NEW STATUTORY PAYMENT PROVISIONS COULD COST YOU
A new bill regarding the payment for construction services took effect last week, on July 1, 2021. The bill updates Florida’s Prompt Payment laws, and increases the interest rate applied to all late payments. For public projects with local government entities, all payments due and not timely made shall now bear interest at the rate of 2% per month, or the rate specified by contract, whichever is greater. For public projects with the State, all payments due and not timely made shall now bear intertest at 2% per month. For private projects, any payment owed and not made within 14 days after it is due, shall bear interest at the statutory legal interest rate specified by Florida’s Chief Financial Officer, plus an additional 12 percent per annum, or the rate specified in the contract, whichever is greater. These new interest rates still apply all the way downstream (e.g. owner to general contractor; general contractor to subcontractor; subcontractor to supplier; and so forth). Previously, late payments on public projects bore interest at a rate of 1% per month, and on private projects at the statutory legal interest rate specified by Florida’s Chief Financial Officer.
Local Public Projects
2% per month or contract rate – whichever is greater
State Public Projects
2% per month
Statutory legal interest rate specified by Florida’s CFO plus 12% per annum or contract rate – whichever is greater
In addition, the new law also specifies that anyone who receives payment on a construction project—both public and private—and who knowingly and intentionally fails to make payment of the undisputed amounts owed for labor, services, or materials, in accordance with contract terms, commits a misapplication of construction funds, punishable as provided in § 713.345, Florida Statutes. Section 713.345 makes the misapplication of construction funds a felony and subject to criminal penalties, and now also subjects a license holder to disciplinary proceedings. The Construction Industry Licensing Board may now discipline a license holder for misapplication of construction funds. If convicted, the CILB must suspend all licenses issued to such license holder for a minimum of 1 year from the date of conviction, and may impose additional penalties.
It is more important than ever to ensure you are complying with Florida’s Prompt Payment laws and the provisions of your contracts, as failing to comply could have significant costs financially, professionally, and personally. Fortunately, you don’t have to figure it out alone. The attorneys at Kirwin Norris, P.A. are well adept in this area of law, with a majority of them Board Certified in Construction Law by the Florida Bar, so let us know any questions or concerns you may have about these new rights or obligations.