Payment bonds are especially helpful in Florida because public projects are not subject to a claim of lien. However, payment bonds in Florida have a lot of specific requirements and time periods that you must meet in order to secure the right to payment through a bond. Florida legislature has new changes coming to the payment bond claim process, specifically to the Florida Notice of Nonpayment. It is crucial that general contractor, material suppliers, and all other contractors working within the state be aware of and comply with these changes. Read on to find out how changes will affect your lien rights.
Florida HB 1247: Changes to the bond claim process
Florida House Bill 1247 will make some substantive changes to the laws regulating Florida construction bonds. This bill will go into effect soon and will apply to payment bonds issued on or after October 1, 2019. Although there are several changes, the most notable ones are those concerning how to perfect a claim against a contractor payment bond using a Notice of Nonpayment. These changes affect both Florida Statutes §255.05 and §713.23 which regulate public and private bond claims respectively.
Statutory form for Florida Notice of Nonpayment
Under the current law, the Florida Notice of Nonpayment merely had include written notice with a description of the labor, services, or materials and the unpaid amount. That’s not much to go on. When these new changes go into effect, this notice will be drastically altered by requiring a statutory form and the inclusion of additional information that will affect its validity.
As far as the additional information that must be provided, the Notice of Nonpayment should also include:
- The nature of labor or serviced performed or to be performed
- The materials furnished or to be furnished
- The amount already paid on the account, the amount owed, and the amount to become due
- If the amount paid includes retainage, the claimant must specify the portion of the amount claimed that constitutes the retainage
Also, under the new law, you must sign this notice under oath and notarize it. Additionally, service of the notice should be anytime during the progress of the work, but no later than 90 days after the final furnishing of labor, services, or materials. A quick note: it’s often best to deliver the notice by certified mail. For equipment lessors, this is the last day that the equipment was on the job site and available for use.
The new, statutory form of the Florida Notice of Nonpayment, which you need in order to make a bond claim, should be in substantially the same form.
The Florida Notice of Nonpayment Form
NOTICE OF NONPAYMENT
To… (name of contractor and address)
… (name of surety and address)…
The undersigned notifies you that:
- The (lienor/claimant) has furnished… (describe labor, services, or materials)… for the improvement of the real property identified as… (property description)… The corresponding amount unpaid to date is $…, of which $… is unpaid retainage.
- The (lienor/claimant) has been paid to date the amount of $… for previously furnishing… (describe labor, services, or materials)… for this improvement.
- The (lienor/claimant) expects to furnish… (describe labor, services, or materials)… for this improvement in the future (if known), and the corresponding amount expected to become due is $… (if known).
I declare that I have read the foregoing Notice of Nonpayment and that the facts stated in it are true to the best of my knowledge and belief.
… (signature and address of lienor/claimant)…
*Note: that the term “lienor” denotes private projects, while “claimant” denotes public projects.
Fraudulent Florida notices of nonpayment can cause you to lose your right to file a claim
This specific change is incredibly significant to note for construction participants in Florida. Under the new statute, if you serve a fraudulent notice of nonpayment, the you will forfeit all of your rights to the bond. The new statute also sets forth the three circumstances that will give rise to a fraudulent notice defense. Specifically, (1) the willful exaggeration of the unpaid balance, (2) the inclusion of any labor, services, or materials that weren’t actually provided to the project, and (3) preparing the notice with willful or gross negligence that results in an exaggeration.
That doesn’t mean that any error in the notice will constitute a fraudulent notice. The statute also provides an exception to any minor mistakes or good faith dispute over the amount due. However, if such a mistake results in some sort of prejudice to the contractor or surety, then the mistake provides a strong defense to payment.
These new notice requirements require much more information than they do now, and more information means more room for error. When preparing a Florida notice of nonpayment, claimants need to make sure that they calculate the unpaid amount and itemize the labor and materials provided carefully, to avoid any problems down the line.
Anyone working on a construction project in the state of Florida needs to be aware of these changes. Once October 1, 2019, passes, all Florida Notices of Nonpayment must be in the prescribed statutory form to be valid. Additionally, you should fill in the amounts and claims provided therein cautiously. If you don’t send the notice in the correct form, or if it contains any exaggerated debt amounts or labor and materials that you didn’t provide to the project, the you can lose the ability to claim payment from the bond.