The Florida 2000 legislative session

Florida's Regular Legislative Session runs for 60 days. This year it began on Tuesday, March 7 and ended during the evening hours of Friday, May 5. On June 28,2000, Governor Jeb Bush took action on the last bill before him and signed Senate Bill 220, a construction package that includes new construction contract indemnification provisions as well as a study mandate on construction retainage.

This article will highlight a variety of issues which the Florida NACM Improved Construction Practices Committee (ICPC) was involved with during the 2000 Legislative Session. It is important to note that for the first time in many years, the ICPC chose to work on other construction and credit issues and did not propose changes to Florida's Construction lien Law.

State Study on Retainage & Related Payment Issues Is Under way Senate Bill 220 directs a research arm of the Florida Legislature called OPPAGA (the Office of Program Policy Analysis and Government Accountability) to conduct an in-depth study of retainage practices. OPPAGA is directed to look at every aspect of retainage, including how other states and the federal government handle retainage and how agencies and governmental entities within this state handle retainage. In addition, OPPAGA will be looking at related payment issues such as construction liens, payment and performance bonds, the inspection process, the paperwork required to obtain payments (both interim and final), pay-if paid provisions, and any other issues that may help bring about recommendations to the Florida Legislature on whether retainage should be limited by statute, and if so, whether such provisions should apply to public and/or private construction projects. OPPAGA's recommendations to the Legislature are due January 1, 2001.

New Construction Contract Indemnification Provisions

Two initiatives passed during the 2000 Legislative Session make substantial improvements to the current construction contract indemnification provisions contained in Section 725.06, Florida Statutes.

The first initiative is contained in House Bill 1083 by Representative Allen Bense (R-Panama City). Representative Bense, a contractor himself, filed the bill on behalf of several design professional groups, to create a separate indemnity provision for design professionals which is similar to the new indemnity language discussed below. As originally drafted, House Bill 1083 would have affected both public and private projects, but it was amended before passage to affect only public works.

The second initiative is contained in Senate Bill 220. The new provision which became effective July 1, 2000, was spearheaded by the American Subcontractors of Florida and strongly supported by the NACM-ICPC and other members of the Florida Construction Coalition. The new provision repeals an existing provision which allowed unlimited construction contract indemnity provisions if contractual consideration was given. The new provision limits indemnification provisions to actions that are a direct result of the indemnifying party's performance of its contract. This new provision applies to both public and private construction projects and states as follows: "725.06 Construction contracts; limitation on indemnification.

(1) A construction contract may require a party to that contract to indemnify and hold harmless the other party to the contract, their officers and employees, from liabilities, damages, losses and costs, including, but not limited to, reasonable attorneys' fees, to the extent caused by the negligence, recklessness or intentional wrongful misconduct of the indemnifying party and persons employed or utilized by the indemnifying party in the performance of the construction contract.

(2) Except as specifically provided in subsection (1), a construction contract may not require one party to indemnify the other party, its employees, officers, directors, or agents from any liability, damage, loss, claim, action, or proceeding, and any such contract provision is void as against the public policy of this state:'

Florida's Uniform Building Code

If you are a material supplier or manufacturer, you probably know of Florida's efforts over the last four years to create one uniform building code for the state.This has been a highly publicized and very divisive issue which began with enabling legislation and a Florida Building Commission appointed by the Governor.The Commission and its technical advisory committees worked endlessly to create one uniform code out of the patchwork of codes currently utilized in Florida.

Two issues remained unresolved by the Commission. The first unresolved issue was identifying the levels of windborne debris regions and coastal protection required. The insurance and home building industries fought endlessly over this issue, and in the end the Legislature gave the insurance industry most of what they asked for. Even so, we are still hearing that homeowners' insurance rates in the South Florida area are skyrocketing out of the reach of many.The second issue that could not be resolved by the Commission and remains unresolved this year is product approval. Dade and Broward Counties have not only held firm in their efforts to keep their own product approval system, but continue attempts to impose their costly and duplicative system on the rest of the state. This issue was left unresolved in this year's Building Code Bill, although language which strengthens the mandate to the Commission was included. The Commission is to continue its work and come back to the Legislature next year with their recommendations.

House Bill 219 by Representative Lee Constantine (RAltamonte Springs), passed on the last day of Session, and creates a Statewide Florida Building Code which will take effect July 1, 2001.

Improved Judgment Recording Provisions Pass With a Glitch

The NACM-ICPC worked closely with the Florida Bar Real Property Committee to craft improvements to the current recording procedures for judgments in Florida. Judgments in Florida have a 20-year life. However, under Florida's existing system a judgment creditor had to comply with a burdensome system of re-recording for an initial seven-year period with two renewal periods. In addition, the judgment creditor had to record the renewals with a 90-day window of the judgment lien's expiration, creating a tracking nightmare for many businesses.

Together, the NACM-ICPC and the Florida Bar Real Property Committee agreed to several changes to the existing judgment recording including:

(1) To change the existing recording scheme to an initial period of 10 years with one renewal for an additional 10 years.

2) To open up the renewal window and allow a judgment creditor to renew a judgment at any time before its expiration, with the second 10-year period running from the date of re-recording. This new procedure will allow a judgment creditor to set an type of schedule for re-recording that is workable for its company. such as recording all fudgments that expire in a particular calendar year at one time.

3) To provide a statutory Notice that of Homestead procedure that a judgment debtor can use to give judgment creditor notice that apiece of property is homestead and thus not subject to the judgment lien under Florida law. The notice must be recorded and served on the judgment creditor by certified mail, retrn receipt requested. if the judgment creditor fails to file suit within 45 days of service of the Notice, the property is deemed exempt for purposes of the specific transaction stated in the Notice of Homestead.

