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Senate Bill 2132

Senate Bill sb2132er

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    2004 Legislature                        SB 2132, 1st Engrossed



  1                                 

  2         An act relating to the Florida Construction

  3         Industries Recovery Fund; amending s. 489.140,

  4         F.S.; renaming the fund as the Florida

  5         Homeowners' Construction Recovery Fund;

  6         creating s. 489.1401, F.S.; declaring

  7         legislative intent with respect to use of the

  8         fund; creating s. 489.1402, F.S.; defining

  9         terms; amending s. 489.141, F.S.; revising

10         conditions for recovery from the fund; amending

11         s. 489.142, F.S.; providing for hearings and

12         for service of notice; amending s. 489.1425,

13         F.S.; conforming to changes in terminology;

14         amending s. 489.143, F.S.; providing a limit on

15         disbursements with respect to a single

16         contract; revising guidelines for making

17         payments from the fund; providing criminal

18         penalties for specified fraudulent acts;

19         amending ss. 489.144, 489.13, 489.131, F.S.;

20         conforming terminology to the changes made by

21         the act; amending s. 468.631, F.S.; requiring

22         certain information relating to building

23         permits to be reported to the Department of

24         Business and Professional Regulation; providing

25         an effective date.

26  

27         WHEREAS, the Florida Construction Industries Recovery

28  Fund was created to reimburse a person who has suffered

29  monetary damages as a result of financial mismanagement by a

30  contractor, and

31  


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 1         WHEREAS, the Legislature recognizes that homeowners

 2  have been caused most monetary damages as a result of

 3  financial mismanagement or abandonment by Division I

 4  contractors, and

 5         WHEREAS, the Legislature desires to provide homeowners

 6  with recompense for such monetary damages, and

 7         WHEREAS, the Legislature recognizes that the current

 8  law places claimants in the position of having to reestablish

 9  damages in order to comply with the provisions of the statute,

10  and

11         WHEREAS, the Legislature desires to make clear the

12  circumstances under which an award from the fund shall be

13  made, and

14         WHEREAS, the Legislature wishes to make other

15  clarifying changes and improve the disposition of claims

16  filed, and

17         WHEREAS, the Legislature recognizes that there are

18  claims currently pending from persons who are not homeowners

19  or who have presented claims for monetary damages caused by

20  Division II contractors, and

21         WHEREAS, the Legislature desires to provide a mechanism

22  for those claims if eligible, to be paid, NOW, THEREFORE,

23  

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

25  

26         Section 1.  Section 489.140, Florida Statutes, is

27  amended to read:

28         489.140  Florida Homeowners' Construction Industries

29  Recovery Fund.--There is created the Florida Homeowners'

30  Construction Industries Recovery Fund as a separate account in

31  the Professional Regulation Trust Fund.


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 1         (1)  The Florida Construction Industries Recovery Fund

 2  shall be disbursed as provided in s. 489.143, on order of the

 3  board, as reimbursement to any natural person adjudged by a

 4  court of competent jurisdiction to have suffered monetary

 5  damages, or to whom the licensee has been ordered to pay

 6  restitution by the board, where the judgment or restitution

 7  order is based on a violation of s. 489.129(1)(g), (j), or

 8  (k), committed by any contractor, financially responsible

 9  officer, or business organization licensed under the

10  provisions of this part at the time the violation was

11  committed, and providing that the violation occurs after July

12  1, 1993.

13         (2)  The Construction Industries recovery fund shall be

14  funded out of the receipts deposited in the Professional

15  Regulation Trust Fund from the one-half cent per square foot

16  surcharge on building permits collected and disbursed pursuant

17  to s. 468.631.

18         Section 2.  Section 489.1401, Florida Statutes, is

19  created to read:

20         489.1401  Legislative intent.--

21         (1)  It is the intent of the Legislature that actions

22  taken by the Construction Industry Licensing Board with

23  respect to contractor sanctions and pursuant to this chapter

24  are an exercise of the department's regulatory power for the

25  protection of public safety and welfare.

