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Senate Bill 2754

Senate Bill sb2754

CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2004                                  SB 2754

    By Senator Argenziano





    3-1560-04                                          See HB 1427

  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; deleting obsolete

  6         language; amending ss. 489.129 and 489.533,

  7         F.S.; increasing an administrative fine under

  8         certain disciplinary proceeding provisions;

  9         amending s. 713.015, F.S.; revising a direct

10         contract provision requirement; providing that

11         failure to include such provision in such

12         contracts limits certain lien rights under the

13         contract; providing construction relating to

14         validity and enforceability; preserving lien

15         rights of certain persons; amending s. 713.02,

16         F.S.; protecting the rights of certain persons

17         to 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         clarifying use of a payment bond as a transfer

25         bond; amending s. 713.135, F.S., revising

26         certain notice of commencement and

27         applicability of lien requirements for certain

28         authorities issuing building permits; amending

29         s. 713.24, F.S.; preserving certain lien rights

30         when filing a transfer bond after commencing

31         certain lien enforcement proceedings; amending

                                  1

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1         s. 713.345, F.S.; increasing certain criminal

 2         penalties for misapplication of construction

 3         funds; providing an effective date.

 4  

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

 6  

 7         Section 1.  Paragraph (a) of subsection (1) and

 8  subsection (5) of section 255.05, Florida Statutes, are

 9  amended to read:

10         255.05  Bond of contractor constructing public

11  buildings; form; action by materialmen.--

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

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

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

15  public building, for the prosecution and completion of a

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

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

18  recommencing the work after a default or abandonment, to

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

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

21  payment and performance bond with a surety insurer authorized

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

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

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

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

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

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

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

29  assigned by the contracting public entity; and a description

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

31  description or the street address of the property being

                                  2

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




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

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

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

 4  contract and promptly making payments to all persons defined

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

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

 7  claimant may apply to the governmental entity having charge of

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

 9  thereupon be furnished with a certified copy of the contract

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

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

12  including unpaid finance charges due under the claimant's

13  contract. Such action shall not involve the public authority

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

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

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

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

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

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

20  less may be exempted from executing the payment and

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

22  Secretary of the Department of Management Services may

23  delegate to state agencies the authority to exempt any person

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

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

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

27  officer or officials shall not be personally liable to persons

28  suffering loss because of granting such exemption. The

29  Department of Management Services shall maintain information

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

31  authority to waive the bond requirements by agency and project

                                  3

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1  number and whether any request for delegation was denied and

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

 3  furnished for public work contracts as provided by this

 4  subsection restricting the classes or persons protected by

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

 6  is unenforceable.

 7         (5)  In addition to the provisions of chapter 47, any

 8  action authorized under this section may be brought in the

 9  county in which the public building or public work is being

10  constructed or repaired. This subsection shall not apply to an

11  action instituted prior to May 17, 1977.

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

13  Statutes, is amended to read:

14         489.129  Disciplinary proceedings.--

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

16  against any certificateholder or registrant: place on

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

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

19  certificate of authority, require financial restitution to a

20  consumer for financial harm directly related to a violation of

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

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

23  education, or assess costs associated with investigation and

24  prosecution, if the contractor, financially responsible

25  officer, or business organization for which the contractor is

26  a primary qualifying agent, a financially responsible officer,

27  or a secondary qualifying agent responsible under s. 489.1195

28  is found guilty of any of the following acts:

29         (a)  Obtaining a certificate, registration, or

30  certificate of authority by fraud or misrepresentation.

31  

                                  4

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




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

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

 3  crime in any jurisdiction which directly relates to the

 4  practice of contracting or the ability to practice

 5  contracting.

 6         (c)  Violating any provision of chapter 455.

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

 8  entity in engaging in the prohibited uncertified and

 9  unregistered practice of contracting, if the certificateholder

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

11  person or entity was uncertified and unregistered.

12         (e)  Knowingly combining or conspiring with an

13  uncertified or unregistered person by allowing his or her

14  certificate, registration, or certificate of authority to be

15  used by the uncertified or unregistered person with intent to

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

17  registrant allows his or her certificate or registration to be

18  used by one or more business organizations without having any

19  active participation in the operations, management, or control

20  of such business organizations, such act constitutes prima

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

22  part.

