Licensing is a very important part of any construction project, and for good reason. Knowing that a party has a required license provides peace of mind for the owner, who can rest easy knowing the hired party has the required expertise to do the job, and the licensed party will have all options open to make sure they are paid. Without following the proper requirements, receiving the proper permits, and having the proper qualified parties on site, general contractors can open themselves up to extremely high penalties and expensive lawsuits. They also will be in hot water with their local licensing board. Licensing can have significant legal effects on any construction issue. Specifically in Florida, unlicensed parties may not file mechanics liens, and unlicensed contractors can be subject to treble damages and attorney fees for negligent unlicensed construction. As the Florida Court examines, determining whether a contractor was licensed or not is not as clear as would seem.
Back in 2004, Taylor Morrison Services, Inc. (TMS), a general contractor, entered into an agreement with Carlos Ecos and Susan Bessing (Owners) to build a house. On the effective date of the contract, four “qualifying agents” were listed with the Licensing Board for the general contractor.
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According to Section 489.105 of Florida Statues, a “qualifying agent” is qualified by the Licensing Board and “has the responsibility to supervise, direct, manage, and control construction activities on a job for which he or she has obtained the building permit.” Section 489.128 states that a contractor “is unlicensed if [the contractor] does not have a primary or secondary qualifying agent . . . concerning the scope of work to be performed under the contract,” but “only if the contractor was unlicensed on the effective date of the original contract for the work, if stated therein, or, if not stated, the date the last party to the contract executed it, if stated therein.”
One of the qualified agents listed, Lisa Steiner, had resigned a few weeks before the effective date of the contract. It turns out that TMS had pulled a permit for the construction project with Steiner’s license. Steiner does not remember signing off for a permit and doubts the authenticity of the signature. She never authorized TMS to obtain a permit with her license. Stemming from this finding, it was determined that there was no licensed contractor supervising the construction project. TMS had a qualified agent employed besides Steiner, but apparently that agent did not really work on the project as well.
When the project was finished, the Owners found multiple defects with the house. The damages were calculated to be around $200,000. The Owners sued TMS for negligent unlicensed construction, asking for treble damages and attorney fees. Florida Trial Court determined TMS was unlicensed and negligent. TMS appealed.
The Court’s Decision
In Taylor Morrison Servs. v. Ecos, 2015 Fla. App. LEXIS 8096, the Florida Court of Appeals was faced with the issue of whether TMS was an unlicensed general contractor concerning a negligent unlicensed construction claim. The court looked to the Florida Statute stating
To be considered licensed under section 489.128(1), a business organization must have a “qualifying agent in accordance with this part concerning the scope of the work to be performed under the contract,” and this determination must be made as of the contract’s effective date when, as here, that date is known. Section 489.128(1)(c) precludes considering events that occur after that date, by instructing that a contractor be considered unlicensed “only if” the contractor is unlicensed at that specific time.
The Appellate Court determined the trial court’s initially ruling against TMS was based off of events that occurred after the effective date of the contract. The permitting of the project and its (lack of) supervision did not occur prior to the effective date. The court found that those requirements cannot be part of the date-specific analysis because it will be impossible to determine whether the contractor will actually be able to comply with permitting and supervision requirements on the effective date of the contract. Furthermore, the court found that the requirement that a construction party has a qualified agent does not refer to actual performance of the qualified agent. The party must just be associated with a qualified agent at the time of the effective date of the contract. TMS was, in fact, associated with a qualified agent at that time. Accordingly, the Florida Appellate Court reversed the trial court’s ruling.
Whether a party is licensed in Florida can be a complicated and important question. Licensing can determine the type of legal remedies you are afforded or the amount of damages you may have to pay for defects. Unlicensed parties are not allowed to file mechanics liens or afforded any lien rights. Although, if you are a licensed party, your lien rights are unaffected by contracting with an unlicensed party. Unlicensed parties at certain times can also be subject to treble damages and attorneys fees for negligent unlicensed construction. Be careful and be aware of who you are contracting with. Practicing due diligence to make sure all requirements and permits have been met on your construction project can save a lot of time and money in litigation.