26         (2)  It is the intent of the Legislature that the sole

27  purpose of the Florida Homeowners' Construction Recovery Fund

28  is to compensate any aggrieved claimant who contracted for the

29  construction or improvement of the residence located within

30  this state and who has obtained a final judgment in any court

31  of competent jurisdiction, was awarded restitution by the


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 1  Construction Industry Licensing Board, or received an award in

 2  arbitration against a licensee on grounds of financial

 3  mismanagement or misconduct, abandoning a construction

 4  project, or making a false statement with respect to a project

 5  and arising directly out of any transaction when the judgment

 6  debtor was licensed and performed any of the activities

 7  enumerated under s. 489.129(1)(g), (j) or (k) on the

 8  homeowner's residence.

 9         (3)  It is the intent of the Legislature that Division

10  I contractors set apart funds for the specific objective of

11  participating in the fund.

12         Section 3.  Section 489.1402, Florida Statutes, is

13  created to read:

14         489.1402  Definitions.--

15         (1)  The following definitions apply to

16  ss.489.140-489.144:

17         (a)  "Arbitration" means alternative dispute resolution

18  entered into between a claimant and a contractor either

19  pursuant to a construction contract that contains a mandatory

20  arbitration clause or through any binding arbitration under

21  the Florida Arbitration Code.

22         (b)  "Board" means the Construction Industry Licensing

23  Board.

24         (c)  "Claimant" means a homeowner.

25         (d)  "Contractor" means a Division I contractor

26  performing services described in s. 489.105 (3)(a)-(c).

27         (e)  "Court of competent jurisdiction" means a civil or

28  criminal court in the state of Florida, or a bankruptcy court.

29         (f)  "Homeowner" means the owner of an owner-occupied

30  residence, including a trustee based upon a trust instrument

31  


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 1  granting a person a beneficial interest for life in the

 2  residence.

 3         (g)  "Licensee" means a contractor, financially

 4  responsible officer, or business organization licensed under

 5  this part at the time the violation was committed.

 6         (h)  "Notice" means service as described in s. 455.275.

 7         (i)  "Residence" means an individual residential

 8  condominium or cooperative unit or a residential building

 9  containing not more than two residential units in which the

10  owner contracting for the improvement is residing or will

11  reside 6 months or more each calendar year upon completion of

12  the improvement.

13         (j)  "Recovery fund" means the Florida Homeowner's

14  Construction Recovery Fund.

15         (k)  "Same transaction" means a contract, or any series

16  of contracts, between a claimant and a contractor or qualified

17  business, when such contract or contracts involve the same

18  property or contiguous properties and are entered into either

19  at one time or serially.

20         (l)  "Valid and current license," for the purpose of s.

21  489.141(2)(d), means any license issued pursuant to this part

22  to a licensee, including a license in an active, inactive,

23  delinquent, or suspended status.

24         (2)  The following definitions apply to claims made

25  prior to July 1, 2007, when the contract was executed and the

26  violation occurred on or before January 1, 2005.

27         (a)  "Claimant" means a natural person.

28         (b)  "Licensee" means a contractor, financially

29  responsible officer, or business organization licensed under

30  this part at the time the violation was committed.

31  


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 1         Section 4.  Section 489.141, Florida Statutes, is

 2  amended to read:

 3         489.141  Conditions for recovery; eligibility.--

 4         (1)  Any claimant person is eligible to seek recovery

 5  from the Construction Industries recovery fund after having

 6  made a claim and exhausting the limits of any available bond,

 7  cash bond, surety, guarantee, warranty, letter of credit, or

 8  policy of insurance, provided that each of the following

 9  conditions is satisfied if:

10         (a)  The claimant Such person has received final

11  judgment in a court of competent jurisdiction in this state in

12  any action wherein the cause of action was based on a

13  construction contract or has received an award in arbitration

14  or the Construction Industry Licensing Board has issued a

15  final order directing the licensee to pay restitution to the

16  claimant. The board may waive this requirement if:

17         1.  The claimant is unable to secure a final judgment

18  against the licensee due to the death of the licensee; or

19         2.  The claimant has sought to have assets involving

20  the transaction that gave rise to the claim removed from the

21  bankruptcy proceedings so that the matter might be heard in a

22  court of competent jurisdiction in this state and, after due

23  diligence, the claimant is precluded by action of the

24  bankruptcy court from securing a final judgment against the

25  licensee.

