1998 Changes to Public Works Bonds and Construction Lien Law

Florida’s Construction Lien Law was changed in 1998 to address issues with construction liens and payment bonds for public works. The changes reflect compromises between different groups in the construction industry, but there may still be questions about the language used. Confusing parts of the law are usually fixed in the next year. The law requires contractors to record a payment bond for public works projects. The bond must include specific information on the first page, like the contractor’s name and address, the property being worked on, and the improvement being made. There is now a process for shortening the time to file a lawsuit on the bond. Contractors can record a notice of contest of claim against the bond, but only after the claimant has stopped working on the project. This notice must be served to the claimant’s address listed in the notice of nonpayment. The details of this process may be a bit confusing and could potentially cause problems. Contractors who have not been paid for their work on a project can now sue for the retainage they are owed within one year of completing the job, or within 90 days of the contractor receiving their final payment. If they don’t get paid, they can take legal action against the contractor or the surety.

There is also a rule that allows contractors to ask for a sworn statement of what they are owed. If the other party doesn’t respond within 30 days, or gives false information, it can affect their rights to the money they are owed. If a contractor has a payment bond and the public owner pays the contractor or a claimant, the contractor can ask the claimant for a written statement about what work they did, what materials they used, how much they got paid, and how much they’re owed. The request has to be sent to the address and person the claimant listed when they first asked to get paid. If the claimant doesn’t respond within 30 days, or if they lie, they might lose their rights to the bond. But if the request isn’t sent to the right address or person, there’s no consequence. If the contractor asks more than once and the information hasn’t changed, there’s no consequence for not responding to the later requests. If someone makes a false or fraudulent statement when trying to get a bond for a construction project, they could lose their rights to the bond. The law also says that if someone leaves out important information or includes wrong information in their statement, they can still lose their rights to the bond if it causes harm to the contractor. There have also been changes to the law about what counts as construction work and who needs to be listed on the final contractor’s paperwork. The 1998 change to the law says that when you file a notice that you haven’t been paid for work you did, you have to say that everyone who sent a notice to the building owner and the main contractor has been paid. You don’t have to list someone who should have sent a notice, but didn’t. But, if you want to be included in a list of people who haven’t been paid, you have to send a notice to the main contractor. If the owner makes a mistake in the paperwork for a construction project that doesn’t hurt anyone, it doesn’t cancel out their right to get paid. The owner has to let the contractor and any other people who have sent a notice know if they decide to end the project. The owner can send this notice by fax if they put a fax number in the paperwork. If they don’t want to get notices by fax, they don’t have to put their fax number in the paperwork. Before July 1, 1998, certified mail had to be delivered with evidence of delivery. After that date, there are now two ways to serve notices by certified mail. The first way requires proof of delivery within 45 days from when the work or delivery was first done. The second way allows for service to be considered as of the date of mailing without proof of delivery, as long as the notice is mailed within 40 days of the work being done and a mail log is maintained. This change was meant to save money, but there is a risk that the notice may not actually be received. Additionally, for bond claims, a notice of contest can be recorded, and the bond claimant has 60 days to bring a lawsuit after the clerk mails a copy of the notice of contest by certified mail. It’s hard to apply a certain concept to a type of bond because there’s no notice required. There are also rules about releasing your rights to a bond when you get paid, and the amount of money needed to transfer a lien to a bond or cash deposit has increased. If the bond doesn’t have enough money to pay for legal fees, the court can make the amount go up, but it might be tough to enforce. The effective date for lien changes was traditionally October 1, but in 1998 it changed to July 1. This information is important for people in the construction industry. The article was written by a lawyer who specializes in construction law.

Source: https://www.floridabar.org/the-florida-bar-journal/1998-changes-to-public-works-bonds-and-construction-lien-law/