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Florida House Bill 1719

ENROLLED HB 1719, Engrossed 1 2003 Legislature

A bill to be entitled
An act relating to consumer protection in the construction
lien law; creating s. 713.015, F.S.; providing mandatory
contract provisions for residential construction
contracts; amending s. 713.06, F.S.; providing an
additional warning statement on a notice to owner;
providing a form for a contractor's final payment
affidavit; amending s. 713.08, F.S.; providing a warning
statement on a claim of lien; amending s. 713.135, F.S.;
requiring the lien law summary to contain an explanation
of owners' rights; requiring the issuing authority to mail
the lien law summary to the owner; amending s. 713.31,
F.S.; requiring a prosecuting entity to provide a copy of
the charging document to the Department of Business and
Professional Regulation; amending s. 713.345, F.S.;
providing permissive inferences that a person knowingly
and intentionally failed to properly apply construction
payments; requiring a prosecuting entity to provide a copy
of the charging document to the Department of Business and
Professional Regulation; amending s. 713.3471, F.S.;
requiring lenders to give certain notices regarding direct
loan disbursements to borrowers; amending s. 713.35, F.S.;
requiring a prosecuting entity to provide a copy of the
charging document to the Department of Business and
Professional Regulation; providing effective dates.

Be It Enacted by the Legislature of the State of Florida:

Section 1. Section 713.015, Florida Statutes, is created
to read:
713.015 Mandatory provisions for direct contracts.--Any
direct contract between an owner and a contractor, related to
improvements to real property consisting of single or multiple
family dwellings up to and including four units, must contain
the following provision printed in no less than 18-point,
capitalized, boldfaced type:

ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001-
713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR
PROVIDE MATERIALS 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 OR NEGLECTS TO MAKE OTHER LEGALLY REQUIRED
PAYMENTS, THE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR
PROPERTY FOR PAYMENT, EVEN IF YOU HAVE 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. FLORIDA'S CONSTRUCTION
LIEN LAW IS COMPLEX AND IT IS RECOMMENDED THAT WHENEVER A
SPECIFIC PROBLEM ARISES, YOU CONSULT AN ATTORNEY.
Section 2. Paragraph (c) of subsection (2) of section
713.06, Florida Statutes, is amended to read:
713.06 Liens of persons not in privity; proper payments.--
(2)
(c) The notice may be in substantially the following form
and must include the information and the warning contained in
the following form:

WARNING! FLORIDA’S CONSTRUCTION LIEN LAW ALLOWS SOME UNPAID
CONTRACTORS, SUBCONTRACTORS, AND MATERIAL SUPPLIERS TO FILE
LIENS AGAINST YOUR PROPERTY EVEN IF YOU HAVE MADE PAYMENT
IN FULL.

WARNING TO OWNER:UNDER FLORIDA LAW, YOUR FAILURE TO MAKE SURE
THAT WE ARE PAID MAY RESULT IN A LIEN AGAINST YOUR PROPERTY AND
YOUR PAYING TWICE.

TO AVOID A LIEN AND PAYING TWICE, YOU MUST OBTAIN A WRITTEN
RELEASE FROM US EVERY TIME YOU PAY YOUR CONTRACTOR.

NOTICE TO OWNER

To ... (Owner's name and address) ...

The undersigned hereby informs you that he or she has furnished
or is furnishing services or materials as follows:
... (General description of services or materials) ... for the
improvement of the real property identified as ... (property
description) ... under an order given by_______________.

Florida law prescribes the serving of this notice and restricts
your right to make payments under your contract in accordance
with Section 713.06, Florida Statutes.

IMPORTANT INFORMATION FOR
YOUR PROTECTION

Under Florida's laws, those who work on your property or
provide materials and are not paid have a right to enforce their
claim for payment against your property. This claim is known as
a construction lien.
If your contractor fails to pay subcontractors or material
suppliers or neglects to make other legally required payments,
the people who are owed money may look to your property for
payment, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN FULL.

PROTECT YOURSELF:
--RECOGNIZE that this Notice to Owner may result in a lien
against your property unless all those supplying a Notice to
Owner have been paid.
--LEARN more about the Construction Lien Law, Chapter 713,
Part I, Florida Statutes, and the meaning of this notice by
contacting an attorney or the Florida Department of Business and
Professional Regulation.
... (Lienor's Signature) ...
... (Lienor's Name) ...
... (Lienor's Address) ...