26         (b)  The judgment, award, or restitution is based upon

27  a violation of s. 489.129(1)(g), (j), or (k) or s. 713.35.,

28  where the

29         (c)  The violation was committed by a licensee.

30  

31  


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 1         (d)  The judgment, award, or restitution order

 2  specifies the actual damages suffered as a consequence of such

 3  violation.

 4         (e)  The contract was executed and the violation

 5  occurred on or after July 1, 1993, and provided that:

 6         1.a.  The claimant Such person has caused to be issued

 7  a writ of execution upon such judgment, and the officer

 8  executing the writ has made a return showing that no personal

 9  or real property of the judgment debtor or licensee liable to

10  be levied upon in satisfaction of the judgment can be found or

11  that the amount realized on the sale of the judgment debtor's

12  or licensee's property pursuant to such execution was

13  insufficient to satisfy the judgment; or

14         2.b.  If the claimant such person is unable to comply

15  with subparagraph 1. sub-subparagraph a. for a valid reason to

16  be determined by the board, the claimant such person has made

17  all reasonable searches and inquiries to ascertain whether the

18  judgment debtor or licensee is possessed of real or personal

19  property or other assets subject to being sold or applied in

20  satisfaction of the judgment and by his or her search has

21  discovered no property or assets or has discovered property

22  and assets and has taken all necessary action and proceedings

23  for the application thereof to the judgment but the amount

24  thereby realized was insufficient to satisfy the judgment; and

25  or

26         3.2.  The claimant has made a diligent attempt, as

27  defined by board rule, to collect the restitution awarded by

28  the board.;

29         (f)(b)  A claim for recovery is made within 2 years

30  from the time of the act giving rise to the claim or within 2

31  years from the time the act is discovered or should have been


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 1  discovered with the exercise of due diligence; however, in no

 2  event may a claim for recovery be made more than 4 years after

 3  the date of the act giving rise to the claim or more than 1

 4  year after the conclusion of any civil, criminal, or

 5  administrative action or award in arbitration based on the

 6  act. This paragraph applies to any claim filed with the board

 7  after October 1, 1998., whichever is later;

 8         (g)(c)  Any amounts recovered by the claimant such

 9  person from the judgment debtor or licensee, or from any other

10  source, have been applied to the damages awarded by the court

11  or the amount of restitution ordered by the board.; and

12         (h)(d)  The claimant Such person is not a person who is

13  precluded by this act from making a claim for recovery.

14         (2)  A claimant person is not qualified to make a claim

15  for recovery from the Construction Industries Recovery Fund,

16  if:

17         (a)  The claimant is the spouse of the judgment debtor

18  or licensee or a personal representative of such spouse;

19         (b)  The claimant is a licensee who acted as the

20  contractor in the transaction which is the subject of the

21  claim;

22         (c)  The Such person's claim is based upon a

23  construction contract in which the licensee was acting with

24  respect to the property owned or controlled by the licensee;

25         (d)  The Such person's claim is based upon a

26  construction contract in which the contractor did not hold a

27  valid and current license at the time of the construction

28  contract; or

29         (e)  The claimant Such person was associated in a

30  business relationship with the licensee other than the

31  contract at issue;.


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 1         (f)  The claimant Such person has suffered damages as

 2  the result of making improper payments to a contractor as

 3  defined in part I of chapter 713; or.

 4         (g)  The claimant has contracted with a licensee to

 5  perform a scope of work described in paragraphs

 6  489.105(3)(d)-(q).

 7         (3)  The board may determine by rule documentation that

 8  is required to complete a claim.

 9         Section 5.  Section 489.142, Florida Statutes, is

10  amended to read:

11         489.142  Board powers relating to recovery; conduct of

12  hearings and service.--

13         (1)  With respect to actions for recovery from the

14  Construction Industries recovery fund, the board may

15  intervene, enter an appearance, file an answer, defend the

16  action, or take any action it deems appropriate and may take

17  recourse through any appropriate method of review on behalf of

18  the State of Florida. The board may delegate to the department

19  by rule the authority to close any case when a claimant is not

20  qualified to make a claim for recovery from the recovery fund

21  under s. 489.141(2); when after notice the claimant has failed

22  to provide documentation in support of the claim as required

23  by the board; or when the licensee has reached the aggregate

24  limit.

