Attorney Herbert Allen provides legal services for construction law and contractors (residential and commercial) in North Florida, Central Florida, and South Florida. Homeowners Guide to Construction Law │ Herbert Allen
Florida homeowners need to know many things before they enter any construction contract. Before you make any decisions, take the time to prepare carefully for any construction project you have in mind. I have not put the following items in chronological order or in order of importance. They all need your time and attention. Furthermore, the actual list of things you need to know would far exceed ten things. I always recommend you contact legal counsel to review your contract and help you navigate the construction process. I normally answer my own telephone at 321.779.1211. If you have questions, please call me.
Ten Things You Need To Know about Florida Construction Law
1. Evaluate the Contractor. If you plan on hiring a contractor to build your home, remodel your home, put on a new roof, fix storm damage, or make significant changes of any kind, please be sure that you get to know the contractor before you sign any construction agreement. I recommend that you understand the type of construction license the contractor holds, and check out the contractor on the Florida Licensing Portal at license check. Seek out references and previous customers of the contractor. Take time to talk with the contractor and get familiar with the type of work the contractor does. The lowest bid on the job does not necessarily mean the best final result or the cheapest price at the end. The choice of the right contractor makes an enormous difference in the outcome of the project.
2. Examine the Contract. When you first review the proposed contract for residential construction exceeding $2,500.00, then look for the following three elements of the contract to see if your contractor follows Florida law. First, Florida License Number. Be sure the contractor’s Florida License Number is clearly stated on the contract. If you are dealing with a corporation or other business entity, be sure that entity has a qualifier holding a valid, current Florida Construction License. Check the licensing portal above. Second, Lien Law Warning and Notice. On the first page of the contract, or in a separate page with a signature line and the date on that same page, you must see the language of Florida Statute 713.015 in bold-faced print, capitalized, 12-point type. That language begins: “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. For the full language, see the Florida Statute 713.05. Third, Construction Industry Recovery Fund Notice. Pursuant to Florida Statute 489.1425(1)., every direct contract with the owner for residential repair, restoration, improvement, or construction must contain the following notice of Construction Industries Recovery Fund. FLORIDA HOMEOWNERS’ CONSTRUCTION RECOVERY FUND. PAYMENT 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: The statement shall be immediately followed by the board’s address and telephone number as established by board rule. Generally, the contract should be very specific and very clear about every part of the construction project. If it is only one or two pages, then you know that it generally favors only the contractor.
3. Take Time To Review Your Plans or Ideas with the Contractor. Careful review of your plans or ideas with the contractor will reduce the time and expense of your project. In many construction jobs, the plans change over time. Starting with plans and specifications that make sense to both you and your contractor will limit changes in many cases. Be sure to initial and date the plans and specifications after you have finalized them. You should expect to pay your contractor for the time it takes on the plans, but be sure that you understand how you will be charged for that time. Email can help you memorialize those discussions with the contractor.
4. Be Certain You Understand the Entire Project Cost. Contractors often charge in two different ways: (1) Time and Materials, meaning the contractor charges you for the time, labor and materials spent on your job; or (2) Fixed Price, meaning that the contractor lists out everything the contractor will do on the project, and charge you a fee for doing those items. You may also hear about Cost Plus contracts, similar to time and materials, meaning the contractor will charge you for the cost of the items, plus an additional fee (often equal to a percentage of the cost items) for all the work, labor, and supervision the contractor puts into the job. Any contract that does not limit your total exposure on cost should be avoided. Be sure to have a maximum contract amount in every contract. I often see contracts that have allowances for items, but then limit you in how and where you may spend the allowance. Make sure every part of the contract makes sense to you and that Judge could understand what you intended if the Jude read the contract. If the contract is vague to you, then it could be vague to the Judge. I urge you to explore different payment options with your contractor before you sign any contract. Often, further expenses and changes to the original plans will require extra funds. Be sure that you include in your contract a way to cover new contingencies and how the total price will change. Depending on the job, you may experience many different kinds of governmental fees and expenses. Be sure that every dollar you will be required to spend will be covered in the contract.
5. Subcontractors. Many general contractors hire subcontractors to perform work on the project. Subcontractors often include roofers, plumbers, drywall subs, and stucco subs, painters and electricians. Be sure your contract includes provisions for dealing with subcontractors and how they will be chosen and paid. You may want to be sure you have the right to veto or remove any subcontractor from the job. You also want to be sure that you understand all the warranties associated with everyone who performs work on the job, and the warranties for all products and materials used in your home. At any time, the owner of the property may request a list of subcontractors or suppliers by registered or certified mail and served on the contractor at the address in the Notice of Commencement (Florida Statute 713.165). During the construction process, you may receive a Notice to Owner from someone working on your job. Be sure that understand what a Notice to Owner means, and why you must be sure to follow the Florida Construction Lien law very carefully to avoid paying twice for the same work or materials. In general, you must be sure that you obtain a release of lien from every person who serves a Notice to Owner, and the written, sworn promise of your contractor that everyone providing labor or materials to the job has been paid in full and all actual or potential liens released.