Copies to: ... (Those persons listed in Section 713.06(2)(a)
and (b), Florida Statutes) ...
The form may be combined with a notice to contractor given under
s. 255.05 or s. 713.23 and, if so, may be entitled "NOTICE TO
OWNER/NOTICE TO CONTRACTOR."
Section 3. Effective January 1, 2004, paragraph (d) of
subsection (3) of section 713.06, Florida Statutes, is amended
to read:
713.06 Liens of persons not in privity; proper payments.--
(3) The owner may make proper payments on the direct
contract as to lienors under this section, in the following
manner:
(d) When the final payment under a direct contract becomes
due the contractor:
1. The contractor shall give to the owner a final payment
anaffidavit stating, if that be the fact, that all lienors
under his or her direct contract who have timely served a notice
to owner on the owner and the contractor have been paid in full
or, if the fact be otherwise, showing the name of each such
lienor who has not been paid in full and the amount due or to
become due each for labor, services, or materials furnished. The
affidavit must be in substantially the following form:

CONTRACTOR’S FINAL PAYMENT AFFIDAVIT
State of Florida
County of ______
Before me, the undersigned authority, personally appeared (name
of affiant), who, after being first duly sworn, deposes and says
of his or her personal knowledge the following:
1. He or she is the (title of affiant), of (name of
contractor’s business), which does business in the State of
Florida, hereinafter referred to as the “Contractor.”
2. Contractor, pursuant to a contract with (name of
owner), hereinafter referred to as the “Owner,” has furnished or
caused to be furnished labor, materials, and services for the
construction of certain improvements to real property as more
particularly set forth in said contract.
3. This affidavit is executed by the Contractor in
accordance with section 713.06 of the Florida Statutes for the
purposes of obtaining final payment from the Owner in the amount
of $ .
4. All work to be performed under the contract has been
fully completed, and all lienors under the direct contract have
been paid in full, except the following listed lienors:
NAME OF LIENOR______________________________AMOUNT DUE
Signed, sealed, and delivered this .... day of ...., ....,
By______________(name of affiant)
_______________(title of affiant)
__(name of contractor’s business)

Sworn to and subscribed before me this .....day of ....by
(name of affiant), who is personally known to me or
produced..... as identification, and did take an oath.
_______________________________(name of notary public)
Notary Public
My Commission Expires:
(date of expiration of commission)

The contractor shall have no lien or right of action against the
owner for labor, services, or materials furnished under the
direct contract while in default for not giving the owner the
affidavit; however, the negligent inclusion or omission of any
information in the affidavit which has not prejudiced the owner
does not constitute a default that operates to defeat an
otherwise valid lien. The contractor shall execute the affidavit
and deliver it to the owner at least 5 days before instituting
an action as a prerequisite to the institution of any action to
enforce his or her lien under this chapter, even if the final
payment has not become due because the contract is terminated
for a reason other than completion and regardless of whether the
contractor has any lienors working under him or her or not.
2. If the contractor's affidavit required in this
subsection recites any outstanding bills for labor, services, or
materials, the owner may, after giving the contractor at least
10 days' written notice, pay such bills in full direct to the
person or firm to which they are due, if the balance due on a
direct contract at the time the affidavit is given is sufficient
to pay them and lienors giving notice, and shall deduct the
amounts so paid from the balance due the contractor. Lienors
listed in said affidavit not giving notice, whose 45-day notice
time has not expired, shall be paid in full or pro rata, as
appropriate, from any balance then remaining due the contractor;
but no lienor whose notice time has expired shall be paid by the
owner or by any other person except the person with whom that
lienor has a contract.
3. If the balance due is not sufficient to pay in full all
lienors listed in the affidavit and entitled to payment from the
owner under this part and other lienors giving notice, the owner
shall pay no money to anyone until such time as the contractor
has furnished him or her with the difference; however, if the
contractor fails to furnish the difference within 10 days from
delivery of the affidavit or notice from the owner to the
contractor to furnish the affidavit, the owner shall determine
the amount due each lienor and shall disburse to them the
amounts due from him or her on a direct contract in accordance
with the procedure established by subsection (4).
4. The owner shall have the right to rely on the
contractor's affidavit given under this paragraph in making the
final payment, unless there are lienors giving notice who are
not listed in the affidavit. If there are lienors giving notice
who are not so listed, the owner may pay such lienors and any
persons listed in the affidavit that are entitled to be paid by
the owner under subparagraph (d)2. and shall thereupon be
discharged of any further responsibility under the direct
contract, except for any balance that may be due to the
contractor.
5. The owner shall retain the final payment due under the
direct contract that shall not be disbursed until the
contractor's affidavit under subparagraph (d)1. has been
furnished to the owner.
6. When final payment has become due to the contractor and
the owner fails to withhold as required by subparagraph (d)5.,
the property improved shall be subject to the full amount of all
valid liens of which the owner has notice at the time the
contractor furnishes his or her affidavit.
Section 4. Subsection (3) of section 713.08, Florida
Statutes, is amended to read:
713.08 Claim of lien.--
(3) The claim of lien shall be sufficient if it is in
substantially the following form, and includes the following
warning:
WARNING!
THIS LEGAL DOCUMENT REFLECTS THAT A CONSTRUCTION LIEN HAS
BEEN PLACED ON THE REAL PROPERTY LISTED HEREIN. UNLESS THE
OWNER OF SUCH PROPERTY TAKES ACTION TO SHORTEN THE TIME
PERIOD, THIS LIEN MAY REMAIN VALID FOR ONE YEAR FROM THE
DATE OF RECORDING, AND SHALL EXPIRE AND BECOME NULL AND
VOID THEREAFTER UNLESS LEGAL PROCEEDINGS HAVE BEEN
COMMENCED TO FORECLOSE OR TO DISCHARGE THIS LIEN.

