The
requirements for and conditions of payment and performance
bonds for state, county, municipal government, or any political
subdivision thereof, or other public authority projects
are found in Florida Statutes section 255.05, also
referred to as the “Little Miller Act." There
were substantial and significant revisions to the statute
in both the 1998 and 1999 legislative sessions.
Click
on a topic below to learn more:
Back
to Payment Bond Info
Back
to Contractor Resources
WHEN
ARE PAYMENT BONDS REQUIRED?
A
payment and performance bond is required of any person or
entity entering into a formal contract with the State of
Florida or any county, city, or political subdivision thereof,
for the construction of any public building, for the prosecution
and completion of any public work, or for repairs upon any
public building or public work. Such a bond is not required
for contracts under $100,000 entered into by the State of
Florida, and for contracts between $100,000 and $200,000,
the requirement can be waived by the Secretary of the Florida
Department of Management Services. The bond requirement
can also be waived by the official or board awarding the
contract when the contract is with any county, city, political
subdivision, or public authority and the contract is for
$200,000 or less.
Back
to Top
WHAT
MUST BE INCLUDED IN THE BOND?
The
bond must be executed, delivered to the public authority
acting as the owner for the project, and recorded in the
official public records of the county in which the real
property to be improved is located, prior to the commencement
of the work, or before the recommencement of the work after
default or abandonment. A sample bond form is provided in
Florida Statutes Section 255.05(3); however, the statute
does not make the use of that particular form mandatory,
but only states that the bond “may” be in substantially
the form provided. The bond form must state, on its front
page:
- The
name, principal business address, and phone number of
the contractor; and
- The
name, principal business address, and phone number of
the surety; and
- The
name, principal business address, and phone number of
the owner, and, if different, the name, principal business
address, and phone number of the contracting public entity
; and
- The
contract number assigned by the contracting public entity;
and
- A
description of the project sufficient to identify it,
including, if applicable, a legal description and street
address of the property being approved, and a general
description of the improvement.
Prior
to a 2005 amendment to Florida Statutes section 255.05(4),
a bond provided on a project that was subject to the provisions
of Section 255.05, but which was not recorded, or which
provided a broader scope of coverage or protection than
that provided by the statute could be deemed a common law
bond, and therefore not subject to the notice or other requirements
imposed on bond claimants by the statute. The 2005 amendment
provides that all payment bonds furnished for public work
contracts to which the statute applies “shall be construed
and deemed statutory payment bonds furnished pursuant to
this section and such bonds shall not under any circumstances
be converted into common law bonds.”
An
additional 2005 amendment to the statute provides that any
provision in a Section 255.05 bond which either attempts
to restrict the classes of claimants who are protected by
the bond, or which attempts to establish venue for any suit
filed against the bond, is unenforceable.
Back
to Top
ADDITIONAL
RULES FOR BONDS OF $200,000 OR LESS
The
Florida Department of Management Services is required by
statute to adopt rules applicable to all contracts of $200,000
or less to provide procedures for:
- Ten
percent (10%) retainage on payments to contractors and
for determining disbursements to laborers, materialmen,
and suppliers from the amounts retained; and
- Requiring
certification from laborers, materialmen and suppliers,
as defined in Florida Statutes section 713.01,
prior to final payment to the contractor, that they have
no claims against the contractor arising from the completion
of the work.
The
state’s liability directly to the claimant is limited
to the pro rata share determined under this section.
Back
to Top
WHAT
FORM OF BOND IS REQUIRED?
A
contractor's payment and performance bond is required, although
an alternative form of security may be used, i.e., cash,
money order, certified check, cashier's check, irrevocable
letter of credit, or certain types of securities. If alternative
security is provided, however, it is subject to the same
conditions as if a payment and performance bond had been
provided.
Back
to Top
WHO
IS PROTECTED BY THE PAYMENT BOND?
The
state, county, city, political subdivision, or public authority
entering into the contract is protected by the contractor's
performance bond.
Providers
of labor and/or suppliers of materials who have a contract
with either the prime contractor or a person or entity with
a direct subcontract with the prime contractor (first tier
subcontractor) are covered by the payment bond. Persons
or entities who supply materials or provide labor to a material
supplier are not covered by the bond. The covered claimants
must have provided labor or supplied materials that were
used directly or indirectly by the prime contractor in the
prosecution of the work under the prime contract.
