Senate Bill sb2458c1

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    Florida Senate - 2003                           CS for SB 2458

    By the Committee on Regulated Industries; and Senator
    Argenziano




    315-2320-03

  1                      A bill to be entitled

  2         An act relating to consumer protection in the

  3         construction lien law; creating s. 713.015,

  4         F.S.; providing mandatory contract provisions

  5         for residential construction contracts;

  6         amending s. 713.06, F.S.; providing an

  7         additional warning statement on a Notice to

  8         Owner; providing a form for a contractor's

  9         final payment affidavit; amending s. 713,08,

10         F.S.; providing a warning statement on a claim

11         of lien; amending s. 713.135, F.S.; requiring

12         the lien law summary to contain an explanation

13         of owners' rights; requiring the issuing

14         authority to mail the lien law summary to the

15         owner; amending s. 713.31, F.S.; requiring a

16         prosecuting entity to provide a copy of the

17         charging document to the Department of Business

18         and Professional Regulation; amending s.

19         713.345, F.S.; providing permissive inferences

20         that a person knowingly and intentionally

21         failed to properly apply construction payments;

22         requiring a prosecuting entity to provide a

23         copy of the charging document to the Department

24         of Business and Professional Regulation;

25         amending s. 713.3471, F.S.; requiring lenders

26         to give certain notices regarding direct loan

27         disbursements to borrowers; amending s. 713.35,

28         F.S.; requiring a prosecuting entity to provide

29         a copy of the charging document to the

30         Department of Business and Professional

31         Regulation; providing an effective date.

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    Florida Senate - 2003                           CS for SB 2458
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 1  Be It Enacted by the Legislature of the State of Florida:

 2  

 3         Section 1.  Section 713.015, Florida Statutes, is

 4  created to read:

 5         713.015  Mandatory provisions for direct

 6  contracts.--Any direct contract between an owner and a

 7  contractor, related to improvements to real property

 8  consisting of single or multiple family dwellings up to and

 9  including four units, must contain the following provision

10  printed in no less than 18-point, capitalized, boldfaced type:

11  

12  ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS

13  713.001-713.37, FLORIDA STATUTES,) THOSE WHO WORK ON YOUR

14  PROPERTY OR PROVIDE MATERIALS AND ARE NOT PAID-IN-FULL HAVE A

15  RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR

16  PROPERTY. THIS CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR

17  CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS,

18  SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS OR NEGLECTS TO MAKE

19  OTHER LEGALLY REQUIRED PAYMENTS, THE PEOPLE WHO ARE OWED MONEY

20  MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE PAID

21  YOUR CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR,

22  YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY.  THIS

23  MEANS IF A LIEN IS FILED AGAINST YOUR PROPERTY, IT COULD BE

24  SOLD AGAINST YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER

25  SERVICES THAT YOUR CONTRACTOR MAY HAVE FAILED TO PAY.

26  FLORIDA'S CONSTRUCTION LIEN LAW IS COMPLEX AND IT IS

27  RECOMMENDED THAT WHENEVER A SPECIFIC PROBLEM ARISES, YOU

28  CONSULT AN ATTORNEY.

29         Section 2.  Paragraph (c) of subsection (2) and

30  paragraph (d) of subsection (3) of section 713.06, Florida

31  Statutes, are amended to read:

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    Florida Senate - 2003                           CS for SB 2458
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 1         (2)

 2         (c)  The notice may be in substantially the following

 3  form and must include the information and the warning

 4  contained in the following form:

 5  

 6  WARNING! FLORIDA'S CONSTRUCTION LIEN LAW ALLOWS SOME UNPAID

 7  CONTRACTORS, SUBCONTRACTORS, AND MATERIAL SUPPLIERS TO FILE

 8  LIENS AGAINST YOUR PROPERTY EVEN IF YOU HAVE MADE PAYMENT IN

 9  FULL.

10  

11  WARNING TO OWNER: UNDER FLORIDA LAW, YOUR FAILURE TO MAKE SURE

12  THAT WE ARE PAID MAY RESULT IN A LIEN AGAINST YOUR PROPERTY

13  AND YOUR PAYING TWICE.

14  

15  TO AVOID A LIEN AND PAYING TWICE, YOU MUST OBTAIN A WRITTEN

16  RELEASE FROM US EVERY TIME YOU PAY YOUR CONTRACTOR.

17  

18                         NOTICE TO OWNER

19  

20  To ...(Owner's name and address)...

21  

22  The undersigned hereby informs you that he or she has

23  furnished or is furnishing services or materials as follows:

24  ...(General description of services or materials)... for the

25  improvement of the real property identified as ...(property

26  description)... under an order given by.............