CLAIM OF LIEN
State of _____
County of _____
Before me, the undersigned notary public, personally
appeared _____, who was duly sworn and says that she or he is
(the lienor herein) (the agent of the lienor herein _____),
whose address is _____; and that in accordance with a contract
with _____, lienor furnished labor, services, or materials
consisting of _____ on the following described real property in
_____ County, Florida:

(Legal description of real property)

owned by _____ of a total value of $_____, of which there
remains unpaid $_____, and furnished the first of the items on
_____, ... (year) ..., and the last of the items on _____, ...
(year) ...; and (if the lien is claimed by one not in privity
with the owner) that the lienor served her or his notice to
owner on _____, ... (year) ..., by _____; and (if required)
that the lienor served copies of the notice on the contractor on
_____, ... (year) ..., by _____ and on the subcontractor,
_____, on _____, ... (year) ..., by _____.
... (Signature) ...

Sworn to (or affirmed) and subscribed before me this _____
day of _____, ... (year) ..., by ... (name of person making
statement) ....

... (Signature of Notary Public - State of Florida) ...
... (Print, Type, or Stamp Commissioned Name of Notary Public)
...

Personally Known _____ OR Produced Identification _____

Type of Identification Produced_______________

However, the negligent inclusion or omission of any information
in the claim of lien which has not prejudiced the owner does not
constitute a default that operates to defeat an otherwise valid
lien.
Section 5. Effective January 1, 2004, paragraphs (b) and
(c) of subsection (1) of section 713.135, Florida Statutes, are
amended to read:
713.135 Notice of commencement and applicability of
lien.--
(1) When any person applies for a building permit, the
authority issuing such permit shall:
(b) Provide the applicant and the owner of the real
property upon which improvements are to be constructed with a
printed statement stating that the right, title, and interest of
the person who has contracted for the improvement may be subject
to attachment under the Construction Lien Law. The Department of
Business and Professional Regulation shall furnish, for
distribution, the statement described in this paragraph, and the
statement must be a summary of the Construction Lien Law and
must include an explanation of the provisions of the
Construction Lien Law relating to the recording, and the posting
of copies, of notices of commencement and a statement
encouraging the owner to record a notice of commencement and
post a copy of the notice of commencement in accordance with s.
713.13. The statement must also contain an explanation of the
owner's rights if a lienor fails to furnish the owner with a
notice as provided in s. 713.06(2) and an explanation of the
owner's rights as provided in s. 713.22. The authority that
issues the building permit must obtain from the Department of
Business and Professional Regulation the statement required by
this paragraph and must mail that statement to any owner making
improvements to real property consisting of a single or multiple
family dwelling up to and including 4 units.However, the
failure by the authorities to provide the summary does not
subject the issuing authority to liability.
(c) In addition to providing the owner with the statement
as required by paragraph (b),inform each applicant who is not
the person whose right, title, and interest is subject to
attachment that, as a condition to the issuance of a building
permit, the applicant must promise in good faith that the
statement will be delivered to the person whose property is
subject to attachment.
Section 6. Effective January 1, 2004, subsection (3) of
section 713.31, Florida Statutes, is amended to read:
713.31 Remedies in case of fraud or collusion.--
(3) Any person who willfully files a fraudulent lien, as
defined in this section, commits a felony of the third degree,
punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
A state attorney or the statewide prosecutor, upon the filing of
an indictment or information against a contractor,
subcontractor, or sub-subcontractor which charges such person
with a violation of this subsection, shall forward a copy of the
indictment or information to the Department of Business and
Professional Regulation. The Department of Business and
Professional Regulation shall promptly open an investigation
into the matter, and if probable cause is found, shall furnish a
copy of any investigative report to the state attorney or
statewide prosecutor who furnished a copy of the indictment or
information and to the owner of the property which is the
subject of the investigation.
Section 7. Section 713.345, Florida Statutes, is amended
to read:
713.345 Moneys received for real property improvements;
penalty for misapplication.--
(1)(a) A person, firm, or corporation, or an agent,
officer, or employee thereof, who receives any payment on
account of improving real property must apply such portion of
any payment to the payment of all amounts then due and owing for
services and labor which were performed on, or materials which
were furnished for, such improvement prior to receipt of the
payment. This paragraph does not prevent any person from
withholding any payment, or any part of a payment, in accordance
with the terms of a contract for services, labor, or materials,
or pursuant to a bona fide dispute regarding the amount due, if
any, for such services, labor, or materials.
(b) Any person who knowingly and intentionally fails to
comply with paragraph (a) is guilty of misapplication of
construction funds, punishable as follows:
1. If the amount of payments misapplied have an aggregate
value of $100,000 or more, the violator is guilty of a felony of
the first degree, punishable as provided in s. 775.082, s.
775.083, or s. 775.084.
2. If the amount of payments misapplied have an aggregate
value of $20,000 or more but less than $100,000, the violator is
guilty of a felony of the second degree, punishable as provided
in s. 775.082, s. 775.083, or s. 775.084.
3. If the amount of payments misapplied have an aggregate
value of less than $20,000, the violator is guilty of a felony
of the third degree, punishable as provided in s. 775.082, s.
775.083, or s. 775.084.
(c) A permissive inference that a person knowingly and
intentionally misapplied construction funds in violation of
subsection (1) is created when a valid lien has been recorded
against the property of an owner for labor, services, or
materials; 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 the funds, to remit
sufficient funds to pay for such labor, services, or materials,
except for funds withheld pursuant to paragraph (1)(a).
(d) A state attorney or the statewide prosecutor, upon the filing of an indictment or information against a contractor,
subcontractor, or sub-subcontractor which charges such person
with a violation of paragraph (b), shall forward a copy of the
indictment or information to the Department of Business and
Professional Regulation. The Department of Business and
Professional Regulation shall promptly open an investigation
into the matter and, if probable cause is found, shall furnish a
copy of any investigative report to the state attorney or
statewide prosecutor who furnished a copy of the indictment or
information and to the owner of the property which is the
subject of the investigation.
(2) The provisions of This section doesdonot apply to
mortgage bankers or their agents, servants, or employees for
their acts in the usual course of the business of lending or
disbursing mortgage funds.
Section 8. Present subsections (1) and (2) of section
713.3471, Florida Statutes, are renumbered as subsections (2)
and (3), respectively, and a new subsection (1) is added to said
section, to read:
713.3471 Lender responsibilities with construction
loans.--
(1) Prior to a lender making any loan disbursement
directly to the owner, or jointly to the owner and any other
party, the lender shall give the following written notice to the
borrowers in bold type larger than any other type on the page:

WARNING!
YOUR LENDER IS MAKING A LOAN DISBURSEMENT DIRECTLY TO YOU
AS THE BORROWER, OR JOINTLY TO YOU AND ANOTHER PARTY. TO
PROTECT YOURSELF FROM HAVING TO PAY TWICE FOR THE SAME
LABOR, SERVICES, OR MATERIALS USED IN MAKING THE
IMPROVEMENTS TO YOUR PROPERTY, BE SURE THAT YOU REQUIRE
YOUR CONTRACTOR TO GIVE YOU LIEN RELEASES FROM EACH LIENOR
WHO HAS SENT YOU A NOTICE TO OWNER EACH TIME YOU MAKE A
PAYMENT TO YOUR CONTRACTOR.
Section 9. Effective January 1, 2004, section 713.35,
Florida Statutes, is amended to read:
713.35 Making or furnishing false statement.--Any person,
firm, or corporation who knowingly and intentionally makes or
furnishes to another person, firm, or corporation, a written
statement in the form of an affidavit, whether or not under
oath, containing false information about the payment status of
subcontractors, sub-subcontractors, or suppliers in connection
with the improvement of real property in this state, knowing
that the one to whom it was furnished might rely on it, and the
one to whom it was furnished will part with draw payments or
final payment relying on the truth of such statement as an
inducement to do so is guilty of a felony of the third degree,
punishable as provided in s. 775.082 or s. 775.083. A state
attorney or the statewide prosecutor, upon the filing of an
indictment or information against a contractor, subcontractor,
or sub-subcontractor which charges such person with a violation
of this section, shall forward a copy of the indictment or
information to the Department of Business and Professional
Regulation. The Department of Business and Professional
Regulation shall promptly open an investigation into the matter
and, if probable cause is found, shall furnish a copy of any
investigative report to the state attorney or statewide
prosecutor who furnished a copy of the indictment or information
and to the owner of the property which is the subject of the
investigation.
Section 10. Except as otherwise provided herein, this act
shall take effect October 1, 2003.