In its recent session, the Florida Legislature passed laws addressing contractor certification, public construction bidding, construction bonds and liens, and workers’ compensation that specifically apply to the construction industry. Here are summaries of the most important changes.
Certification of Registered Contractors
On April 8, 2012, the Governor signed into law important changes in the way the Florida Construction Industry Licensing Board certifies contractors. Specifically, the new law renews the “grandfathering” statute and extends the deadline to apply for certification. Beginning on October 1, 2012, certain contractors (such as general, building and roofing contractors) that hold a valid registered local license may obtain a contractor certification from the Construction Industry Licensing Board. This means that registered contractors, which are contractors who may only work in the municipality they are registered in, may obtain a state certification permitting them to work anywhere in the state simply by being a locally registered contractor. The legislature has extended the deadline for licensed contractors to apply for certification to November 1, 2014.
Public Bids
On March 23, 2012, the Governor signed into law a bill that requires all state and local governmental entities to open sealed bids (submitted pursuant to a competitive solicitation) and announce the name of each bidder and the price of each bid at a public meeting. This means that all bids for public construction projects will be opened and announced on the record at a duly noticed public meeting of the local governmental entity that requested the bids. As such, the name of each bidder and the price of each bid shall be made public and will become a public record. Consequently, the name of each bidder and the price submitted will now be made available to the public upon request and subject to the provisions of Florida’s public records act.
Bonds for Construction of Public Buildings
Currently any person who enters into a contract for $100,000.00 or more with a state or local governmental entity to construct or repair a public building must obtain a payment and performance bond.
Beginning on October 1, 2012, the new law requires the front page of the bond to show the bond number assigned by the surety and the name, address and phone number of the contractor, surety, and the contracting public entity; the contract number assigned by the contracting public entity; and a description of the project.
For contracts entered into after October 1, 2012, contractors will be required to provide the state or local governmental entity with a certified copy of the recorded bond before commencing work. If the contractor does not provide the state or local governmental entity with the required certified copy of the bond, then the contractor cannot be paid until the certified copy of the bond is provided.
Payment bonds on public projects issued on or after October 1, 2012, will be unenforceable if they limit the duration of the bond or place any conditions precedent to enforcement of a claim against the bond beyond those allowed for by law.
The Notice of Contest of Claim Against a Payment Bond for a public project shall no longer be mailed by the clerk to the claimant but must now be served by the contractor or contractor’s attorney on the claimant. Furthermore, service of the Notice is now deemed complete upon actual receipt, rather than upon mailing.
For contracts entered into on or after October 1, 2012, public entities cannot condition payment to a contractor on the production of a release, waiver, or like document from a claimant demonstrating that the claimant does not have an outstanding claim related to the project. However, the surety may, in a writing served on the public entity, revoke its consent or direct the public entity to withhold a specified amount from a payment.
Changes to Construction Lien Law Regarding Leases
Beginning on October 1, 2012, where a lessor has a clause in a lease that states that the property is not subject to liens for improvements made by the lessee and the lessor records the lease or notice of the clause, then the property cannot be subject to liens for improvements made by the lessee even if other leases for premises on the parcel do not expressly prohibit liens or do not have identical clauses. The old law did not prohibit a lienor from arguing that its lien was valid on the basis that other leases on the parcel did not prohibit liens. However, the new law expressly prohibits this argument thereby further protecting the lessor.
Demand for a Copy of Contract and Statements of Account
Beginning on October 1, 2012, the new law requires additional information be included in a demand to a lienor or owner when requesting a copy of a contract or a statement of the amount due. Such demands must include a description of the property, the name(s) of the owner, the contractor, and the lienor’s customer, as provided in the lienor’s notice to owner (or notice to contractor).
Notice of Commencement and Notice of Nonpayment
The law used to provide that a Notice of Commencement could not expire before the completion of the construction and final payment to the contractor. Beginning on October 1, 2012, the new law has eliminated this limitation and provides that a Notice of Commencement expires one year from the date of recording unless a different date is specified in the notice.
Additionally, the new law also clarifies the requirement that if a payment bond is not recorded before construction commences, the lienor has options to calculate the time period in which it has to serve a Notice of Nonpayment to the contractor and surety. The lienor has the option to serve the notice 90 days after the final furnishing of labor, services, or materials, or 90 days after the date the lienor is served with a copy of the bond.
Notice of Contest
Current law permits a contractor who receives a Notice of Nonpayment to elect to shorten the time in which an action may be brought to enforce the payment bond (or lien). The contractor does so by filing a Notice of Contest of Claim with the clerk’s office specifying the amount of time.
Beginning on October 1, 2012, it is no longer sufficient for the contractor to mail the Notice of Contest to the person seeking to enforce the bond (or lien). The contractor must serve the person with a copy of the Notice.
Notice of Termination
Under existing law, an owner may terminate the period of effectiveness of a notice of commencement by serving a Notice of Termination. The new law requires the owner to serve a copy of the Notice on the contractor as well as on each lienor who has a contract directly with the owner or who has served a Notice to Owner.
Delivery of Notices, Generally
The legislature has updated the manner in which contracting-related notices, claims of liens, or other instruments may be served by adding service via common carrier delivery and Global Express Guaranteed.
Workers’ Compensation
Under the current law, corporate officers (or members of limited liability companies with a minimum of 10% ownership) in the construction industry may elect to be exempt from workers’ compensation coverage requirements. An individual who makes such an election is not considered an employee for purposes of premium calculations and is not eligible to receive workers’ compensation benefits.
Beginning on January 1, 2013, requirements for corporate officers to apply for an exemption have been eased. Corporate officers are no longer required to submit their applications in writing. The new law allows for the electronic submission of exemption applications. In addition, the applicant is no longer required to notarize the application or to file copies of stock certificates with the application. Rather, the applicant need only submit their date of birth, Florida driver’s license number or identification card number, and a statement of their ownership interest in the business.
The new law also expands the exemption to all industries, not just the construction industry.
The Loren Law Firm, based in West Palm Beach, specializes in the representation of businesses and management in the construction industry. Bruce E. Loren is Florida Bar Board Certified in Construction Law.