THE NOTICE OF HOMEOWNER'S CONSTRUCTION INDUSTRY RECOVERY FUND DOES NOT APPLY TO ALL CONTRACTORS.

 

By: Randall Gilbert, Esq. ♦

 

♦  Randall L. Gilbert, was born in Miami, Florida, has argued to the Supreme Court of Florida and the District Courts of Appeal, Recipient of the National Institute of Trial Advocacy Award, 2003. Florida Certified Master Plumbing Contractor’s license, 1993; Member of Attorneys’ Title Fund, Vice Chairman of the Broward County Construction Lawyer's Association, 2005-2006; Broward County Bar Association; Licensed Florida Real Estate Agent, 2005; Admitted to Florida Bar, 1999, Practices in U.S. District Court, Southern and Northern Districts of Florida, 2000. Education: University of Florida (B.A., 1996); Nova Southeastern University, Shepard Broad Law Center (J.D., 1999). Practice Areas: Construction Litigation; Commercial Litigation; Contracts; Corporate; Appeals, and Real Property. Email: Randall L. Gilbert

 Firm Profile: The Firm counsels the construction industry primarily dealing with all sizes of State and Federal litigation and arbitration. Typical claims include licensure, construction liens and bonds, Non-payment, DBPR complaints, bidding, delays, defects, contract preparation and negotiation. 

 

 

Which contractors does it apply to?

The Homeowner's Construction Industry Recovery Fund is found in Florida Statute §489.1425 and after January 1, 2005, only applies to state licensed (not county licensed) Division I Contractors.  Division I Contractors are (a) General Contractors, (b) Building Contractors, and (c) Residential Contractors. See, Florida Statutes §489.1402(1)(d);  §489.105(3)(a)-(c) (2006).

 

Which Contractors does it NOT apply to?

For Contracts entered after Janary 1, 2005, The Notice does not apply to Division II Contractors.  Division II Contractors are (d) Sheet metal contractor (e) Roofing contractor (f) Class A air-conditioning contractor (g) Class B air-conditioning contractor (h) Class C air-conditioning contractor (i) Mechanical contractor  (j) Commercial pool/spa contractor (k) Residential pool/spa contractor (l) Swimming pool/spa servicing contractor (m) Plumbing contractor (n) Underground utility and excavation contractor (o) Solar contractor (p) Pollutant storage systems contractor or (q) Specialty contractors. Florida Statute §489.105(3)(d)-(q) (2006).

 

What does the Recovery Fund Notice have to say?

Once again, this only applies to state licensed General, Building, and Residential Contractors.  Florida Statute §489.1425 (2006) requires agreements exceeding $2,500.00 for repair, restoration, improvement, or construction to residential real property must contain a written statement explaining the consumer's rights under the recovery fund, and must be in written substantially in the following form:

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: Construction Industry Recovery Fund 1940 North Monroe Street, Suite 42 Tallahassee, FL 32399 telephone: (850) 921-6593.

 

Penalty for failure to put Notice in the Contract.

Usually the Department of Business and Professional Regulations (“DBPR”) will send a warning first advising a Contractor that the notice must be in place.  However, the DBPR may fine a Contractor up to $500 for the first violation and  $1,000 per violation thereafter. 

 

Validity of Contract without the Recovery Fund Notice

Although the DBPR may whack a contractor with fines, it seems that a construction contract would still be valid even if it did not include the Recovery Fund Notice.  Currently, there are no cases, statutes, nor rules which hold, that an entire construction contract could be rendered voidable and unenforceable where it fails to include the Recovery Fund Notice.

 

Florida Statute §489.129(i) (2006) only seems to allow the DBPR (and not Courts) to take administrative action (and not civil action) if a Contractor Fail[ed] in any material respect to comply with the provisions of Chapter 489.

 

Florida Statute §489.131(12) (2006) states that, “Unless specifically provided, the provisions of this part shall not be construed to create a civil cause of action.” 