27  

28  Florida law prescribes the serving of this notice and

29  restricts your right to make payments under your contract in

30  accordance with Section 713.06, Florida Statutes.

31  

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    Florida Senate - 2003                           CS for SB 2458
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 1                    IMPORTANT INFORMATION FOR

 2                         YOUR PROTECTION

 3  

 4         Under Florida's laws, those who work on your property

 5  or provide materials and are not paid have a right to enforce

 6  their claim for payment against your property. This claim is

 7  known as a construction lien.

 8         If your contractor fails to pay subcontractors or

 9  material suppliers or neglects to make other legally required

10  payments, the people who are owed money may look to your

11  property for payment, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN

12  FULL.

13  

14  PROTECT YOURSELF:

15         --RECOGNIZE that this Notice to Owner may result in a

16  lien against your property unless all those supplying a Notice

17  to Owner have been paid.

18         --LEARN more about the Construction Lien Law, Chapter

19  713, Part I, Florida Statutes, and the meaning of this notice

20  by contacting an attorney or the Florida Department of

21  Business and Professional Regulation.

22                                      ...(Lienor's Signature)...

23                                           ...(Lienor's Name)...

24                                        ...(Lienor's Address)...

25  

26  Copies to: ...(Those persons listed in Section 713.06(2)(a)

27  and (b), Florida Statutes)...

28  The form may be combined with a notice to contractor given

29  under s. 255.05 or s. 713.23 and, if so, may be entitled

30  "NOTICE TO OWNER/NOTICE TO CONTRACTOR."

31  

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    Florida Senate - 2003                           CS for SB 2458
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 1         (3)  The owner may make proper payments on the direct

 2  contract as to lienors under this section, in the following

 3  manner:

 4         (d)  When the final payment under a direct contract

 5  becomes due the contractor:

 6         1.  The contractor shall give to the owner a final

 7  payment an affidavit stating, if that be the fact, that all

 8  lienors under his or her direct contract who have timely

 9  served a notice to owner on the owner and the contractor have

10  been paid in full or, if the fact be otherwise, showing the

11  name of each such lienor who has not been paid in full and the

12  amount due or to become due each for labor, services, or

13  materials furnished. The affidavit must be in the following

14  form:

15                      CONTRACTOR'S AFFIDAVIT

16  State of Florida

17  County of ....

18  Before me, the undersigned authority, personally appeared

19  (name of affiant), who, after being first duly sworn, deposes

20  and says of his or her personal knowledge the following:

21         1.  He or she is the (title of affiant), of

22         (name of contractor's business), which does

23         business in the State of Florida, hereinafter

24         referred to as the "Contractor."

25         2.  Contractor, pursuant to a contract dated

26         ...., ...., with (name of owner), hereinafter

27         referred to as the "Owner," has furnished or

28         caused to be furnished labor, materials, and

29         services for the construction of certain

30         improvements to real property as more

31         particularly set forth in said contract.

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    Florida Senate - 2003                           CS for SB 2458
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 1         3.  This affidavit is executed by the

 2         Contractor in accordance with section 713.06 of

 3         the Florida Statutes for the purpose of

 4         obtaining payment from the Owner in the amount

 5         of .....

