By Deborah Lawson, Governmental Affairs Consultant
Best estimates are that 40-50 percent of all bonds for public construction projects are not properly recorded in the public records as required by statute. The 2012 Legislature acknowledged this deficiency and imposed a penalty on the general contractor for failure to record the payment and performance bond(s). HB 897 by Moraitis provides that the public entity may not make payment to the contractor until the contractor has delivered a certified copy of the recorded bond to the public entity. This provision applies regardless of other laws or contractual provisions regarding the timing of payment to the contractor, and applies to all contracts entered into on or after October 1, 2012. See, s. 255.05(1)(b), Florida Statutes 2012. Why is this important? The bond information is critical to all subcontractors and suppliers working on your public projects. The payment bond is their only protection if payment is not properly made by the general contractor. A side-benefit for public entities — if payment bonds are properly recorded and available in the public records, direct requests to public entities for copies of bonds should be substantially reduced, benefiting all involved. Section 255.05(1), Florida Statutes, sets forth the requirements for contractors to obtain payment and performance bonds, record them, and provide them to the public entity. The section also sets forth in detail what information must be contained on the front page of the bond which includes correct names, phone numbers and addresses for the owner, contractor and surety; the contract number assigned by the public entity; the bond number; a descriptions of the project and the improvement; and a legal description or street address for the property being improved. This information is intended to aid subcontractors and suppliers in identifying the correct bond for the correct project. Florida law still requires public entities to provide copies of bonds upon request, but it is our hope that this will become less and less necessary and recording of bonds in a timely manner becomes the norm.
Deborah Lawson is a governmental affairs consultant who lives and works in Tallahassee, Florida. She specializes in representing construction subcontractors and material suppliers before the Florida Legislature and State agencies and represents the Florida Improved Construction Practices Committee and NACM South Atlantic