25         (2)  Notwithstanding any other provision of law, the

26  board shall cause a notice of hearing to be served 14 days in

27  advance of the hearing on the claimant and on the licensee

28  whose license is subject to suspension by s. 489.143. Each

29  notice shall inform the recipient of any administrative

30  hearing or judicial review that is available under s. 120.569,

31  s. 120.57, or s. 120.68; shall indicate the procedure that


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 1  must be followed to obtain the hearing or judicial review; and

 2  shall state the time limits that apply. Service of the notice

 3  on the licensee shall be made in accordance with s. 455.275.

 4  Service of the notice on the claimant shall be by regular

 5  United State mail at the address provided on the claim. The

 6  service of notice in accordance with this section is complete

 7  upon expiration of 14 days after deposit in the United States

 8  mail. Proof of service of a notice shall be made by entry in

 9  the records of the department that the notice was given. The

10  entry shall be admissible in judicial and administrative

11  proceedings of this state and shall constitute sufficient

12  proof that notice was given.

13         (3)  Notwithstanding any other provision of law, board

14  hearings on claims shall be conducted in accordance with ss.

15  120.569 and 120.57(2). All claim hearings shall be conducted

16  at the board's regular meeting at the place, date, and time

17  published. Orders of the board denying or awarding funds to a

18  claimant constitute final orders that may be appealed in

19  accordance with s. 120.68. Orders awarding or denying claims

20  shall be served in the same manner as notices of hearing in

21  this section.

22         Section 6.  Section 489.1425, Florida Statutes, is

23  amended to read:

24         489.1425  Duty of contractor to notify residential

25  property owner of recovery fund.--

26         (1)  Any agreement or contract for repair, restoration,

27  improvement, or construction to residential real property must

28  contain a written statement explaining the consumer's rights

29  under the Construction Industries recovery fund, except where

30  the value of all labor and materials does not exceed $2,500.

31  


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 1  The written statement must be substantially in the following

 2  form:

 3  

 4                 FLORIDA HOMEOWNERS' CONSTRUCTION

 5                     INDUSTRIES RECOVERY FUND

 6  

 7         PAYMENT MAY BE AVAILABLE FROM THE FLORIDA

 8         HOMEOWNERS' CONSTRUCTION INDUSTRIES RECOVERY

 9         FUND IF YOU LOSE MONEY ON A PROJECT PERFORMED

10         UNDER CONTRACT, WHERE THE LOSS RESULTS FROM

11         SPECIFIED VIOLATIONS OF FLORIDA LAW BY A

12         LICENSED STATE-LICENSED CONTRACTOR.  FOR

13         INFORMATION ABOUT THE RECOVERY FUND AND FILING

14         A CLAIM, CONTACT THE FLORIDA CONSTRUCTION

15         INDUSTRY LICENSING BOARD AT THE FOLLOWING

16         TELEPHONE NUMBER AND ADDRESS:

17  

18  The statement shall be immediately followed by the board's

19  address and telephone number as established by board rule.

20         (2)(a)  Upon finding a first violation of subsection

21  (1), the board may fine the contractor up to $500, and the

22  moneys must be deposited into the Construction Industries

23  recovery fund.

24         (b)  Upon finding a second or subsequent violation of

25  subsection (1), the board shall fine the contractor $1,000 per

26  violation, and the moneys must be deposited into the

27  Construction Industries recovery fund.

28         Section 7.  Section 489.143, Florida Statutes, is

29  amended to read:

30         489.143  Payment from the fund.--

31  


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 1         (1)  The fund shall be disbursed as provided in s.

 2  489.141 on a final order of the board.

