Legislative Notes
Bad Construction Bonds Bill Continues to Move
Our friends at Associated General Contractors (AGC) filed legislation relating to
construction bonds and their political contributions and grassroots efforts are paying
dividends. HB 1247 by Rep. Daniel Perez (R-Miami) passed its last committee this week
and is ready for floor action in the House. The Senate bill, SB 1200 by Sen. Kelli Stargel
(R-Lakeland) will be heard in its last committee stop on April 10 in Senate Rules.
On bonded construction projects, both public and private, current law requires a
subcontractor/supplier to serve a “notice of nonpayment” on the General Contractor
(GC) and surety if they have performed work or delivered materials and have not been
paid in accordance with their contracts. HB 1247 and SB 1200, although improved from
the initial version, still contain the following problematic provisions:
• C
reate a new process for notifying the GC of payments owed by requiring the
notice of nonpayment to be under oath (similar to a sworn statement of accounts).
• C
reate a new harsh penalty--fraudulent notice of nonpayment--against
subcontractors and suppliers when providing a claim for monetary damages if the
subcontractor or supplier has miscalculated amount owed.
• A
llow a GC to recover attorney’s fees if a surety refuses to perform under a
subcontractor’s performance bond.
NUCA of Florida believes elevating an inaccurate notice of nonpayment to “fraud
status” by statutorily creating a fraudulent notice of nonpayment is much too severe a
penalty in a process by which the GC isn’t at risk of losing his property like the potential
situation under the current lien law. We also are concerned that an incorrect number of
days billed for heavy equipment rental or miscalculated overhead costs and change
orders could trigger a fraudulent notice of nonpayment under this bill.
Through our lobbying efforts, we have been able to get the bill amended by the
House sponsor to address some of our concerns. The bill has now been amended
to provide that the negligent inclusion or omission of any information in the notice
of nonpayment that has not prejudiced the contractor or surety does not defeat an
otherwise valid bond claim. Also, the bill was changed to provide that contractors
are entitled to attorney’s fees for obtaining a judgment against an insurer for failing
to make a payment under a bond. While we are grateful to the sponsor for these
changes, we remain opposed because this new process creates a higher likelihood
that legitimate claims will be challenged therefore creating more costs to our
members. Unfortunately, thanks to the sponsors ability to ameliorate other group’s
concerns, there is little opposition elsewhere and the bill is expected to pass. THANK
YOU TO ALL WHO RESPONDED TO OUR CALL TO ACTION ON THIS BILL. We will
continue to fight this bill.
“Through our
lobbying efforts,
we have been
able to get the
bill amended
by the House
sponsor to
address some
of our concerns.
The bill has now
been amended
to provide that
the negligent
inclusion or
omission of any
information in
the notice of
nonpayment
that has not
prejudiced the
contractor or
surety does
not defeat an
otherwise valid
bond claim.”
Your Government Affairs Team, Kari & Scott
• • •
MARCH 2019 • DITCHMEN
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