 6         4.  All work to be performed under the contract

 7         has been fully completed, and all lienors under

 8         the direct contract have been paid in full,

 9         except the following listed lienors:

10  

11  NAME OF LIENOR                             AMOUNT DUE 

12           (Indicate any unpaid amounts which contractor

13  disputes)

14                                                        

15    Signed, sealed, and delivered this .... day of...., 

16  

17                        By            of affiant)

18                                     (title of affiant) 

19                         (name of contractor's business)

20  

21        Sworn to and subscribed before me this .... day

22  of ...., by (name of affiant), who is personally known

23  to me or produced .... as identification, and did take

24  an oath.

25                                 (name of notary public)

26                                           Notary Public

27  My Commission Expires:

28  (date of expiration of commission)

29  

30  The contractor shall have no lien or right of action against

31  the owner for labor, services, or materials furnished under

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    Florida Senate - 2003                           CS for SB 2458
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 1  the direct contract while in default for not giving the owner

 2  the affidavit; however, the negligent inclusion or omission of

 3  any information in the affidavit which has not prejudiced the

 4  owner does not constitute a default that operates to defeat an

 5  otherwise valid lien. The contractor shall execute the

 6  affidavit and deliver it to the owner at least 5 days before

 7  instituting an action as a prerequisite to the institution of

 8  any action to enforce his or her lien under this chapter, even

 9  if the final payment has not become due because the contract

10  is terminated for a reason other than completion and

11  regardless of whether the contractor has any lienors working

12  under him or her or not.

13         2.  If the contractor's affidavit required in this

14  subsection recites any outstanding bills for labor, services,

15  or materials, the owner may, after giving the contractor at

16  least 10 days' written notice, pay such bills in full direct

17  to the person or firm to which they are due, if the balance

18  due on a direct contract at the time the affidavit is given is

19  sufficient to pay them and lienors giving notice, and shall

20  deduct the amounts so paid from the balance due the

21  contractor. Lienors listed in said affidavit not giving

22  notice, whose 45-day notice time has not expired, shall be

23  paid in full or pro rata, as appropriate, from any balance

24  then remaining due the contractor; but no lienor whose notice

25  time has expired shall be paid by the owner or by any other

26  person except the person with whom that lienor has a contract.

27         3.  If the balance due is not sufficient to pay in full

28  all lienors listed in the affidavit and entitled to payment

29  from the owner under this part and other lienors giving

30  notice, the owner shall pay no money to anyone until such time

31  as the contractor has furnished him or her with the

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    Florida Senate - 2003                           CS for SB 2458
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 1  difference; however, if the contractor fails to furnish the

 2  difference within 10 days from delivery of the affidavit or

 3  notice from the owner to the contractor to furnish the

 4  affidavit, the owner shall determine the amount due each

 5  lienor and shall disburse to them the amounts due from him or

 6  her on a direct contract in accordance with the procedure

 7  established by subsection (4).

 8         4.  The owner shall have the right to rely on the

 9  contractor's affidavit given under this paragraph in making

10  the final payment, unless there are lienors giving notice who

11  are not listed in the affidavit.  If there are lienors giving

12  notice who are not so listed, the owner may pay such lienors

13  and any persons listed in the affidavit that are entitled to

14  be paid by the owner under subparagraph (d)2. and shall

15  thereupon be discharged of any further responsibility under

16  the direct contract, except for any balance that may be due to

17  the contractor.

18         5.  The owner shall retain the final payment due under

19  the direct contract that shall not be disbursed until the

20  contractor's affidavit under subparagraph (d)1. has been

21  furnished to the owner.

22         6.  When final payment has become due to the contractor

23  and the owner fails to withhold as required by subparagraph

24  (d)5., the property improved shall be subject to the full

25  amount of all valid liens of which the owner has notice at the

26  time the contractor furnishes his or her affidavit.

