Florida Homeowners Construction Recovery Fund

Florida Homeowners Construction Recovery Fund

By Christopher M. Cobb June 26, 2020 Posted in Construction Law

The Florida Homeowners Recovery Fund (the “Recovery Fund”) was created under Chapter 489.140, Florida Statutes and its purpose is to provide relief for Florida residential homeowners who have been financially harmed by Florida licensed contractors.  As a construction license holder in Florida, you should know and understand what the Recovery Fund is and how a claim can affect your license.

Any residential property owner is eligible to seek redress from the Recovery Fund but there are conditions which must be met in order for the claim to succeed.  The first requirement for payment from the Recovery Fund appears in the statutory definitions.  “Homeowner” is defined as the “owner of an owner-occupied residence”.  From there, “Residence” is defined as “single-family residence….in which the owner contracting for the improvement is residing or will reside 6 months or more each calendar year…”.  In other words, payment from the Recovery Fund is limited to residential owner-occupied homesteaded property.

Assuming the Homeowner meets this statutory definition, the Homeowner (or “Claimant”) then must have received either a final judgment, arbitration award or CILB final order against a license holder directing and requiring the licenses contractor pay restitution.  The final judgment, arbitration award or CILB final order must be based upon consumer harm caused by specific criteria.  The requirement to pay must be based upon contractor financial mismanagement, contractor abandonment, unapproved contract overages, executing of a false affidavit or making false statements.  See 489.129(1)(g), (j), or (k) and 713.35, Florida Statutes.  Additionally, the Homeowner will need to make some diligent effort to collect on the final judgment or arbitration award before a Recovery Fund claim can be made. 

Florida Homeowners Recovery Fund

If no collection or execution is possible, then the Homeowner can file his/her claim with the DBPR seeking reimbursement from the Recovery Fund.  An important deadline to keep in mind when asserting a claim on the Recovery Fund is that an aggrieved Homeowner has 1 year from the conclusion of any civil, criminal, or administrative action or award in arbitration to file the Recovery Fund claim.  Further, the claim will be limited to actual damages and claims are limited to $50,000 per claim for Division I contractors (i.e. Certified General, Certified Building, and Certified Residential).  There is an aggregate cap on Division I licenses of $500,000.00.

In 2016, the statute was changed to add Division II contractors back into the Recovery Fund.  This effectively added: Sheet Metal; Roofing; Class A Air-Conditioning; Class B Air-Conditioning; Class C Air-Conditioning; Mechanical; all Pool/Spa contractors; Plumbing; Underground Utility and Excavation; Solar; and Pollutant Storage Systems. The maximum recovery against Division II contractors is $15,000 per claim and must be based on contracts entered after July 1, 2016.  There is an aggregate cap for Division II claims in the amount of $150,000.00 per licensee.

Any payment to the Homeowner of any amount from Recovery Fund places the contractor’s license on automatic suspension without further administrative action.  The contractor’s license will not be reinstated until he/she has repaid in full, plus interest, the amount paid to the homeowner/claimant. 

Both Division I and Division II contractors must ensure that the Florida Homeowner Construction Recovery Fund Notice is contained in their residential construction contracts.  The language is below:

FLORIDA HOMEOWNER’S CONSTRUCTION

RECOVERY FUND

PAYMENT, UP TO A LIMITED AMOUNT, MAY BE AVAILABLE FROM THE FLORIDA HOMEOWNERS’ CONSTRUCTION RECOVERY FUND IF YOU LOSE MONEY ON A PROJECT PERFORMED UNDER CONTRACT, WHERE THE LOSS RESULTS FROM SPECIFIED VIOLATIONS OF FLORIDA LAW BY A LICENSED CONTRACTOR.  FOR INFORMATION ABOUT THE RECOVERY FUND AND FILING A CLAIM, CONTACT THE FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD AT THE FOLLOWING TELEPHONE NUMBER AND ADDRESS:

Construction Industry Licensing Board

2601 Blairstone Road

Tallahassee, Florida 32399-1039

(850) 487-1395

 

Note that the DBPR address has recently changed as well, so all old contract forms should be amended to reflect the new address. Failure of license holders to include the required warning language can result in discipline.  On the first violation of failure to include this language, the CILB may fine the contractor up to $500, and the moneys will be deposited into the Recovery Fund. On a second or subsequent violation, the CILB shall fine the contractor $1,000 per violation, and the moneys will be also deposited into the Recovery Fund. §489.1425(2), Fla. Stat. (2016).

 

An understanding of the Recovery Fund and its processes is imperative for all contractors in the unfortunate event they are faced with a Recovery Fund Claim.

 

For more information on the author visit https://www.cobbgonzalez.com/attorneys/christopher-m-cobb/

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