Back
to Top
HOW
DO I OBTAIN A COPY OF THE BOND AND THE PRIME CONTRACT?
A
claimant can obtain a copy of the prime contract and the
bond simply by requesting a copy from the governmental entity
that contracted for the work. Upon such written request,
the contracting government entity must provide the requesting
claimant with a certified copy of both the prime contract
and the bond.
Back
to Top
WHAT
ARE THE NOTICE REQUIREMENTS?
Any
claimant, except a laborer, who does not have a contract
with the prime contractor, must furnish the prime contractor
with written notice that claimant intends to look to the
bond for protection. This notice must be furnished within
forty-five (45) days after first providing labor or supplying
materials for the project. Pursuant to Florida Statutes
section 713.06(2)(c), the notice can be combined with a
Notice to Owner provided pursuant to section 713.06 and
entitled “Notice to Owner/Notice to Contractor.”
Any claimant who does not have a contract with the prime
contractor, and who has not been paid in full for the labor,
services, or materials provided to the project, must also
furnish the contractor and the surety with a written notice
of the performance of the labor or services or the delivery
of materials and of the nonpayment no earlier than forty-five
days (45) after the date of first providing labor or services
or delivering materials, and not later than ninety (90)
days after the date of last providing labor or services,
or completed delivery of materials to the project. For suppliers
of rental equipment, the ninety (90) day period for service
of the notice of performance and nonpayment commences with
the date the rental equipment was last on the site available
for use.
A
2005 amendment to Florida Statutes section 255.05(2)(a)(2)
added the language that “[a]ny Notice of Nonpayment
served by a claimant who is not in privity with the contractor
which includes sums for retainage must specify the portion
of the amount claimed for retainage.”
Both
notices, where required, are absolute requirements for proceeding
with a claim against the bond. Notices may be served in
the same manner as provided for service of notices under
the construction lien law, specifically, Florida Statutes
section 713.18. The time period for service of the notice
of performance and nonpayment is measured from the date
of last furnishing labor or services or delivering materials
to the project, and not by any other standard such as the
issuance of a certificate of occupancy or the issuance of
a certificate of substantial completion.
Back
to Top
WHAT
CAN I INCLUDE IN THE CLAIM AGAINST THE BOND?
A
claimant on the payment bond has a right of action against
both the contractor and the surety for the amount due the
claimant, together with any unpaid finance charges due under
the claimant’s contract.
Back
to Top
WAIVERS
OF BOND CLAIMS
Florida
Statutes section 255.05(2)(b) provides a Waiver of Right
to Claim Against the Payment Bond (Progress Payment) form
to be executed by a claimant in exchange for, or to induce
issuance of, a progress payment. Although the statute provides
that the waiver and release form “may” be in
substantially the form provided, as opposed to a mandatory
requirement that the form “shall” be in substantially
the form provided, section 255.05(2)(d) provides “a
person may not require a claimant to furnish a waiver that
is different from” the form specified.
Similarly,
section 255.05(2)(c) provides a Waiver of Right to Claim
Against the Payment Bond (Final Payment) form with the same
permissive use language and also subject to the same provision
that a claimant cannot be required to furnish a waiver that
is different from the form specified.
A
bond waiver that is not in substantially the form provided
by the statutes, if executed by the claimant is, however,
enforceable in accordance with the terms of the executed
waiver.
A
claimant who receives either a progress payment or final
payment in the form of a check in exchange for providing
a bond waiver may condition the waiver upon payment of the
check.
Back
to Top
NOTICE
OF CONTEST OF CLAIM AGAINST PAYMENT BOND
Pursuant
to a 1998 amendment to the statute, a contractor may shorten
the time period for a claimant to file a lawsuit on the
payment bond if the claimant is no longer furnishing labor,
services, or materials on the project by recording a Notice
of Contest of Claim Against Payment Bond, following procedures
that are identical to those provided for service of a Notice
of Contest of Lien under Florida Statutes chapter
713. The form of the Notice of Contest of Claim Against
Payment Bond must be in substantially the form provided
in Florida Statutes section 255.05(2)(a)1. If a claimant
who is served a Notice of Contest of Claim Against Payment
Bond fails to institute a lawsuit on the bond within sixty
(60) days from the date of mailing of the Notice of Contest
of Claim Against Payment Bond by the Clerk of the Circuit
Court, the claimant’s claim against the bond shall
be automatically extinguished.