27         Section 3.  Subsection (3) of section 713.08, Florida

28  Statutes, is amended to read:

29         713.08  Claim of lien.--

30  

31  

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    Florida Senate - 2003                           CS for SB 2458
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 1         (3)  The claim of lien shall be sufficient if it is in

 2  substantially the following form and includes the following

 3  warning:

 4  

 5  WARNING! THIS LEGAL DOCUMENT REFLECTS THAT A CONSTRUCTION LIEN

 6  HAS BEEN PLACED ON THE REAL PROPERTY LISTED HEREIN. UNLESS THE

 7  OWNER OF SUCH PROPERTY SHORTENS THE TIME PERIOD WITH A NOTICE

 8  OF CONTEST OF LIEN OR A SHOW CAUSE ORDER, THIS LIEN MAY REMAIN

 9  VALID FOR ONE YEAR FROM THE DATE OF RECORDING, AND SHALL

10  EXPIRE AND BECOME NULL AND VOID THEREAFTER UNLESS LEGAL

11  PROCEEDINGS HAVE BEEN COMMENCED TO FORECLOSE OR TO DISCHARGE

12  THE LIEN

13  

14                          CLAIM OF LIEN

15  State of ....

16  County of ....

17         Before me, the undersigned notary public, personally

18  appeared ...., who was duly sworn and says that she or he is

19  (the lienor herein) (the agent of the lienor herein ....),

20  whose address is ....; and that in accordance with a contract

21  with ...., lienor furnished labor, services, or materials

22  consisting of .... on the following described real property in

23  .... County, Florida:

24  

25               (Legal description of real property)

26  

27  owned by .... of a total value of $...., of which there

28  remains unpaid $...., and furnished the first of the items on

29  ...., ...(year)..., and the last of the items on ....,

30  ...(year)...; and (if the lien is claimed by one not in

31  privity with the owner) that the lienor served her or his

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    Florida Senate - 2003                           CS for SB 2458
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 1  notice to owner on ...., ...(year)..., by ....; and (if

 2  required) that the lienor served copies of the notice on the

 3  contractor on ...., ...(year)..., by .... and on the

 4  subcontractor, ...., on ...., ...(year)..., by .....

 5                                               ...(Signature)...

 6  

 7         Sworn to (or affirmed) and subscribed before me this

 8  .... day of ...., ...(year)..., by ...(name of person making

 9  statement)....

10  

11           ...(Signature of Notary Public - State of Florida)...

12           ...(Print, Type, or Stamp Commissioned Name of Notary

13  Public)...

14  

15         Personally Known .... OR Produced Identification ....

16  

17         Type of Identification Produced............

18         Section 4.  Paragraphs (b) and (c) of subsection (1) of

19  section 713.135, Florida Statutes, are amended to read:

20         713.135  Notice of commencement and applicability of

21  lien.--

22         (1)  When any person applies for a building permit, the

23  authority issuing such permit shall:

24         (b)  Provide the applicant and the owner of the real

25  property upon which improvements are to be constructed with a

26  printed statement stating that the right, title, and interest

27  of the person who has contracted for the improvement may be

28  subject to attachment under the Construction Lien Law. The

29  Department of Business and Professional Regulation shall

30  furnish, for distribution, the statement described in this

31  paragraph, and the statement must be a summary of the

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    Florida Senate - 2003                           CS for SB 2458
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 1  Construction Lien Law and must include an explanation of the

 2  provisions of the Construction Lien Law relating to the

 3  recording, and the posting of copies, of notices of

 4  commencement and a statement encouraging the owner to record a

 5  notice of commencement and post a copy of the notice of

 6  commencement in accordance with s. 713.13. The statement must

 7  also contain an explanation of the owner's rights if a lienor

 8  fails to furnish the owner with a notice as provided in s.

 9  713.06(2) and an explanation of the owner's rights as provided

10  in s. 713.22. The authority that issues the building permit

11  must obtain from the Department of Business and Professional

12  Regulation the statement required by this paragraph and must

13  mail that statement to the owner. However, the failure by the

14  authorities to provide the summary does not subject the

15  issuing authority to liability.

16         (c)  In addition to providing the owner with the

17  statement as required by paragraph (b), inform each applicant

18  who is not the person whose right, title, and interest is

19  subject to attachment that, as a condition to the issuance of

20  a building permit, the applicant must promise in good faith

21  that the statement will be delivered to the person whose

22  property is subject to attachment.

