If you are working as a prime contractor on residential construction projects in Florida, the law requires that you include certain clauses and notices. Failure to do so can kill your ability to file a mechanics lien. Plus, it can open you up to potential fines and other penalties. Let’s take a look at everything you must include in a Florida residential construction contract.
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Florida residential construction contracts
Many states have various rules and requirements to protect homeowners when it comes to construction. That’s because they’re not your “average consumer” of construction services. State legislatures around the country require certain notices and provisions in a construction contract to ensure that they are aware of their rights and liabilities. The state of Florida is no different.
In response to this need to protect homeowners, there are certain provisions that must be included in a residential construction contract. These are required under Florida’s consumer protection and construction laws.
Construction Recovery Fund notice
This paragraph needs to be included in any residential project that is over $2,500. This is a brief statement explaining recovery options for consumers under the Florida Homeowners’ Construction Recovery Fund. The language for this notice is found under Fla. Stat. §489.1425, which states:
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: (850) 487-1396; 2601 Blair Stone Road, Tallahassee, FL 32399.
The first violation under this act will result in a fine of up to $500. For any subsequent violations, a contractor faces a fine of up to $1,000 per violation. All fines imposed will be deposited into the fund itself.
Mechanics lien notice
When drafting contracts, prime contractors need to include the Florida mechanics lien notice as required Fla. Stat. §713.015. This notice explains that, if you don’t pay them, contractors and others who work on your house have the right to file a construction lien, commonly known as a mechanics lien.
This notice must be included in the contracts over $2,500 for the construction or improvement of any single or multiple-family dwelling up to 4 units.
The notice must be in 12pt, bold, capitalized font on either the first page of the contract or a separately executed document.
The required language is as follows:
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.
As a prime contractor, failure to include this paragraph in your contract will be fatal to your mechanics lien rights. However, it will not affect the rights of any other subs or suppliers on the project.
Discover how a Florida contractor’s average DSO went from 60 days to 14 days after sending notices on every job.
Contractor license number
A Florida contractor license is required to perform a wide array of construction work in the state. This is why contractors must provide their license number in the contract documents. Under Fla. Stat. §489.119(5), whether a licensed contractor is drawing up a document for a customer or running an advertisement, all communications must include their license number. Communications include contracts, estimates, proposals, and the like. Including your company branded work vehicle! This is a blanket rule for any construction contracts and advertisements, not just for residential projects.
If you fail to provide your license number, you may receive a notice of noncompliance from the licensing board. They may also issue a fine or citation if you fail to correct the violation within 30 days or any subsequent offense. This is just another example of how serious Florida takes licensing.
Construction defect procedures notice
Lastly, this is another provision that state law requires – not only in residential contracts, but in all Florida construction contracts. Under Fla. Stat. §558.005, there are certain notice and opportunity to cure defective work requirements.
ANY CLAIMS FOR CONSTRUCTION DEFECTS ARE SUBJECT TO THE NOTICE AND CURE PROVISIONS OF CHAPTER 558, FLORIDA STATUTES.
There is no penalty for contractors or design professionals for not including this in your construction contract. This is merely required to inform the owner of their rights when faced with defective work, as opposed to a penalty.
Construction contracts in general
At the end of the day, the construction industry (and specifically residential construction) is all about referrals. The more information you provide to homeowners, the happier and more comfortable they’ll be when it comes to signing that contract. And keep in mind, these are just the provisions that the law requires. There are still a ton of other important clauses and provisions that contractors should consider. And as always, be sure to get everything in writing!