 

In a similar context, the fourth district in SeaBridge, Inc. v. Superior Kitchens, Inc., 672 So.2d 848, 850 (Fla. 4th DCA 1996) followed the supreme court's decision in Murphy v. N. Sinha Corp., and stated that:

 

Chapter 489 establishes licensing procedures and regulatory duties for the construction industry and created the Construction Industry Licensing Board to enforce the performance of these procedures and duties. There is no evidence in the language of the statute or the statutory structure that a 0private cause of action against a qualifying agent was contemplated by the legislature in enacting this statute.

 

However, until this question is decided unquestionably, the better practice is to include the Recovery Fund Notice.

 

How much can be recovered from the Fund?

For Contracts before January 1, 2004, $25,000, for actual damages and which does not include costs interest, attorney's fees, court costs, medical damages, or punitive damages. Contracts entered after January 1, 2004, payment from the recovery fund shall be subject to a $50,000 maximum payment. Florida Statute §489.143(2) (2006).

 

Can the Recovery Fund go back against the Contractor for payment?

Yes for whatever was paid to the Homeowner. 

 

Exclusions under the Recovery Fund?

  1. Claimants who are not homeowners and who are not natural persons.
  2. The construction contract was entered into after January 1, 2005 and was not entered into with a General Contractor, Building Contractor, or Residential Contractor (i.e. Division I Contractors).
  3. The contractor did not hold a valid and current license at the time of the violation.
  4. The claimant does not have a final order from either a court of competent jurisdiction or the DBPR awarding restitution.
  5. The final order is not based upon a violation of s. 489.129(1)(g), (j), or (k),[1] or s. 713.35, Florida Statutes (2006).[2]
  6. The claim is being made more than one year from the date of the entry of the final order.
  7. The claimant is a person who is precluded from making a claim for recovery under s. 489.141(2), Florida Statutes.

 

For Homeowners, claim forms and more information can be found at:

Recovery Funds FAQ's

Recovery Fund Claim Form

FHCRP Information Sheet

Recovery Fund Required Documents

Recovery Fund Asset Search

Recovery Fund Affidavit of Asset Search

 

 

THE INFORMATION YOU OBTAIN AT THIS SITE IS NOT, NOR IS IT INTENDED TO BE, LEGAL ADVICE. YOU SHOULD CONSULT AN ATTORNEY FOR INDIVIDUAL ADVICE REGARDING YOUR OWN SITUATION.

 

Copyright © by http://www.theconstructionlawyers.com All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.



 


[1] (g) Committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:

  1. Valid liens have been recorded against the property of a contractor's customer for supplies or services ordered by the contractor for the customer's job; the contractor has received funds from the customer to pay for the supplies or services; and the contractor has not had the liens removed from the property, by payment or by bond, within 75 days after the date of such liens;
  2. The contractor has abandoned a customer's job and the percentage of completion is less than the percentage of the total contract price paid to the contractor as of the time of abandonment, unless the contractor is entitled to retain such funds under the terms of the contract or refunds the excess funds within 30 days after the date the job is abandoned; or
  3. The contractor's job has been completed, and it is shown that the customer has had to pay more for the contracted job than the original contract price, as adjusted for subsequent change orders, unless such increase in cost was the result of circumstances beyond the control of the contractor, was the result of circumstances caused by the customer, or was otherwise permitted by the terms of the contract between the contractor and the customer.

(j) Abandoning a construction project in which the contractor is engaged or under contract as a contractor. A project may be presumed abandoned after 90 days if the contractor terminates the project without just cause or without proper notification to the owner, including the reason for termination, or fails to perform work without just cause for 90 consecutive days.

(k) Signing a statement with respect to a project or contract falsely indicating that the work is bonded; falsely indicating that payment has been made for all subcontracted work, labor, and materials which results in a financial loss to the owner, purchaser, or contractor; or falsely indicating that workers' compensation and public liability insurance are provided.

[2] “Any person, firm, or corporation who knowingly and intentionally makes or furnishes to another person, firm, or corporation an affidavit, a waiver or release of lien, or other document, 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….”