If you are a contractor in Florida and you plan to take on residential construction work, it is imperative that you familiarize yourself with the required terms of a valid construction contract. Per Florida law, if your contract does not contain certain provisions, you not only put yourself at risk for penalties and fines but also, you may forfeit your right to file a mechanics lien.
A mechanics lien can assist you in the event that the homeowner or another contractor does not pay you for your work on a project. According to Levelset, to exercise your right to a mechanics lien, your contract must contain four key elements.
Mechanics Lien Notice
The most important element of any strong construction contract is the mechanics lien notice. Florida law requires contracts to contain a mechanics lien notice if the value of the work you plan to complete is $2,500 or more. This notice informs homeowners and property owners that if they fail to pay the agreed amount upon completion of the work stated in the contract, you have the right to file for a lien on their home or property. The lien must contain exact verbiage, appear in bold, 12 point and capitalized font, and either be on the first page of the contract or the last, if not on a separate document.
Construction Recovery Fund Notice
If you plan to do $2,500 or more worth of work on a residential project, you must also include a construction recovery fund notice. This notice informs customers of their right under Florida law to recover compensation for the losses they incur at the hands of a negligent contractor. Failure to include this notice in your contract may result in a $500 fine for the first instance and a $1,000 fine for each violation thereafter.
Notice of Construction Defects Procedure
Per Florida law, all construction contracts — both residential and commercial — must contain a notice that informs homeowners of their rights and opportunities to remedy defective work. Though the law requires it, it does not dole out penalties for contractors’ failure to include the provision.
Finally, you must include your contractor license on all contract documents. Not only must you include it on contract documents but also, you must include it on all communications with customers and potential customers, ranging from estimates and proposals to advertisements. If you fail to include your license number on communication materials, you may receive a fine or violation from the Florida licensing board.
Your construction contract is all you have to protect your rights to payment and against legal claims. For these reasons, you should take great care when drafting the contract.