23         Section 5.  Subsection (3) of section 713.31, Florida

24  Statutes, is amended to read:

25         713.31  Remedies in case of fraud or collusion.--

26         (3)  Any person who willfully files a fraudulent lien,

27  as defined in this section, commits a felony of the third

28  degree, punishable as provided in s. 775.082, s. 775.083, or

29  s. 775.084. A state attorney or the statewide prosecutor, upon

30  the filing of an indictment or information against a

31  contractor, subcontractor, sub-subcontractor, or professional

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    Florida Senate - 2003                           CS for SB 2458
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 1  lienor which charges such person with a violation of this

 2  subsection, shall forward a copy of the indictment or

 3  information to the Department of Business and Professional

 4  Regulation. The Department of Business and Professional

 5  Regulation shall promptly open an investigation into the

 6  matter and, if probable cause if found, shall furnish a copy

 7  of any investigation report to the prosecutor furnishing a

 8  copy of the indictment or information and to the owner of the

 9  property that is the subject of the investigation.

10         Section 6.  Section 713.345, Florida Statutes, is

11  amended to read:

12         713.345  Moneys received for real property

13  improvements; penalty for misapplication.--

14         (1)(a)  A person, firm, or corporation, or an agent,

15  officer, or employee thereof, who receives any payment on

16  account of improving real property must apply such portion of

17  any payment to the payment of all amounts then due and owing

18  for services and labor which were performed on, or materials

19  which were furnished for, such improvement prior to receipt of

20  the payment.  This paragraph does not prevent any person from

21  withholding any payment, or any part of a payment, in

22  accordance with the terms of a contract for services, labor,

23  or materials, or pursuant to a bona fide dispute regarding the

24  amount due, if any, for such services, labor, or materials.

25         (b)  Any person who knowingly and intentionally fails

26  to comply with paragraph (a) is guilty of misapplication of

27  construction funds, punishable as follows:

28         1.  If the amount of payments misapplied have an

29  aggregate value of $100,000 or more, the violator is guilty of

30  a felony of the first degree, punishable as provided in s.

31  775.082, s. 775.083, or s. 775.084.

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    Florida Senate - 2003                           CS for SB 2458
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 1         2.  If the amount of payments misapplied have an

 2  aggregate value of $20,000 or more but less than $100,000, the

 3  violator is guilty of a felony of the second degree,

 4  punishable as provided in s. 775.082, s. 775.083, or s.

 5  775.084.

 6         3.  If the amount of payments misapplied have an

 7  aggregate value of less than $20,000, the violator is guilty

 8  of a felony of the third degree, punishable as provided in s.

 9  775.082, s. 775.083, or s. 775.084.

10         (c)  A permissive inference that a person knowingly and

11  intentionally misapplied construction funds in violation of

12  this subsection is created when a valid lien has been recorded

13  against the property of an owner for labor, services, or

14  materials; the person who ordered the labor, services, or

15  materials has received sufficient funds to pay for such labor,

16  services, or materials; and the person has failed, for a

17  period of at least 45 days, to remit sufficient funds to pay

18  for such labor, services, or materials, except as for funds

19  withheld pursuant to paragraph (a).

20         (d)  A state attorney or the statewide prosecutor, upon

21  the filing of an indictment or information against a

22  contractor, subcontractor, or sub-subcontractor which charges

23  such person with a violation of paragraph (b), shall forward a

24  copy of the indictment or information to the Department of

25  Business and Professional Regulation. The Department of

26  Business and Professional Regulation shall promptly open an

27  investigation into the matter and, if probable cause is found,

28  shall furnish a copy of any investigative report to the

29  prosecutor furnishing a copy of the indictment or information

30  and to the owner of the property that is the subject of the

31  investigation.

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    Florida Senate - 2003                           CS for SB 2458
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 1         (2)  The provisions of This section does do not apply

 2  to mortgage bankers or their agents, servants, or employees

 3  for their acts in the usual course of the business of lending

 4  or disbursing mortgage funds.

