Guide for Contractors: Complying with Florida Statute 489.126 on Deposit Monies

Understanding and complying with Florida Statute 489.126 is essential for contractors to maintain legal standards and build trust with clients. This statute outlines how you must handle deposit monies received for residential construction projects. Here’s a step-by-step guide to ensure you meet these legal requirements:

Step 1: Initial Payment and Permits

Receive Initial Payment:

• When you receive an initial payment exceeding 10% of the total contract price, specific actions must follow.

Apply for Necessary Permits:

• Within 30 days of receiving the payment, apply for all required permits. This excludes situations where the work doesn’t require permits under applicable codes and ordinances.
• Document the permit applications and keep records of submission dates to ensure compliance.

Start the Work:

• Begin the project within 90 days after all necessary permits are issued. If delays occur, ensure you have just cause (e.g., unforeseen circumstances) and document these reasons.
• Communicate any delays to the client and get written agreements for extended timelines when necessary.

Step 2: Addressing Delays

Written Demand from Client:

• If you fail to apply for permits or start the work within the required time, the client can send a certified letter demanding action.
• Ensure your contracting agreements include your correct address to receive such notifications.

Respond Promptly:

• Upon receiving a written demand, you must act within 30 days to apply for permits, start the work, or refund the payment. Failure to do so can be seen as intent to defraud.

Step 3: Legal Consequences and Prevention

Avoiding Fraud Accusations:

• Never receive money for work not performed. If you have taken money and not performed any work for 90 days, it could be inferred as intent to defraud.
• Always document the progress of work and payments received.

Understand the Penalties:

• Violations can result in severe penalties:
  • Less than $1,000: First-degree misdemeanor.
  • $1,000 to $20,000: Third-degree felony.
  • $20,000 to $200,000: Second-degree felony.
  • Over $200,000: First-degree felony.

Refunding Excess Payments:

• If the client demands a refund for unperformed work, comply within 30 days to avoid legal issues. Document all transactions and refunds.

Best Practices for Compliance

1. Clear Contracting Agreements:
   • Ensure contracts clearly state the payment schedule, work timelines, and your contact information.
2. Timely Communication:
   • Maintain regular communication with clients regarding project status, potential delays, and permit applications.
3. Record Keeping:
   • Keep detailed records of all payments received, permits applied for, work progress, and communications with clients.

By following these guidelines, you can ensure compliance with Florida Statute 489.126, avoiding legal pitfalls and building a reputation as a trustworthy contractor.