 3         (2)(1)  Any claimant person who meets all of the

 4  conditions prescribed in s. 489.141 s. 489.141(1) may apply to

 5  the board to cause payment to be made to a claimant such

 6  person from the Construction Industries recovery fund in an

 7  amount equal to the judgment, award, or restitution order,

 8  exclusive of postjudgment interest, against the licensee or

 9  $25,000, whichever is less, or an amount equal to the

10  unsatisfied portion of such person's judgment, award, or

11  restitution order, exclusive of postjudgment interest, or

12  $25,000, whichever is less, but only to the extent and amount

13  of actual damages suffered by the claimant reflected in the

14  judgment or restitution order as being actual or compensatory

15  damages. Payment from the fund for other costs related to or

16  pursuant to civil proceedings such as postjudgment interest,

17  attorney's fees, court costs, medical damages, and punitive

18  damages is prohibited. The recovery fund is not obligated to

19  pay any judgment, award, or restitution order, or any portion

20  thereof, which is not expressly based on one of the grounds

21  for recovery set forth in s. 489.141 s. 489.140(1). Beginning

22  January 1, 2005, for each contract entered after July 1, 2004,

23  payment from the recovery fund shall be subject to a $50,000

24  maximum payment.

25         (3)(2)  Upon receipt by a claimant under subsection (2)

26  (1) of payment from the Construction Industries recovery fund,

27  the claimant shall assign his or her additional right, title,

28  and interest in the judgment, award, or restitution order, to

29  the extent of such payment, to the board, and thereupon the

30  board shall be subrogated to the right, title, and interest of

31  the claimant; and any amount subsequently recovered on the


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 1  judgment, award, or restitution order by the board, to the

 2  extent of the right, title, and interest of the board therein,

 3  shall be for the purpose of reimbursing the Construction

 4  Industries recovery fund.

 5         (4)(3)  Payments for claims arising out of the same

 6  transaction shall be limited, in the aggregate, to the lesser

 7  of the judgment, award, or restitution order or the maximum

 8  payment allowed $25,000, regardless of the number of claimants

 9  involved in the transaction.

10         (5)(4)  Payments for claims against any one licensee

11  shall not exceed, in the aggregate, $100,000 annually, up to a

12  total aggregate of $250,000. Beginning January 1, 1998, For

13  any claim approved by the board which is in excess of the

14  annual cap, the amount in excess of $100,000 up to the total

15  aggregate cap of $250,000 is eligible for payment in the next

16  and succeeding fiscal years, but only after all claims for the

17  then-current calendar year have been paid. Payments may not

18  exceed the aggregate annual or per claimant limits under law.

19  Beginning January 1, 2005, for each contract entered into

20  after July 1, 2004, payment from the recovery fund is subject

21  only to a total aggregate cap of $500,000.

22         (6)(5)  Claims shall be paid in the order filed, up to

23  the aggregate limits for each transaction and licensee and to

24  the limits of the amount appropriated to pay claims against

25  the fund for the fiscal year in which the claims were filed.

26         (7)(6)  If the annual appropriation is exhausted with

27  claims pending, such claims shall be carried forward to the

28  next fiscal year. Any moneys in excess of pending claims

29  remaining in the Construction Industries recovery fund at the

30  end of the fiscal year shall be paid as provided in s.

31  468.631.


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 1         (8)(7)  Upon the payment of any amount from the

 2  Construction Industries recovery fund in settlement of a claim

 3  in satisfaction of a judgment, award, or restitution order

 4  against a licensee as described in s. 489.141 s. 489.141(1),

 5  the license of such licensee shall be automatically suspended,

 6  without further administrative action, upon the date of

 7  payment from the fund. The license of such licensee shall not

 8  be reinstated until he or she has repaid in full, plus

 9  interest, the amount paid from the fund. A discharge of

10  bankruptcy does not relieve a person from the penalties and

11  disabilities provided in this section.

12         (9)  Any firm, corporation, partnership, or

13  association, or any person acting in his or her individual

14  capacity, who aids, abets, solicits, or conspires with any

15  person to knowingly present or cause to be presented any false

16  or fraudulent claim for the payment of a loss under this act

17  is guilty of a third-degree felony, punishable as provided in

18  s. 775.082 or s. 775.084 and by a fine not exceeding $30,000,

19  unless the value of the fraud exceed $30,000 in which event

20  the fine may not exceed double the value of the fraud.

21         (10)  All payments and disbursements from the recovery

22  fund shall be made by the Chief Financial Officer upon a

23  voucher signed by the secretary of the department or the

24  secretary's designee.

