HAVE ALREADY PAID YOUR
285	CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR
286	CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF
287	A LIEN IS FILED YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO
288	PAY FOR LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR
289	OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY. TO PROTECT YOURSELF,
290	YOU SHOULD STIPULATE IN THIS CONTRACT THAT BEFORE ANY PAYMENT IS
291	MADE, YOUR CONTRACTOR IS REQUIRED TO PROVIDE YOU WITH A WRITTEN
292	RELEASE OF LIEN FROM ANY PERSON OR COMPANY THAT HAS PROVIDED TO
293	YOU A "NOTICE TO OWNER." FLORIDA'S CONSTRUCTION LIEN LAW IS
294	COMPLEX AND IT IS RECOMMENDED THAT WHENEVER A SPECIFIC PROBLEM
295	ARISES, YOU CONSULT AN ATTORNEY.
296
297	Nothing in this section shall be construed to adversely affect
298	the lien and bond rights of lienors who are not in privity with
299	the owner. This section does not apply when the owner is a
300	contractor licensed under chapter 489 or is a person who created
301	parcels or offers parcels for sale or lease in the ordinary
302	course of business.
303	Section 6.  Subsection (7) of section 713.02, Florida
304	Statutes, is amended to read:
305	713.02  Types of lienors and exemptions.--
306	(7)  Notwithstanding any other provision of this part, no
307	lien shall exist in favor of any contractor, subcontractor, or
308	sub-subcontractor who is unlicensed as provided in s. 489.128 or
309	s. 489.532. Notwithstanding any other provision of this part, if
310	a contract is rendered unenforceable by an unlicensed
311	contractor, subcontractor, or sub-subcontractor pursuant to s.
312	489.128 or s. 489.532, such unenforceability shall not affect
313	the rights of any other persons to enforce contract, lien, or
314	bond remedies and shall not affect the obligations of a surety
315	that has provided a bond on behalf of the unlicensed contractor,
316	subcontractor, or sub-subcontractor. It shall not be a defense
317	to any claim on a bond or indemnity agreement that the principal
318	or indemnitor is unlicensed as provided in s. 489.128 or s.
319	489.532.
320	Section 7.  Subsection (3) of section 713.04, Florida
321	Statutes, is amended, and subsection (4) is added to said
322	section, to read:
323	713.04  Subdivision improvements.--
324	(3)  The owner shall not pay any money on account of a
325	direct contract before actual furnishing of labor and services
326	or materials for subdivision improvements. Any The payment not
327	complying with such requirement shall not qualify as a proper
328	payment under this chapter section.
329	(4)  The owner shall make final payment on account of a
330	direct contract only after the contractor complies with s.
331	713.06(3)(d). Any payment not complying with such requirement
332	shall not qualify as a proper payment under this chapter.
333	Section 8.  Paragraph (c) of subsection (4) of section
334	713.08, Florida Statutes, is amended to read:
335	713.08  Claim of lien.--
336	(4)
337	(c)  The claim of lien shall be served on the owner.
338	Failure to serve any claim of lien in the manner provided in s.
339	713.18 before recording or within 15 days after recording shall
340	render the claim of lien voidable to the extent that the failure
341	or delay is shown to have been prejudicial to any person
342	entitled to rely on the service.
343	Section 9.  Paragraph (e) of subsection (1) of section
344	713.13, Florida Statutes, is amended to read:
345	713.13  Notice of commencement.--
346	(1)
347	(e)  A copy of any payment bond must be attached at the
348	time of recordation of the notice of commencement. The failure
349	to attach a copy of the bond to the notice of commencement when
350	the notice is recorded negates the exemption provided in s.
351	713.02(6). However, if such a payment bond under s. 713.23
352	exists but was is not attached at the time of recordation of the
353	notice of commencement, the bond may be used to transfer any
354	recorded lien of a lienor except that of the contractor by the
355	recordation and service of a notice of bond pursuant to s.
356	713.23(2). The notice requirements of s. 713.23 apply to any
357	claim against the bond; however, the time limits for serving any
358	required notices shall begin running from the later of the time
359	specified in s. 713.23 or the date the notice of bond is served
360	on the lienor recorded, the bond may be used as a transfer bond
361	pursuant to s. 713.24.
362	Section 10.  Paragraph (e) of subsection (1) of section
363	713.23, Florida Statutes, is amended to read:
364	713.23  Payment bond.--
365	(1)
366	(e)  No action for the labor or materials or supplies may
367	be instituted or prosecuted against the contractor or surety
368	unless both notices have been given. No action shall be
369	instituted or prosecuted against the contractor or against the
370	surety on the bond under this section after 1 year from the
371	performance of the labor or completion of delivery of the
372	materials and supplies. The time period for bringing an action
373	against the contractor or surety on the bond shall be measured
374	from the last day of furnishing labor, services, or materials by
375	the lienor and shall not be measured by other standards, such as
376	the issuance of a certificate of occupancy or the issuance of a
377	certificate of substantial completion. A contractor or the
378	contractor's agent or attorney may elect to shorten the
379	prescribed time within which an action to enforce any claim
380	against a payment bond provided under pursuant to this section
381	or s. 713.245 may be commenced at any time after a notice of
382	nonpayment, if required, has been served for the claim by
383	recording in the clerk's office a notice in substantially the
384	following form:
385
386	NOTICE OF CONTEST OF CLAIM
387	AGAINST PAYMENT BOND
388
389	To:    (Name and address of lienor)
390	You are notified that the undersigned contests your notice
391	of nonpayment, dated _____, _____, and served on the undersigned
392	on _____, _____, and that the time within which you may file
393	suit to enforce your claim is limited to 60 days from the date
394	of service of this notice.
