Construction Contracting: Mandatory Provisions for Residential Contracts

Andrew Douglas

8 years ago

Florida law requires contractors to include 2 mandatory provisions in their contracts when the contract is for improvement to residential property, the Florida Lien Law disclosure and the Florida Homeowner’s Construction Recovery Fund.

FLORIDA LIEN LAW MANDATORY PROVISION FOR DIRECT CONTRACTS

Source: Fla. Stat. 713.015 Mandatory provisions for direct contracts.—

Applies to: Any direct contract greater than $2,500 between an owner and a contractor, related to improvements to real property consisting of single or multiple family dwellings up to and including four units.

Must contain the following notice provision printed in no less than 12-point, capitalized, boldfaced b type on the front page of the contract or on a separate page, signed by the owner and dated:

ACCORDING TO FLORIDA’S CONSTRUCTION LIEN LAW (SECTIONS 713.001–713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR PROVIDE MATERIALS AND SERVICES AND ARE NOT PAID IN FULL HAVE A RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE ALREADY PAID YOUR CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF A LIEN IS FILED YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY. TO PROTECT YOURSELF, YOU SHOULD STIPULATE IN THIS CONTRACT THAT BEFORE ANY PAYMENT IS MADE, YOUR CONTRACTOR IS REQUIRED TO PROVIDE YOU WITH A WRITTEN RELEASE OF LIEN FROM ANY PERSON OR COMPANY THAT HAS PROVIDED TO YOU A “NOTICE TO OWNER.” FLORIDA’S CONSTRUCTION LIEN LAW IS COMPLEX, AND IT IS RECOMMENDED THAT YOU CONSULT AN ATTORNEY.

Failing to Include this Provision:

713.05(b) The failure to provide such written notice does not bar the enforcement of a lien against a person who has not been adversely affected.

CONSTRUCTION INDUSTRY RECOVERY MANDATORY CONTRACT PROVISION

Source: 489.1425 Duty of contractor to notify residential property owner of recovery fund.—

Applies to: Each agreement or contract for repair, restoration, improvement, or construction to residential real property must contain a written statement explaining the consumer’s rights under the recovery fund, except where the value of all labor and materials does not exceed $2,500.

The written statement must be substantially in the following form:

FLORIDA HOMEOWNERS’ CONSTRUCTION
RECOVERY FUND

PAYMENT, UP TO A LIMITED AMOUNT, MAY BE AVAILABLE FROM THE FLORIDA HOMEOWNERS’ CONSTRUCTION RECOVERY FUND IF YOU LOSE MONEY ON A PROJECT PERFORMED UNDER CONTRACT, WHERE THE LOSS RESULTS FROM SPECIFIED VIOLATIONS OF FLORIDA LAW BY A LICENSED CONTRACTOR. FOR INFORMATION ABOUT THE RECOVERY FUND AND FILING A CLAIM, CONTACT THE FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD AT THE FOLLOWING TELEPHONE NUMBER AND ADDRESS:

Must Contain: The statement must shall be immediately followed by the board’s address and telephone number as established by board rule.

Failing to Include this Provision:

489.1425 (2)(a) Upon finding a first violation of subsection (1), the board may fine the contractor up to $500, and the moneys must be deposited into the recovery fund.

(b) Upon finding a second or subsequent violation of subsection (1), the board shall fine the contractor $1,000 per violation, and the moneys must be deposited into the recovery fund.