WESLEY MANAGEMENT COMPANY – Jupiter, FL
10/27/2020 – Understanding changes to the Florida Payment Bond Claim Requirements
WHATS NEW ABOUT FLORIDA’S PAYMENT BOND CLAIM REQUIREMENTS
There were significant changes made by the 2019 Florida Legislature to payment bond claim requirements on private projects. Understanding these changes (effective October 1, 2019), is critical for subcontractors, suppliers and laborers to ensure they comply and not lose their right to payment from the payment bond surety insurance, and for owners, contractors and sureties to assess the validity of such claims.
Changes to section 713.23, Florida Statutes, made by House Bill 1247, can be viewed at the following link: H.R.1247, 26th Leg., C.S.C.S. (Fla. 2019). The key changes primarily relate to:
Statutory form of the notice of nonpayment served on the contractor and surety
Consequences of intentionally or recklessly exaggerating the amount or nature of the claim in the notice of nonpayment
Timing of the notice relative to claims related to rental equipment.
NOTICE OF NONPAYMENT
House Bill 1247 made changes to the requirements of what must be included in the notice of nonpayment. The new statutory form of the notice of nonpayment which the new law mandates, must be “substantially” followed, and includes the following items (multiple new items were added which were not previously required):
The name of the contractor and the contractor’s address
The name of the surety and the surety’s address
The nature of the labor or services performed
The nature of labor or services to be performed, if known
The materials furnished
The materials to be furnished, if known
The amount paid on the account
The amount due, and how much of the amount due is for retainage, if any
The amount to become due, if known; and
The notice provider’s signature and address.
All of the statements contained in the notice of nonpayment must now be made under oath, and include the following declaration: “I declare that I have read the foregoing Notice of Nonpayment and that the facts stated in it are true to the best of my knowledge and belief.” If the notice fails to comply with these requirements, there is a risk the claimant could lose or impair its rights under the payment bond.
FRAUDULENT NOTICE OF NONPAYMENT
The House Bill 1247 establishes an entirely new concept of a fraudulent notice of nonpayment. Similar to the concept of a fraudulent construction lien under section713.31, Florida Statutes, effective October 1, 2019, if a claimant serves a fraudulent notice of nonpayment, the claimant will lose all rights under the payment bond. A notice of nonpayment will be considered fraudulent if the claimant either: (1) willfully exaggerates the amount due; (2) willfully includes a claim for work not performed or materials not furnished; or (3) prepares the notice of nonpayment with willful and gross negligence, which results in a willful exaggeration.
A minor mistake or good faith dispute as to the amount due should not defeat an otherwise valid claim against the bond, unless the mistake prejudices the contractor or the surety.
Nonetheless, payment bond claimants will need to be aware of this new risk, and will need to carefully and conservatively prepare and submit their sworn notices of nonpayment to avoid potential fraudulent notice of nonpayment defenses by contractors and/or sureties.
TIME LIMIT TO SERVE NOTICE OF NONPAYMENT FOR RENTAL EQUIPMENT
The Bill makes important changes to the time limitations associated with submitting a notice of nonpayment. To be timely, a notice of nonpayment must be served on the contractor and the surety no later than 90 days after the claimant’s final furnishing of labor, services, or materials to the project. However, effective October 1, 2019, with respect to a claim for payment for rental equipment, the notice of nonpayment must be served no later than 90 days after the last date the rental equipment was on the job site and available for use.
Meeting the notice of nonpayment timing requirement is critical, as the failure to do so precludes a claimant from bringing a claim against the surety on the payment bond.
The facts and circumstances of each project are unique. Please give us a call; we want to hear from you and assist to clarify issues regarding payment bond claims and notice requirements.
About Company
WESLEY MANAGEMENT COMPANY Consulting company servicing Owners, (POA/HOA) Associations, Developers & Contractors with capital improvements and construction projects. Providing management consulting services in the areas of:
Construction Management: Administration & coordination to deliver a project from inception to completion; meeting the Client’s budget & standards
Owner/Contractor Representation: Observations verifying work proceeds per specification; confirming installations are monitored for compliance with the contract documents
Expert Opinion & Witness: Post construction claims analysis, forensic observation & accountability
Insurance & Mitigation Inspections: Inspections & observations for purchase, or insurance verification & discount
Mission Statement
Assisting to complete contract obligations & achieve Client satisfaction
Licensing & Insurance
Licenses, Certificates of Insurance and pre-qualification information may be furnished upon request. Our firm maintains State, Federal and OSHA requirements for Safety Plans, HAZCOM Communication, Drug Free Work Place and as an Equal Opportunity Employer.
Licensed for commercial drone/UAS operations per FAA Part 107 Certification. Professional liability and job specific aerial drone insurance can be provided.
Certificates
Members of the Company hold certifications for specialty trades, training & licensing, in addition to State required continuing education.
History
Over thirty years experience in providing construction management on projects.
For more information, visit wesleymanagement.com or call 561 316 7678.
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