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

24  certificate or registration issued hereunder except in the

25  name of the certificateholder or registrant as set forth on

26  the issued certificate or registration, or in accordance with

27  the personnel of the certificateholder or registrant as set

28  forth in the application for the certificate or registration,

29  or as later changed as provided in this part.

30  

31  

                                  5

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1         (g)  Committing mismanagement or misconduct in the

 2  practice of contracting that causes financial harm to a

 3  customer. Financial mismanagement or misconduct occurs when:

 4         1.  Valid liens have been recorded against the property

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

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

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

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

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

10  the date of such liens;

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

12  the percentage of completion is less than the percentage of

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

14  of abandonment, unless the contractor is entitled to retain

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

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

17  abandoned; or

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

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

20  job than the original contract price, as adjusted for

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

22  result of circumstances beyond the control of the contractor,

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

24  otherwise permitted by the terms of the contract between the

25  contractor and the customer.

26         (h)  Being disciplined by any municipality or county

27  for an act or violation of this part.

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

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

30  the board.

31  

                                  6

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1         (j)  Abandoning a construction project in which the

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

 3  project may be presumed abandoned after 90 days if the

 4  contractor terminates the project without just cause or

 5  without proper notification to the owner, including the reason

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

 7  for 90 consecutive days.

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

 9  contract falsely indicating that the work is bonded; falsely

10  indicating that payment has been made for all subcontracted

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

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

13  that workers' compensation and public liability insurance are

14  provided.

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

16  contracting.

17         (m)  Committing incompetency or misconduct in the

18  practice of contracting.

19         (n)  Committing gross negligence, repeated negligence,

20  or negligence resulting in a significant danger to life or

21  property.

22         (o)  Proceeding on any job without obtaining applicable

23  local building department permits and inspections.

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

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

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

27  part I of chapter 713.

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

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

30  the business organization qualified by the licensee, relating

31  to the practice of the licensee's profession.

                                  7

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1  

 2  For the purposes of this subsection, construction is

 3  considered to be commenced when the contract is executed and

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

 5  A contractor does not commit a violation of this subsection

 6  when the contractor relies on a building code interpretation

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

 8  553.80 to enforce the building code, absent a finding of fraud

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

10  repeated negligence, or negligence resulting in a significant

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

12  official, in a proceeding under chapter 120.

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

14  489.533, Florida Statutes, is amended to read:

15         489.533  Disciplinary proceedings.--

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

17  business organization for which the contractor is a primary

18  qualifying agent or secondary qualifying agent responsible

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

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

21  the following penalties:

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

23  $10,000 $5,000 for each count or separate offense.

24         Section 4.  Section 713.015, Florida Statutes, is

25  amended to read:

26         713.015  Mandatory provisions for direct contracts.--

27         (1)  Any direct contract between an owner and a

28  contractor, related to improvements to real property

29  consisting of single or multiple family dwellings up to and

30  including four units, must contain the following provision

31  printed in capital letters no less than the same size

                                  8

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1  18-point, capitalized, boldfaced type used in the body of the

 2  contract:

 3  

 4  ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS

 5  713.001-713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR

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

 7  RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR

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

 9  CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS,

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

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

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

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

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

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

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

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

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

19  RECOMMENDED THAT WHENEVER A SPECIFIC PROBLEM ARISES, YOU

20  CONSULT AN ATTORNEY.

21         (2)  The failure of a contractor to include this

22  provision in the direct contract shall not invalidate or

23  render the direct contract unenforceable. Nothing in this

24  section shall be construed to adversely affect the lien and

25  bond rights of lienors who are not in privity with the owner.

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

27  Statutes, is amended to read:

28         713.02  Types of lienors and exemptions.--

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

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

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

                                  9

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1  489.128 or s. 489.532. Notwithstanding any other provision of

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

 3  unlicensed contractor, subcontractor, or sub-subcontractor

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

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

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

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

 8  the unlicensed contractor, subcontractor, or

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

10  bond or indemnity agreement that the principal or indemnitor

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

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

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

14  section, to read:

15         713.04  Subdivision improvements.--

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

17  direct contract before actual furnishing of labor and services

18  or materials for subdivision improvements. Any such The

19  payment not complying with such requirement shall not qualify

20  as a proper payment under this chapter section.