25         Section 8.  Section 489.144, Florida Statutes, is

26  amended to read:

27         489.144  Investment of the fund.--The funds in the

28  Construction Industries recovery fund may be invested by the

29  Chief Financial Officer under the same limitations as apply to

30  the investment of other state funds, and the interest earned

31  thereon shall be deposited to the credit of the Construction


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 1  Industries recovery fund and shall be available for the same

 2  purposes as other moneys deposited in the Construction

 3  Industries recovery fund.

 4         Section 9.  Paragraph (c) of subsection (4) of section

 5  489.13, Florida Statutes, is amended to read:

 6         489.13  Unlicensed contracting; notice of

 7  noncompliance; fine; authority to issue or receive a building

 8  permit; web page.--

 9         (4)

10         (c)  The balance of any fines collected under this

11  section shall be used to maintain the department's unlicensed

12  contractor website page, as specified in subsection (6), and

13  to fund the Florida Homeowners' Construction Industries

14  Recovery Fund. Nothing in this paragraph shall be construed to

15  permit recovery from the Construction Industries Recovery Fund

16  if the contractor is unlicensed.

17         Section 10.  Paragraph (e) of subsection (3) of section

18  489.131, Florida Statutes, is amended to read:

19         489.131  Applicability.--

20         (3)  Nothing in this part limits the power of a

21  municipality or county:

22         (e)  To require one bond for each contractor in an

23  amount not to exceed $5,000, which bond shall be conditioned

24  only upon compliance with the Florida Building Code adopted

25  pursuant to s. 553.73.  Any such bond must be equally

26  available to all contractors without regard to the period of

27  time a contractor has been certified or registered and without

28  regard to any financial responsibility requirements.  Any such

29  bonds shall be payable to the Florida Homeowners' Construction

30  Industry Recovery Fund and filed in each county or

31  municipality in which a building permit is requested.  Bond


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 1  reciprocity shall be granted statewide.  All such bonds shall

 2  be included in meeting any financial responsibility

 3  requirements imposed by any statute or rule.  Any contractor

 4  who provides a third party insured warranty policy in

 5  connection with a new building or structure for the benefit of

 6  the purchaser or owner shall be exempt from the bond

 7  requirements under this subsection with respect to such

 8  building or structure.

 9         Section 11.  Section 468.631, Florida Statutes, is

10  amended to read:

11         468.631  Building Code Administrators and Inspectors

12  Fund.--

13         (1)  The provisions of This part shall be funded

14  through a surcharge, to be assessed pursuant to s. 125.56(4)

15  or s. 166.201 at the rate of one-half cent per square foot of

16  under-roof floor space permitted, including new construction,

17  renovations, alterations, and additions.  The unit of

18  government responsible for collecting permit fees pursuant to

19  s. 125.56(4) or s. 166.201 shall collect such surcharge and

20  shall remit the funds to the department on a quarterly

21  calendar basis beginning not later than December 31, 1993, for

22  the preceding quarter, and continuing each third month

23  thereafter; and such unit of government may retain an amount

24  up to 10 percent of the surcharge collected to fund projects

25  and activities intended to improve the quality of building

26  code enforcement.  There is created within the Professional

27  Regulation Trust Fund a separate account to be known as the

28  Building Code Administrators and Inspectors Fund, which shall

29  deposit and disburse funds as necessary for the implementation

30  of this part. The department shall annually establish the

31  amount needed to fund the certification and regulation of


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 1  building code administrators, plans examiners, and building

 2  code inspectors.  Any funds collected in excess of the amount

 3  needed to adequately fund the certification and regulation of

 4  building code administrators, plans examiners, and building

 5  code inspectors shall be deposited into the Florida

 6  Homeowners' Construction Industries Recovery Fund established

 7  by s. 489.140.  If the Florida Homeowners' Construction

 8  Industries Recovery Fund is fully funded as provided by s.

 9  489.140, any remaining funds shall be distributed to the

10  Construction Industry Licensing Board for use in the

11  regulation of certified and registered contractors.

12         (2)  The unit of government responsible for collecting

13  permit fees under this section shall report to the department

14  quarterly the number of permits issued for under-roof floor

15  space during the quarter, the total square footage for the

16  number of permits issued for under-roof floor space during the

17  quarter, and the calculation of the amount of funds being

18  remitted to the department. The report shall be attested to by

19  the officer in charge of collecting permit fees.

20         Section 12.  This act shall take effect July 1, 2004.

21  

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  


                                  17

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

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