Herbert L. Allen, Jr., P.A. dedicates this website to Florida Construction law. Contractors Guide to Construction Law │ Herbert L. Allen, Jr., P.A. Attorney Herbert Allen provides legal services for construction law and contractors (residential and commercial) in North Florida, Central Florida, and South Florida. Contact: 321.237.2869. Contractors Guide to Construction Law │ Construction Attorney │ 321.237.2869
Since my earliest days of serving as a construction lawyer, I have notice repeated problems with Contractors. Holding any contracting license in Florida places high demands upon the licensee, and requires careful work and compliance. Below I will discuss a few of the common problems I have seen contractors experience.
Over the years, I have represented general contractors, subcontractors, materialmen, HVAC companies, electricians, plumbers, and roofers. Some people have problems interpreting and complying with the Florida Construction Lien Law. I certainly find the legal demands upon everyone involved in construction to be very complicated and, at times, the legal outcomes difficult to predict with certainty. Let me mention a few critical issues with contractors that have arisen in my practice. If you have questions, call me. I generally answer my own phone at 321.237.2869.
Common Errors of Florida Construction Contractors
1. Partial Payments and Final Payments. Contractors often seek a deposit upon signing the a residential construction contract. They know they will have to spend time on plans, specifications, consultations concerning engineering, drafting, and architects, time with the owners, selecting subs, and pulling permits. If things do not work out with the owner, then conflict may arise about the entire contract and who keeps the deposit. Be sure your construction contract clearly specifies an entitlement to keep deposits under defined conditions. Furthermore, even if you experience some pressure not to file a notice to owner, you will generally lose all of your lien rights if you are not in privity with the owner. Privity of contract means that you have a direct ("one to one") contractual relationship with the other party, usually the owner. You may still have contract rights to receive payment from someone, but those lien rights protect your payment. Be very careful of the wording in partial release of liens and be careful to comply with your stautory duties in seeking payments and releasing liens. Florida Statute 713.20 controls waiver and release of liens. Finally, remember that before you can bring suit for non-payment based upon your lien rights, you must serve a contractor's final affidavit, as described in Florida Staute 713.06(3)(d)1, which also requires the contractor to furnish that final affidavit at least five days before instituting any legal action upon the lien. In short, be sure that you evaluate your entitlement to payment, and that you have a valid lien before instituting any legal action. Finally, if you ever make statements (sworn or not) containing falsehoods to induce others to pay you, then you are violating Florida Statute 713.35, with the ominous threat of criminal prosecution (third degree felony) lurking in the statute. Contractors Guide to Construction Law │ Construction Attorney │ 321.237.2869
2. Common Lien Law Errors. Lien law errors often arise related to the Notice to Owner and Claim of Lien.
A. Notice To Owner Errors. Florida Statute 713.06(2)(c) provides a sample Notice To Owner form. In my practice, I have seen contractors completely fail to serve a Notice to Owner when required to do to establish lien rights. In other cases, the contractor did not serve it within the time allowed by statute. The Notice to Owner generally must be served within forty-five days of the first work on the job. Be careful about specially fabricated materials. Make sure you complete the form correctly, taking care to indicate the actual entity under contract and providing labor, materials, or services. Serving the Notice to Owner requires statutory compliance on time, method and recipients. See Florida Statute 713.18 for details on how to serve the Notice to Owner. Without proper proof of service of the Notice to Owner, you generally forfeit all lien rights. Be very careful.
B. Claim of Lien Errors. Some contractors have problems with their Claim of Lien. Generally, Florida construction law does not allow a separate lien item for profit and overhead, even if your contract allows you to charge for those items separately. The lien focuses upon the value of improvements to the real estate. If you claim profit and overhead as separate items, your lien may be unenforceable. Furthermore, you may also be opening yourself up for a counter-claim and declaratory judgment action seeking the Court to declare your lien willfully exaggerated, and, therefore fraudulent. See Florida Statute 713.31. The essence of the fraudulent claim of lien lies in the legal concept of willful exaggeration. If you record and serve a claim of lien for work never performed, or material never furnished to the job, then you have opened yourself up to a claim for damages, punitive damages in the difference between the amount on the claim of lien and the correct amount, and, in addition, you lose all rights regarding your claim of lien. In addition, the threat of ciminal prosecution lurks in the statute. Finally, you must be careful to fill out the Claim of Lien correctly and then record it and serve it properly as provided by Florida Statute 713.18. Generally, you must record your Claim of Lien not later than 90 days after your final furnishing of the labor or services or materials. You can learn about the Claim of Lien basics, including a form, by reviewing Florida Statute 713.08. Some contractors failed to send notice of the Claim of Lien timely and as prescribed by statute, or failed to record it timely. In many instances, the lienor simply forgot to send the Claim of Lien at all. Contractors Guide to Construction Law │ Construction Attorney │ 321.237.2869
3. Misapplication of Construction Funds. Sometimes homeowners or subcontractors complain to me about the general contractor misapplying construction funds. Many times money flows through a construction company and the funds are not carefully segregated by job. Instead, the payment this week from one job may be used for payroll, purchasing supplies, or whatever job needs financial help this week. By taking funds from one job and using them to pay for another job, you open the door to charges of criminal prosecution for misapplying construction funds. If you reach the end of a job and do not have enough money left in draws on that job to pay the subs, materialmen, or laborers, then you know you are in trouble and scramble to find money to pay everyone. Better practice will always be to segregate money by job and be sure that all draws pay for all improvements for that job. In these tough economic times for everyone, contractors have been forced out of business, leaving jobs unfinished and numerous people unpaid for their work on the jobs. Be sure to avoid criminal prosecution for misapplying construction funds, because Florida Statute 713.345 imposes criminal penalties, including first degree felonies, for misapplication of construction funds. Let me draw particular attention to the following sentence from Florida Statute 713.345(c): "A permissive inference that a person knowingly and intentionally misapplied construction funds in violation of this subsection is created when a valid lien has been recorded against the property of an owner for labor, services, or material [and] the person who ordered the labor, services, or materials has received sufficient funds to pay for such labor, services, or materials [and] the person has failed, for a period of at least 45 days from receipt of funds, to remit sufficient funds to pay for such labor, services, or materials . . . ." If you get paid in full as a contractor on a draw, be sure that everyone entitled to full payment from you receives it promptly. If anyone files a Claim of Lien on your job, you may receive a call from the State Attorney's office. Be very careful of misapplying construction funds. Contractors Guide to Construction Law │ Construction Attorney │ 321.237.2869
Contractors Guide to Construction Law │ Herbert L. Allen, Jr., P.A.
For further information, you may follow the links below:
Notice of Commencement • Notice to Owner • Request for Sworn Statement of Account • Claim of Lien • Construction Contracts • Contest of Lien • Contractor's Final Payment Affidavit • Misapplication of Construction Funds • Proper Payments • Statute of Limitations • Construction Defects and Pre-Suit Notice
I handle many construction cases without an office consultation. We can work together through email, fax, U.S. mail, texting, and many other means of communication and document exchange. If you need to visit my office, Herbert L. Allen, Jr., P.A., is located at 1360 S. Patrick Dr., Satellite Beach, FL 32937. I provide attorney legal services for construction law in Satellite Beach, Melbourne Beach, Merritt Island, Indialantic, Melbourne, Eau Gallie, Rockledge, Viera, Cocoa Beach, Cocoa, Palm Bay, Palm Shores, West Melbourne, Suntree, Patrick Air Force Base, Cape Canaveral and all of Florida.