Are These 4 Mandatory Disclosures Missing From Your Construction Contract?
In Florida, there are four very specific disclosures that are required by law to be in your residential construction contracts.
Lien Law DisclosureIf your contract is in excess of $2,500 and is for the construction or repair of a residential dwelling up to four units, then your contract is required to include a lien rights disclosure. This needs to be at least twelve point-font, bold and all caps and needs to be either on the front page of your contract or on a separate page signed by the Owner. In essence, this informs the Owner that if he/she doesn't pay you, you have the right to lien his/her property and possibly sell it in a foreclosure proceeding. This disclosure is only required by those that have a direct contract with the Owner. If your contract is as a subcontractor or supplier, this disclosure is not required. Additionally, if the Owner hasn't suffered any prejudice because you did not include the disclosure, a court will likely not impose any sanctions. As well, if the Owner happens to be a licensed general contractor, you need not include the disclosure.
Construction Defect DisclosureIf you have a contract with an Owner, you're obligated to include a certain disclosure which informs the Owner that to the extent there is a construction defect, Chapter 558 of Florida Statutes will control. Chapter 558 sets out a procedure to follow prior to a lawsuit being filed, giving the Owner and the Contractor an opportunity to hopefully resolve claims regarding any construction defects.
Recovery Fund DisclosureThis disclosure is required for any contract between a Contractor and residential Owner in excess of $2,500. The disclosure informs the Owner that to the extent the Contractor violates one of the provisions of Chapter 489, which includes financial mismanagement or any type of fraud committed by the Contractor, the homeowner may be able to recover his or her losses from the recovery fund - a fund maintained by the state solely for the purpose of compensating owners because of such violations by contractors.
Municipal DisclosuresCertain counties and even certain cities require that you include particular provisions in your residential construction contracts. As an example, Miami-Dade County in Chapter 10-33 of their municipal code requires that a contractor signing a contract with a residential owner needs to include an entire page of such disclosures. These disclosures are in addition to, not in lieu of all of, the other disclosures specified above.
If you do the type of construction work that requires these disclosures, it's imperative that you take the time to amend your contracts so that you comply with the law.