395
396	DATED on _____, _____.
397
398	Signed:   (Contractor or Attorney)
399
400
401	The claim of any lienor upon whom the such notice is served and
402	who fails to institute a suit to enforce his or her claim
403	against the payment bond within 60 days after service of the
404	such notice shall be extinguished automatically. The clerk shall
405	mail a copy of the notice of contest to the lienor at the
406	address shown in the notice of nonpayment or most recent
407	amendment thereto and shall certify to such service on the face
408	of the such notice and record the notice. Service is complete
409	upon mailing.
410	Section 11.  Subsections (3) and (4) of section 713.24,
411	Florida Statutes, are amended to read:
412	713.24  Transfer of liens to security.--
413	(3)  Any party having an interest in such security or the
414	property from which the lien was transferred may at any time,
415	and any number of times, file a complaint in chancery in the
416	circuit court of the county where such security is deposited, or
417	file a motion in a pending action to enforce a lien, for an
418	order to require additional security, reduction of security,
419	change or substitution of sureties, payment of discharge
420	thereof, or any other matter affecting said security. If the
421	court finds that the amount of the deposit or bond in excess of
422	the amount claimed in the claim of lien is insufficient to pay
423	the lienor's attorney's fees and court costs incurred in the
424	action to enforce the lien, the court must increase the amount
425	of the cash deposit or lien transfer bond. Nothing in this
426	section shall be construed to vest exclusive jurisdiction in the
427	circuit courts over transfer bond claims for nonpayment of an
428	amount within the monetary jurisdiction of the county courts.
429	(4)  If a proceeding to enforce a transferred lien is not
430	commenced within the time specified in s. 713.22 or if it
431	appears that the transferred lien has been satisfied of record,
432	the clerk shall return said security upon request of the person
433	depositing or filing the same, or the insurer. If a proceeding
434	to enforce a lien is commenced in a court of competent
435	jurisdiction within the time specified in s. 713.22 and, during
436	such proceeding, the lien is transferred pursuant to this
437	section or s. 713.13(1)(e), an action commenced within 1 year
438	after the transfer, unless otherwise shortened by operation of
439	law, in the same county or circuit court to recover against the
440	security shall be deemed to have been brought as of the date of
441	filing the action to enforce the lien, and the court shall have
442	jurisdiction over the action.
443	Section 12.  Paragraph (b) of subsection (1) of section
444	713.345, Florida Statutes, is amended to read:
445	713.345  Moneys received for real property improvements;
446	penalty for misapplication.--
447	(1)
448	(b)  Any person who knowingly and intentionally fails to
449	comply with paragraph (a) is guilty of misapplication of
450	construction funds, punishable as follows:
451	1.  If the amount of payments misapplied has an aggregate
452	value of $100,000 or more, the violator is guilty of a felony of
453	the first degree, punishable as provided in s. 775.082, s.
454	775.083, or s. 775.084.
455	2.  If the amount of payments misapplied has an aggregate
456	value of $1,000 $20,000 or more but less than $100,000, the
457	violator is guilty of a felony of the second degree, punishable
458	as provided in s. 775.082, s. 775.083, or s. 775.084.
459	3.  If the amount of payments misapplied has an aggregate
460	value of less than $1,000 $20,000, the violator is guilty of a
461	felony of the third degree, punishable as provided in s.
462	775.082, s. 775.083, or s. 775.084.
463	Section 13.  Subsection (1) of section 713.3471, Florida
464	Statutes, is amended to read:
465	713.3471  Lender responsibilities with construction
466	loans.--
467	(1)  Prior to a lender making any loan disbursement on any
468	construction loan secured by residential real property directly
469	to the owner, which, for purposes of this subsection, means only
470	a natural person, into the owner's account or accounts, or
471	jointly to the owner and any other party, the lender shall mail,
472	deliver by electronic mail or other electronic format or
473	facsimile, or personally deliver give the following written
474	notice to the borrowers in bold type larger than any other type
475	on the page:
476
477	WARNING!
478
479	YOUR LENDER IS MAKING A LOAN DISBURSEMENT DIRECTLY TO YOU
480	AS THE BORROWER, OR JOINTLY TO YOU AND ANOTHER PARTY. TO
481	PROTECT YOURSELF FROM HAVING TO PAY TWICE FOR THE SAME
482	LABOR, SERVICES, OR MATERIALS USED IN MAKING THE
483	IMPROVEMENTS TO YOUR PROPERTY, BE SURE THAT YOU REQUIRE
484	YOUR CONTRACTOR TO GIVE YOU LIEN RELEASES FROM EACH LIENOR
485	WHO HAS SENT YOU A NOTICE TO OWNER EACH TIME YOU MAKE A
486	PAYMENT TO YOUR CONTRACTOR.
487
488	This subsection does not apply when the owner is a contractor
489	licensed under chapter 489 or is a person who creates parcels or
490	offer parcels for sale or lease in the ordinary course of
491	business.
492	Section 14.  This act shall take effect October 1, 2005.

CODING: Words stricken are deletions; words underlined are additions.