The above-stated provisions passed as part of Senate Bill 1194, and became effective July 1, 2000. Unfortunately a bill drafting error in the final version of the bill created one glitch which we will now have to repair.As passed, the bill creates an initial seven-year recording period with one 10-year renewal. This glitch was unintentional but requires passage of legislation next year to correct it.

New Statewide System Replaces Docketing of Writs of Execution With Sheriffs

This year's judgment lien bill also creates a system for statewide docketing of judgments on personal property. The new system is slated to be up and running by October 1, 2001, at which time Sheriffs around the state will cease individually docketing writs of execution. Judgments will be filed against personal property through the Florida Secretary of State, similar to the procedures currently used for Uniform Commercial Code transactions.

Similar to the Florida Secretary of State's functions relating to corporations and Uniform Commercial Code transactions, this new system will be automated and accessible from the world wide web. You should be able to look up a particular judgment debtor and see any Judgment Lien Certificates that have been filed.The greatest benefit will be that under the new system, judgments that have been properly filed will affect all personal property within the state and will not be limited to property in a specific county, as with the current system.

Under the new system Judgment Lien Certificates will be effective for a five-year period and can be renewed within the six-month period prior to expiration of the lien for one additional five-year period.There will be a two-year period of transition for existing writs of execution and procedures for transferring existing writs to the new Judgment Lien Certificates.

New Requirements in Garnishment Proceedings

Senate Bill 1194 also contains new changes to the Garnishment statutes which became effective July 1, 2000.The changes include a new form entitled "Notice to Defendant of Right Against Garnishment of Wages, Money, and Other Property" This form will be attached to the Writ of Garnishment by the Clerk of the Court and informs the Defendant of the types of money that are exempt from garnishment under state and federal law (i.e., social security benefits, head of household wages, public assistance, VA benefits, etc.).The Notice also provides a notarized form for a "Claim of Exemption and Request for Hearing" that a defendant would use if they believed the garnished funds were exempt.

A Plaintiff who is served with a Claim of Exemption and Request for Hearing must respond by filing a sworn statement contesting the defendant's claim (within two business days if served by hand/within seven business days if served by mail). If the Plaintiff fails to respond within this short time period, the Writ of Garnishment is automatically dissolved without a hearing.

Increased Access to Public Records May Be Forthcoming

Senate Bill 1334 states that a legitimate state purpose is served by providing the public with Internet access to public records and infornation. One of the many provisions of this bill requires county recording departments to provide indexes of recorded documents and the ability to order copies of the documents on-line no later than January 1, 2002. The bill also requires county recording departments to provide for electronic retrieval of the documents no later than January 1, 2000.

Repeal of Intangible Tax on Accounts Receivable

Part of Florida's tax reform initiatives during this time of economic prosperity has included chipping away at Florida's intangible tax on accounts receivable. It's now official-effective for the tax year beginning January 1, 2001, all accounts receivable are exempt from the intangible tax.This measure passed as part of Committee Substitute for House Bills 67 and 187.

Improved Construction Prompt Pay and Unlicensed Activity Provisions End ilp On the Cutting Room Floor

Some of the great disappointments of this Legislative Session were the events that occurred in the last week of Session when provisions contained in House Bill 715 by Representative Jeff Miller (R-Milton) and Senate Bill 1464 by Senator Daniel Webster (R-Winter Garden) stalled in the Senate President's Office. Ultimately this legislation was edited by the Senate, and important improvements to the Local Government Prompt Payment law and new provisions for curbing unlicensed construction activity were lost. Florida's existing local government prompt payment law does not apply to school boards, school districts, special taking districts and community colleges. The revised provisions would have brought these entities into the fold as well as tightened some existing loopholes in payment time periods.These issues will be high on the construction industry's agenda for the 2001 Legislative Session.

Legislation to Impose Criminal Penalties for Unsecured Loads Fails

Provisions contained in House Bill 43 by Representative Alex Villalobos (R-Miami) and in Senate Bill 56 by Senator Mario Diaz-Balart (R-Miami) would have imposed criminal penalties on owners and drivers of vehicles for damage caused by a vehicle with an unsecured or improperly secured load. An originally filed criminal penalties would have applied to any incident where $500 or more damage occurred.

These bills were of great concern to many industries including the trucking and construction industries, and were substantially amended and improved upon throughout the committee process. Despite the fact that these bills were high on the "must pass list for their sponsors, in the end they did not make it out of committee and to the floor for a vote.

Highlights of Other Legislation that Passed

* Retainage in Florida Department ofTransportation contracts is now optional (Senate Bill 772).

* The Florida Department ofTransportation can now refuse to accept surety bonds from a surety company who has wrongfully failed or refused to settle or provide a defense under a previous contract claim (Senate Bill 772).

* Florida building officials now have a Building Official's Bill of Rights which specifies the rights of licensed building officials and inspectors who are being investigated or disciplined (Senate Bill 220).

* Creation of the Residential Swimming Pool Safety Act which requires all new residential swimming pools to meet specified safety barrier criteria. Options include pool enclosures that hinder direct access from the home, pool safety covers, exit alarms on doors and windows having access to the pool, or self-closing and latching devices placed 54" above the floor on all pool access doors (Senate Bill 86).

Planning for the Year 2001

Term limits in Florida kick in this year. Sixty-three of the 160 members of the Florida Legislature are termed out and cannot run for re-election. Despite a very hectic election year, the Florida NACM-ICPC is already busy working on next year's agenda. High on the radar screen are issues such as retainage and prompt payment, procedures for exempting sales tax on construction materials for tax exempt projects, and regulatory and disciplinary issues for contractors who are guilty of financial mismanagement of their business.