 5         Section 7.  Present subsections (1) and (2) of section

 6  713.3471, Florida Statutes, are redesignated as subsections

 7  (2) and (3), respectively, and a new subsection (1) is added

 8  to that section, to read:

 9         713.3471  Lender responsibilities with construction

10  loans.--

11         (1)  Prior to a lender making any loan disbursement

12  directly to the owner, or jointly to the owner and any other

13  party, the lender shall give the following written notice to

14  the borrower in boldface type larger than any other type on

15  the page:

16  

17  WARNING!!! YOUR LENDER IS MAKING A LOAN DISBURSEMENT DIRECTLY

18  TO YOU AS THE BORROWER, OR JOINTLY TO YOU AND ANOTHER PARTY.

19  TO PROTECT YOURSELF FROM HAVING TO PAY TWICE FOR THE SAME

20  LABOR, SERVICES, OR MATERIALS USED IN MAKING THE IMPROVEMENTS

21  TO YOUR PROPERTY, BE SURE THAT YOU REQUIRE YOUR CONTRACTOR TO

22  GIVE YOU LIEN RELEASES FROM EACH LIENOR WHO HAS SENT YOU A

23  NOTICE TO OWNER EACH TIME YOU MAKE A PAYMENT TO YOUR

24  CONTRACTOR.

25         Section 8.  Section 713.35, Florida Statutes, is

26  amended to read:

27         713.35  Making or furnishing false statement.--Any

28  person, firm, or corporation who knowingly and intentionally

29  makes or furnishes to another person, firm, or corporation, a

30  written statement in the form of an affidavit, whether or not

31  under oath, containing false information about the payment

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 1  status of subcontractors, sub-subcontractors, or suppliers in

 2  connection with the improvement of real property in this

 3  state, knowing that the one to whom it was furnished might

 4  rely on it, and the one to whom it was furnished will part

 5  with draw payments or final payment relying on the truth of

 6  such statement as an inducement to do so is guilty of a felony

 7  of the third degree, punishable as provided in s. 775.082 or

 8  s. 775.083. A state attorney or the statewide prosecutor, upon

 9  the filing of an indictment or information against a

10  contractor, subcontractor, or sub-subcontractor which charges

11  such person with a violation of this section, shall forward a

12  copy of the indictment or information to the Department of

13  Business and Professional Regulation. The Department of

14  Business and Professional Regulation shall promptly open an

15  investigation into the matter and, if probable cause is found,

16  shall furnish a copy of any investigative report to the

17  prosecutor furnishing a copy of the indictment or information

18  and to the owner of the property that is the subject of the

19  investigation.

20         Section 9.  This act shall take effect July 1, 2003,

21  except that sections 1, 2, 4, 7, and 8 of this act shall take

22  effect October 1, 2003.

23  

24  

25  

26  

27  

28  

29  

30  

31  

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    Florida Senate - 2003                           CS for SB 2458
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 1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 2                             SB 2458

 3                                 

 4  Adds language regarding the type of real property that is the
    subject of any direct contract between an owner and a
 5  contractor, describing it as real property consisting of
    single or multiple family dwellings up to and including 4
 6  units.

 7  Provides new warning language giving the owner notice that
    unpaid contractors, subcontractors, and material suppliers may
 8  file liens against the owner's property even if the owner has
    made payment in full.  It also provides the language that must
 9  be in the Contractor's Affidavit.

10  Provides new warning language for the claim of lien form.

11  Creates a permissive inference that a person knowingly and
    intentionally misapplied construction funds when a valid lien
12  has been recorded against the property of the owner and the
    person who recorded the lien has received sufficient funds for
13  the construction and has failed, for a period of at least 45
    days, to remit sufficient funds to pay for the labor, services
14  or materials.

15  Requires that once a state attorney or statewide prosecutor
    forwards a copy of a indictment or information that charges a
16  contractor with the willful filing of a fraudulent lien or
    making or furnishing a false statement under s. 713.35, F.S.,
17  to the department, the department must then promptly open an
    investigation, and if probable cause is found, furnish a copy
18  of any investigative report to the prosecutor and to the owner
    of the property.
19  
    Requires a lender, prior to making any loan disbursement
20  directly to the owner or jointly to the owner and any other
    party, to provide a written warning statement regarding lien
21  releases.

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  

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