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

22  direct contract only after the contractor complies with s.

23  713.06(3)(d). Any such payment not complying with such

24  requirement shall not qualify as a proper payment under this

25  chapter.

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

27  713.08, Florida Statutes, is amended to read:

28         713.08  Claim of lien.--

29         (4)

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

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

                                  10

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




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

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

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

 4  person entitled to rely on the service.

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

 6  713.13, Florida Statutes, is amended to read:

 7         713.13  Notice of commencement.--

 8         (1)

 9         (e)  A copy of any bond must be attached at the time of

10  recordation of the notice of commencement. The failure to

11  attach a copy of the bond to the notice of commencement when

12  the notice is recorded negates the exemption provided in s.

13  713.02(6). However, if such a bond exists but is not recorded,

14  the bond may be used as a transfer bond pursuant to s. 713.24.

15  The bond shall be deemed a transfer bond under s. 713.24 for

16  all purposes at the time of recordation of the notice of bond

17  and the clerk's mailing as provided in s. 713.23(2). At the

18  time of recordation of the notice of bond, any notice

19  requirements not contained in s. 713.24 shall be deemed

20  deleted from the bond.

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

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

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

24  section, to read:

25         713.135  Notice of commencement and applicability of

26  lien.--

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

28  authority issuing such permit shall:

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

30  property upon which improvements are to be constructed with a

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

                                  11

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




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

 2  subject to attachment under the Construction Lien Law. The

 3  Department of Business and Professional Regulation shall

 4  furnish, for distribution, the statement described in this

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

 6  Construction Lien Law and must include an explanation of the

 7  provisions of the Construction Lien Law relating to the

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

 9  commencement and a statement encouraging the owner to record a

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

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

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

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

14  713.06(2) and an explanation of the owner's rights as provided

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

16  must obtain from the Department of Business and Professional

17  Regulation the statement required by this paragraph and must

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

19  facsimile, or personally deliver that statement to the owner

20  or, in the case in which the owner is required to personally

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

22  owner making improvements to real property consisting of a

23  single or multiple family dwelling up to and including four

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

25  summary does not subject the issuing authority to liability.

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

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

28  to the issuance of a building permit.

29         (4)  The several boards of county commissioners,

30  municipal councils, or other similar bodies may by ordinance

31  or resolution establish reasonable fees for furnishing copies

                                  12

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1  of the forms and the printed statement provided in paragraphs

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

 3  be paid by the applicant for each permit in addition to all

 4  other costs of the permit; however, no forms or statement need

 5  be furnished, mailed, or otherwise provided to, nor may such

 6  additional fee be obtained from, applicants for permits in

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

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

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

10  the business of construction of buildings for sale to others

11  and intends to make the improvements authorized by the permit

12  on the property and upon completion will offer the improved

13  real property for sale.

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

15  Statutes, is amended to read:

16         713.24  Transfer of liens to security.--

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

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

19  appears that the transferred lien has been satisfied of

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

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

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

23  competent jurisdiction within the time specified in s. 713.22

24  and, subsequent to the expiration of the proceeding, the lien

25  is transferred pursuant to s. 713.24, an action commenced to

26  recover against the security shall be deemed to have been

27  brought as of the date of filing the action to enforce the

28  lien.

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

30  713.345, Florida Statutes, is amended to read:

31  

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    Florida Senate - 2004                                  SB 2754
    3-1560-04                                          See HB 1427




 1         713.345  Moneys received for real property

 2  improvements; penalty for misapplication.--

 3         (1)

 4         (b)  Any person who knowingly and intentionally fails

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

 6  construction funds, punishable as follows:

 7         1.  If the amount of payments misapplied has an

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

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

10  775.082, s. 775.083, or s. 775.084.

11         2.  If the amount of payments misapplied has an

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

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

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

15  775.084.

16         3.  If the amount of payments misapplied has an

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

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

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

20         Section 12.  This act shall take effect October 1,

21  2004.

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  

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