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New Florida Law Increases Interest Rates for Late Payments for Certain Construction Services and Imposes Criminal Penalties for Misappropriating Construction Funds

Kelly Ruane Melchiondo

The 2021 Florida Senate Bill 378 became effective as of July 1, 2021, and implemented major changes for owners, municipalities, and other local government entities that pay contractors for construction services in Florida, for contracts signed on or after July 1, 2021. The Bill amended several key provisions in Florida Statutes that govern payment for construction services in Florida. Owners, municipalities, and other local government entities that engage contractors should be aware of the following changes in the laws as of July 1:

  • The amendment to Florida Statute § 218.735(9), which provides for timely payment for construction services from local government entities, increases the interest rate to be charged on late payments from 1 percent to 2 percent, or the rate provided in the construction contract, whichever is greater;

  • The amendment to Florida Statute § 255.071(1), which provides for payment of undisputed amounts to subcontractors, sub-subcontractors, materialmen and suppliers on construction contracts for public projects, provides that any person, firm or contractor who knowingly and intentionally fails to make required payments commits misappropriation of construction funds, a felony under Fla. Stat. § 713.345;

  • The amendment to Florida Statute § 489.129(r), which governs licensure for Florida contractors, provides that anyone who commits misapplication of construction funds in violation of Fla. Stat. § 713.345 shall have his or her license suspended for a minimum of one year from the conviction date. License suspension is not an exclusive remedy, meaning the licensing board also has the discretion to impose additional penalties.

  • The amendment to Florida Statute § 715.12, the Construction Contract Prompt Payment Law, provides for interest to be charged on all late payments for construction services at the rate provided in Fla. Stat. § 55.03, plus an additional 12 percent annually, beginning on the 14th day after payment is due.
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