On July 1, 2016 House Bill 535 will become effective. It was unanimously approved by the House and Senate, signed by the Governor, and significantly affects many facets of the Construction Industry. As one result, all Class II Contractors including:
- Sheet Metal Contractors;
- Roofing Contractors;
- Class A, B, and C Air-Conditioning Contractors;
- Mechanical Contractors;
- Commercial and Residential Pool/Spa Contractors;
- Swimming Pool/Spa Servicers;
- Plumbing Contractors;
- Underground Utility and Excavation Contractors;
- Solar Contractors;
- Pollutant Storage Systems Contractors; and
- Specialty Contractors
who did not previously include the notice concerning the Florida Homeowner’s Construction Recovery Fund in their Residential Service Contracts must update their agreements. If they fail to include the required language and the value of all labor and materials exceeds $2,500, they can face a potential fine of $500 for the first violation and $1,000 for the second violation.
The Florida Homeowners’ Construction Recovery Fund was created under Chapter 489, Florida Statutes as a separate account in the Professional Regulation Trust Fund. The recovery fund is funded by a surcharge of 1.5% on all permit fees. It provides compensation to Florida homeowners who have been harmed by Florida licensed contractors.
The maximum recovery against a Division II contractor is $15,000 per claim and must be based on contracts entered after July 1, 2016. There is an aggregate cap for all claims against any one Division II contractor of $150,000.00. If the Fund makes a payment to a Homeowner in settlement of a claim against a Contractor, the Contractor’s license is automatically suspended. The license cannot not be reinstated until the Fund has been repaid in full, plus interest, even if the debt is discharged in bankruptcy.
All Division II contractors should include the following statutorily required language in their Residential Service Contracts immediately:
FLORIDA HOMEOWNER’S CONSTRUCTION
PAYMENT, UP TO A LIMITED AMOUNT, 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 Licensing Board
2601 Blairstone Road
Tallahassee, Florida 32399-1039
If you are required to update your form residential contract, you should also consider adding warranty disclaimers to prevent uninsured claims and reconsider whether to include a prevailing party attorney fee provision in the agreement. Having a well-drafted Residential Service Agreement can help prevent claims against Division II Contractors, prevent recovery from the Florida Homeowner’s Construction Recovery Fund, and suspension of contracting licenses.