Bill Text: FL S1092 | 2019 | Regular Session | Introduced


Bill Title: Reduction of Construction Contracting Fraud

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-05-03 - Died in Innovation, Industry, and Technology, companion bill(s) passed, see CS/HB 7125 (Ch. 2019-167) [S1092 Detail]

Download: Florida-2019-S1092-Introduced.html
       Florida Senate - 2019                                    SB 1092
       
       
        
       By Senator Albritton
       
       
       
       
       
       26-01757A-19                                          20191092__
    1                        A bill to be entitled                      
    2         An act relating to reduction of construction
    3         contracting fraud; amending s. 489.126, F.S.; deleting
    4         an intent requirement for contractor fraud offenses;
    5         revising elements of offenses; providing legislative
    6         findings; revising criminal penalties for contractor
    7         fraud offenses; amending s. 501.1375, F.S.; revising
    8         the maximum amount of a prospective buyer’s deposit
    9         for a residential dwelling which must be put into
   10         escrow; providing that a prospective buyer of a
   11         residential dwelling unit may not waive the right to
   12         have deposit funds placed in escrow; amending s.
   13         713.345, F.S.; requiring escrow of certain payments
   14         received for the improvement of real property;
   15         providing criminal penalties; providing an effective
   16         date.
   17          
   18  Be It Enacted by the Legislature of the State of Florida:
   19  
   20         Section 1. Subsections (3) and (4) of section 489.126,
   21  Florida Statutes, are amended, and subsections (5) and (6) are
   22  added to that section, to read:
   23         489.126 Moneys received by contractors.—
   24         (3)(a) A contractor who receives money for repair,
   25  restoration, addition, improvement, or construction of
   26  residential real property in excess of the value of the work
   27  performed shall not, with intent to defraud the owner, fail or
   28  refuse to perform any work for any 90-day period.
   29         (b) Proof that a contractor received money for the repair,
   30  restoration, addition, improvement, or construction of
   31  residential real property and that the amount received exceeds
   32  the value of the work performed by the contractor is shown when
   33  and that:
   34         1. The contractor failed to perform any of the work for
   35  which he or she contracted during any 90-day 60-day period;
   36         2. The failure to perform any such work during the 90-day
   37  60-day period was not related to the owner’s termination of the
   38  contract or a material breach of the contract by the owner; and
   39         3. The contractor failed to perform for 90 days due to just
   40  cause or terminated the contract without proper notification to
   41  the owner, for an additional 30-day period after the date of
   42  mailing of notification as specified in paragraph (c), to
   43  perform any work for which he or she contracted,
   44  
   45  gives rise to an inference that the money in excess of the value
   46  of the work performed was taken with the intent to defraud.
   47         (c) Proper notification for purposes of paragraph (b) must
   48  be made by the contractor in the form of a letter that includes
   49  the reason for termination of the contract or the failure to
   50  perform sent via certified mail, return receipt requested,
   51  mailed to the last address of the owner in the written
   52  contracting agreement. If there is no address for the owner
   53  listed in the contracting agreement, or no written agreement
   54  exists, the letter must be mailed to the address of the payment
   55  received or the letter must be filed as a notice of termination
   56  with the building department with jurisdiction over the
   57  improvement Notification as contemplated in paragraph (b)
   58  consists of a certified letter, return receipt requested, mailed
   59  to the address of the contractor as listed in the written
   60  contracting agreement. The letter must indicate that the
   61  contractor has failed to perform any work for a 60-day period,
   62  that the failure to perform the work was not the result of the
   63  owner’s termination of the contract or a material breach of the
   64  contract by the owner, and that the contractor must recommence
   65  construction within 30 days after the date of mailing of the
   66  letter. If there is no address for the contractor listed in the
   67  written contracting agreement, or no written agreement exists,
   68  the letter must be mailed to the address of the contractor
   69  listed in the building permit application.
   70         (4) The Legislature finds that vigorous enforcement of
   71  residential contracting is necessary to protect consumers and
   72  the state’s economy and, therefore, this section shall be
   73  strictly construed Any person who violates any provision of this
   74  section is guilty of theft and shall be prosecuted and punished
   75  under s. 812.014.
   76         (5)A violation of subsection (2) is a:
   77         (a)Felony of the third degree, punishable as provided in
   78  s. 775.082, s. 775.083, or s. 775.084, if the total money
   79  received for permits is less than $20,000.
   80         (b)Felony of the second degree, punishable as provided in
   81  s. 775.082, s. 775.083, or s. 775.084, if the total money
   82  received for permits is $20,000 or more but less than $50,000.
   83         (c)Felony of the first degree, punishable as provided in
   84  s. 775.082, s. 775.083, or s. 775.084, if the total money
   85  received for permits is $50,000 or more.
   86         (6)A violation of subsection (3) is a:
   87         (a)Felony of the third degree, punishable as provided in
   88  s. 775.082, s. 775.083, or s. 775.084, if the total money
   89  received exceeding the value of the work performed is less than
   90  $20,000.
   91         (b)Felony of the second degree, punishable as provided in
   92  s. 775.082, s. 775.083, or s. 775.084, if the total money
   93  received exceeding the value of the work performed is $20,000 or
   94  more but less than $50,000.
   95         (c)Felony of the first degree, punishable as provided in
   96  s. 775.082, s. 775.083, or s. 775.084, if the total money
   97  received exceeding the value of the work performed is $50,000 or
   98  more.
   99         Section 2. Subsections (2) and (3) of section 501.1375,
  100  Florida Statutes, are amended to read:
  101         501.1375 Deposits received for purchase of residential
  102  dwelling units; placement in escrow; waiver; exceptions.—
  103         (2) NOTICE TO BUYER OF RIGHT TO HAVE DEPOSIT FUNDS PLACED
  104  IN ESCROW ACCOUNT.—In all offers to purchase, sales agreements,
  105  or written contracts made between a building contractor or a
  106  developer and a prospective buyer of a one-family or two-family
  107  residential dwelling unit, the building contractor or developer
  108  shall notify the prospective buyer that any deposit (up to 5 10
  109  percent of the purchase price) made by the buyer to the building
  110  contractor or developer shall, unless waived in writing by the
  111  buyer, be deposited in an escrow account with a savings and loan
  112  association, bank, or trust company;, an attorney who is a
  113  member of The Florida Bar;, a licensed Florida real estate
  114  broker;, or a title insurance company authorized to insure title
  115  to real property in this state. The funds, if escrowed, may be
  116  deposited in separate accounts or commingled with other escrow
  117  or trust accounts. Any such offer, agreement, or contract used
  118  by the building contractor or developer with respect to the sale
  119  of a one-family or two-family residential dwelling unit shall
  120  contain the following legend in conspicuous type: THE BUYER OF A
  121  ONE-FAMILY OR TWO-FAMILY RESIDENTIAL DWELLING UNIT HAS THE RIGHT
  122  TO HAVE ALL DEPOSIT FUNDS (UP TO 10 PERCENT OF THE PURCHASE
  123  PRICE) DEPOSITED IN AN ESCROW ACCOUNT. THIS RIGHT MAY BE WAIVED,
  124  IN WRITING, BY THE BUYER.
  125         (3) ESCROW ACCOUNTS; WITHDRAWALS.—If the buyer of a one
  126  family or two-family residential dwelling unit does not waive
  127  the right to have deposits placed in an escrow account, the
  128  building contractor or developer shall place the funds (up to 5
  129  10 percent of the purchase price) in an escrow account. The
  130  account shall be clearly denoted on the records of the escrow
  131  holder as an escrow account. All withdrawals from the account
  132  shall require the signatures of both the building contractor or
  133  developer and the buyer or the buyer’s agent, except as provided
  134  in this section.
  135         Section 3. Section 713.345, Florida Statutes, is amended to
  136  read:
  137         713.345 Moneys received for real property improvements;
  138  penalty for misapplication.—
  139         (1)(a) A person, firm, or corporation, or an agent,
  140  officer, or employee thereof, who receives any payment on
  141  account of improving real property must apply such portion of
  142  any payment to the payment of all amounts then due and owing for
  143  services and labor which were performed on, or materials which
  144  were furnished for, such improvement before prior to receipt of
  145  the payment. This paragraph does not prevent any person from
  146  withholding any payment, or any part of a payment, in accordance
  147  with the terms of a contract for services, labor, or materials,
  148  or pursuant to a bona fide dispute regarding the amount due, if
  149  any, for such services, labor, or materials.
  150         (b) Any person who knowingly and intentionally fails to
  151  comply with paragraph (a) is guilty of misapplication of
  152  construction funds, punishable as follows:
  153         1. If the amount of payments misapplied has an aggregate
  154  value of $100,000 or more, the violator commits is guilty of a
  155  felony of the first degree, punishable as provided in s.
  156  775.082, s. 775.083, or s. 775.084.
  157         2. If the amount of payments misapplied has an aggregate
  158  value of $1,000 or more but less than $100,000, the violator
  159  commits is guilty of a felony of the second degree, punishable
  160  as provided in s. 775.082, s. 775.083, or s. 775.084.
  161         3. If the amount of payments misapplied has an aggregate
  162  value of less than $1,000, the violator commits is guilty of a
  163  felony of the third degree, punishable as provided in s.
  164  775.082, s. 775.083, or s. 775.084.
  165         (c) A permissive inference that a person knowingly and
  166  intentionally misapplied construction funds in violation of this
  167  subsection is created when a valid lien has been recorded
  168  against the property of an owner for labor, services, or
  169  materials; the person who ordered the labor, services, or
  170  materials has received sufficient funds to pay for such labor,
  171  services, or materials; and the person has failed, for a period
  172  of at least 45 days from receipt of the funds, to remit
  173  sufficient funds to pay for such labor, services, or materials,
  174  except for funds withheld pursuant to paragraph (a).
  175         (d) A state attorney or the statewide prosecutor, upon the
  176  filing of an indictment or information against a contractor,
  177  subcontractor, or sub-subcontractor which charges such person
  178  with a violation of paragraph (b), shall forward a copy of the
  179  indictment or information to the Department of Business and
  180  Professional Regulation. The Department of Business and
  181  Professional Regulation shall promptly open an investigation
  182  into the matter and, if probable cause is found, shall furnish a
  183  copy of any investigative report to the state attorney or
  184  statewide prosecutor who furnished a copy of the indictment or
  185  information and to the owner of the property which is the
  186  subject of the investigation.
  187         (2)(a)A person, firm, or corporation or an agent, officer,
  188  or employee thereof who receives any payment on account of
  189  improving real property more than 5 percent of the project’s
  190  cost must place such payment in an escrow account with a savings
  191  and loan association, bank, or trust company; an attorney who is
  192  a member of The Florida Bar; or a licensed Florida real estate
  193  broker, or must provide a certified letter detailing the amount
  194  and date of any payments made to subcontractors out of the
  195  payment received within 30 days after receipt of payment.
  196         (b)A person who violates paragraph (a) commits a felony of
  197  the third degree, punishable as provided in s. 775.082, s.
  198  775.083, or s. 775.084.
  199         (3)(2) This section does not apply to mortgage bankers or
  200  their agents, servants, or employees for their acts in the usual
  201  course of the business of lending or disbursing mortgage funds.
  202         Section 4. This act shall take effect July 1, 2019.

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