Back
to Top
ADVANCE
WAIVER OF BOND CLAIMS UNENFORCEABLE
A
claimant’s claim against the surety under a payment
bond cannot be waived in advance of the furnishing of labor
or services or the delivery of materials. Any provision
to this effect in a contract would presumably be void and
unenforceable, even though signed by the claimant whose
rights are purportedly waived, although the specific language
which appears in the similar provision under Florida
Statutes chapter 713 is omitted from the statute relating
to bond claims.
Back
to Top
REQUEST
FOR SWORN STATEMENT OF ACCOUNT
The
contractor who has provided a payment and performance bond
under Florida Statutes section 255.05, may, when
any payment is made to it or directly to a claimant by the
contracting entity, serve a written demand upon any claimant
with whom the contractor does not have a direct contract,
for a written statement of account under oath, stating,
as of the date of the response:
- The
nature of the labor or services performed, and yet to
be performed, if any, and
- The
materials furnished, or yet to be furnished, if known,
and
- The
amount paid on account to date, and
- The
amount due, and
- The
amount to become due, if known.
The
request must be served upon the claimant at the address
and to the attention of any person designated to receive
the demand in the Notice to Contractor served by the claimant.
While there is no form provided in the statutes for making
the request, the form provided in Florida Statutes
section 713.16(3) should be used as the provisions of the
statute under section 255.05(8) are virtually identical
to those under chapter 713. The failure of a claimant to
furnish the sworn statement within thirty (30) days after
a proper demand, or the furnishing of a false or fraudulent
statement, deprives the claimant of its claim under the
bond, if the request is received by the claimant prior to
the filing of a lawsuit by the claimant on the bond.
Back
to Top
WHAT
IS THE DEADLINE FOR FILING A SUIT?
A
lawsuit on the payment bond must be filed against the surety
or the principal on the bond within one year from the date
the claimant last provided labor or supplied materials for
the project, except when a claim is solely for unpaid retainage.
A
claim that is solely for retainage must be instituted against
the surety or the principal on the bond within one year
from the date the claimant last provided labor or supplied
materials for the project; however, as a result of a 2005
amendment to the statute, suit cannot be filed until at
least one of the following four conditions has been satisfied:
-
The Contractor has received payment of the retainage,
and the time provided for payment of the retainage by
the Contractor to the claimant, under Florida Statutes
Sections 218.735 or 255.073(3) has expired; or
- The
claimant has completed all work required under its contract
and seventy (70) days have passed since the Contractor
submitted its final payment request to the contracting
government entity; or
- At
least 160 days have passed since reaching “substantial
completion” as defined in the contract, or if “substantial
completion” is not defined in the contract, since
reaching beneficial occupancy or use of the project; or
-
The claimant has asked the Contractor, in writing, for
any of the following information and the Contractor has
failed to respond, in writing, within ten (10) days after
receipt of the request:
- Whether
the project has reached “substantial completion”;
or
-
Whether the Contractor has received payment of the
claimant’s retainage, and if so, the date the
retainage was received by the Contractor; or
-
Whether the Contractor has submitted its final payment
request to the contracting government entity.
If
none of the four conditions set forth above have been satisfied,
and suit for recovery of retainage cannot be filed within
one (1) year from the date the claimant last provided labor
or supplied materials for the project, the statute of limitations
period is extended for 120 days after one of these conditions
is satisfed.
Back
to Top
ARE
ATTORNEY FEES RECOVERABLE?
In
addition to the bond claim amount, the prevailing party
in a lawsuit on a payment bond under Florida Statutes
section 255.05 is entitled to recover its reasonable attorney’s
fees and costs incurred in the lawsuit. The Florida Supreme
Court has ruled that the “prevailing party”
in such an lawsuit is not simply the party who recovers
a net judgment in its favor, but is the party who prevails
on the “substantial issues in the litigation.”
This determination is made by the trial court on a case
by case basis which injects uncertainty in the process,
even after judgment on the principal claim has been rendered.
Back
to Top
Back
to Payment Bond Info
Back
to Contractor Resources