6. Workers’ Compensationa and Insurance. You must insist that everyone working on your project has complied with the requirements of the Florida Workers’ Compensation laws. You want to avoid any responsibility for injuries on the job. In general, you want to see proof of worker’s compensation coverage for every person on the job. Likewise, you want to see proof of proper insurance coverage for accidents and risk of loss. Make sure your contract specifically provides for such proof before anyone begins work on the job. See Florida Statute 440.05. Please note that everyone on the job should have either proof of Worker’s Compensation Coverage or else a Certificate of Election of Exemption, and the exemption is only good for two years. The dates of exemption should be listed on the Certificate.
6. Materials. Anyone supplying materials to your job may file a Notice to Owner. The problem is that you may not have ever met the person supplying those materials, but they may send you a Notice to Owner, and have a valid construction lien. Therefore, anytime you receive a Notice to Owner from anyone, you need to be sure that you pay for all materials supplied to your job. Materials often include wood, blocks, cabinets, and other items incorporated into the construction. Be sure that all the materialmen have been paid. Be sure that you make only proper payments on the construction project to avoid paying twice for the same improvements. See proper payments below. Also, many construction contracts contain allowance provisions for the owner to select certain items within a given allowance amount. Often you get to pick wallpaper, paint, tile, etc., but you have a specified allowance in dollars to work with. Be sure your contract clearly indicates how long you have to make your choices, what suppliers you may choose, what items you may choose, and every other detail about the choices you deem important. Be sure the contract also specifies how long you have to make your choices, and if you fail to act within that time, then what happens next. Furthermore, if you exhaust your allowance, what happens next. Likewise, if you do use your entire allowance, do you receive a credit? Be sure to cover those points in the construction contract. Also, be sure that if you do not spend the entire allowance, do you receive a credit on the total contract price? If so, how much?
7. Change Orders. Change orders describe the written documents, hopefully, that describes any changes to the construction contract. For the homeowner, changes often occur in construction. When you begin construction, which often includes demolition, you suddenly learn you cannot build as you described on your plans. You must make changes. Likewise, when you actually see things laid out, you may have a better design idea and what to move things around. Or, you decide you do not have enough money to do everything you originally hoped. In any case, changes often come to construction contracts. Be sure that your construction contract contains specific language about change orders. For each change order, be sure it is in writing, signed before any change work begins, specifies how long it will take, what will be done by whom, and how much it will change the total contract price. Try to avoid making changes and the signing the change order. All important changes must be in writing, and signed before further work begins.
8. Delays. Many construction contracts have provisions for delays caused by hurricanes, natural disasters, and other big events. Be sure that your construction contract places an obligation on your contractor to complete the job by a certain, specified date. Be realistic and flexible that unforeseen events may change that date, but without a completion date, many contractors do not work diligently to meet that date. If strong delay damages of $100.00 per day are described as liquidated damages for delay in the construction contract, then a court may be more likely to impose them, if they are unascertainable at contract formation and reasonable at the time you impose those damages.
9. Proper Payments. Florida construction law provides a scheme to be sure that owners do not have to pay twice for the same improvements to their property. Florida Statute 713.06(3) provides guidance on making proper payments, but the statute requires strict compliance and does not answer every question. At times, making proper payments may be difficult, but it will be your best defense against unpaid lienors on the job. The statute establishes an order and priority of payments. It requires that you be very careful to pay only persons entitled to payment from the funds available. If you have a construction loan, often the lender will release funds for payment only when they are satisfied, but you should be sure as well that only proper payments have been made.
10. Punch Out. As you come down to the end of the construction project, you may have a punch list of items still needing attention before the contractor finally leaves the job. In many cases, you will need to obtain a certificate of occupancy or completion. The construction permit will need a final inspection and close out the building permit. At this point, you want your contractor to turn over all warranty information and assure you that all work has been completed to your reasonable satisfaction. Please recall that you should not be crazy about every detail. Try to be reasonable with your contractor so your contractor will be reasonable with you. In winding up, you want to be sure that everyone entitled to payment has been paid in full. Be sure that you make only proper payments, as described above. You want to see a contractor’s final payment affidavit (Florida Statute 713.06(3)(c)) , specifying that everyone has been paid or plans for payment and releases of lien. You want to be sure that every Notice to Owner has a corresponding Final Release of Lien before you release the final payment, and retainage. You want to check the public records to be sure that no Claim of Lien has been filed on your property, and if so, then be sure the Claim of Lien has been fully resolved before final payment, including the recording of a Satisfaction of Lien. Even when you think you have finally finished everything, you may later find construction problems or even construction defects. Always try to resolve those problems with your contractor before you begin litigation or even think about starting litigation. Be sure that your construction contract provides a time for the contractor to return to the job after completion to fix any newly discovered problems, not apparent at first. In my personal experience, prayer with my clients helps immensely.
Homeowners Guide to Construction Law │ Herbert Allen
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.