The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Regulated Industries
BILL: SB 414
INTRODUCER: Senator Garcia
SUBJECT: Florida Homeowners’ Construction Recovery Fund
DATE: January 26, 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Kraemer Imhof RI Pre-meeting
2. AEG
3. FP
I. Summary:
SB 414 amends s. 489.143, F.S., to increase the maximum amounts payable to claimants for
claims that may be made against contractors from the Florida Homeowners’ Construction
Recovery Fund (recovery fund) for each of the next four fiscal years (through Fiscal Year 2027-
2028), and to substantially increase the total lifetime aggregate limit for claim payments made
against a single contractor for those same fiscal years.
For claims against general contractors, building contractors, and residential contractors
(Division I licensees), the maximum amount per claim increases from $50,000 to $250,000 over
the next four fiscal years, and the total lifetime aggregate limit increases from $500,000 to
$1 million over the next four fiscal years.
For claims against roofing contractors, sheet metal contractors, class A, B, and C air-
conditioning contractors, mechanical contractors, commercial pool/spa contractors, residential
pool/spa contractors, swimming pool/spa servicing contractors, plumbing contractors,
underground utility and excavation contractors, solar contractors, and pollutant storage systems
contractors (Division II licensees), the maximum amount per claim increases from $50,000 to
$250,000 over the next four fiscal years, and the total lifetime aggregate limit increases from
$150,000 to $550,000 over the next four fiscal years.
Under the bill, the increased amounts for Division I claims and the total lifetime aggregate limit
of all claims against a Division I licensee, apply to contracts entered into after July 1, 2004. The
increased amounts for Division II claims and the total lifetime aggregate limit of all claims
against a Division II licensee apply to contracts entered into after July 1, 2016 (the date that
claims against Division II licensees were first authorized to be filed).1 Current law provides the
1
See ch. 2016-129, Laws of Fla.
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statute of limitations to make a claim under the recovery fund is one year after the conclusion of
an action or award in arbitration based on a compensable claim.2
According to the Department of Business and Professional Regulation, the impact on state
revenues and expenditures is indeterminate and there is no impact expected on local government
revenues and expenditures.3 See Section V, Fiscal Impact Statement.
The bill takes effect July 1, 2024.
II. Present Situation:
The Legislature regulates the construction industry “in the interest of the public health, safety,
and welfare,”4 and has enacted ch. 489, F.S., relating to contracting, to address requirements for
construction contracting, electrical and alarm system contracting, and septic tank contracting,
and requirements for qualified persons to be licensed if they have sufficient technical expertise in
the applicable trade.5
Contractor Licensing Exemptions; Handyman Exemption
More than 20 categories of persons are exempt6 from the contractor licensing requirements of
ch. 489, F.S., including work falling under the so-called handyman exemption, meaning the work
is of a “casual, minor, or inconsequential nature,” and the total contract price for labor, materials,
and all other items is less than $2,500, subject to certain exceptions.7
Construction Professional Licenses
Chapter 489, F.S., relates to “contracting,” with part I addressing the licensure and regulation of
construction contracting, and part II addressing the licensure and regulation of electrical and
alarm system contracting.
2
See s. 489.141(1)(f), F.S.
3
See Department of Business and Professional Regulation, 2024 Agency Legislative Bill Analysis for SB 414 at 4
(Nov. 20, 2023) (on file with the Senate Committee on Regulated Industries).
4
See s. 489.101, F.S.
5
See parts I, II, and III, respectively, of ch. 489, F.S.
6
Exemptions provided in s. 489.103, F.S., include: contractors in work on bridges, roads, streets, highways, or railroads, and
other services defined by the Construction Industry Licensing Board and the Florida Department of Transportation;
employees of licensed contractors, if acting within the scope of the contractor’s license, with that licensee’s knowledge;
certain employees of federal, state, or local governments or districts (excluding school and university boards), under limited
circumstances; certain public utilities, on construction, maintenance, and development work by employees; property owners,
when acting as their own contractor and providing “direct, onsite supervision” of all work not performed by licensed
contractors on one-family or two-family residences, farm outbuildings, or commercial buildings at a cost not exceeding
$75,000; work undertaken on federal property or when federal law supersedes part I of ch. 489, F.S.; registered architects and
engineers acting within their licensed practice, including those exempt from such licensing, but not acting as a contractor
unless licensed under ch. 489, F.S.; work on one-, two-, or three-family residences constructed or rehabilitated by Habitat for
Humanity, International, Inc., or a local affiliate, subject to certain requirements; certain disaster recovery mitigation or other
organizations repairing or replacing a one-family, two-family or three-family residence impacted by a disaster, subject to
certain requirements; and employees of an apartment community or apartment community management company who make
minor repairs to existing electric water heaters, electric heating, ventilating, and air-conditioning systems, subject to certain
requirements See s. 489.103, F.S., for additional exemptions.
7
See also s. 489.103(9), F.S., and Fla. Admin. Code R. 61G-12.011(2).
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Construction contractors regulated under part I of ch. 489, F.S., and electrical and alarm
contractors regulated under part II of ch. 489, F.S., must satisfactorily complete a licensure
examination before being licensed.8 The Construction Industry Licensing Board (CILB) within
the Department of Business and Professional Regulation (DBPR) and the Electrical Contractors’
Licensing Board (ECLB) within the DBPR may deny a license application for any person found
guilty of any of the grounds for discipline in s. 455.227(1), F.S., or in the profession’s practice
act.9
The CILB is responsible for licensing and regulating the construction industry in Florida under
part I of ch. 489, F.S,10 and is divided into two divisions with separate jurisdictions:
 Division I comprises the general contractor, building contractor, and residential contractor
members of the CILB. Division I has jurisdiction over the regulation of general contractors,
building contractors, and residential contractors.11
 Division II comprises the roofing contractor, sheet metal contractor, air-conditioning
contractor, mechanical contractor, pool contractor, plumbing contractor, and underground
utility and excavation contractor members of the CILB. Division II has jurisdiction over the
regulation of roofing contractors, sheet metal contractors, class A, B, and C air-conditioning
contractors, mechanical contractors, commercial pool/spa contractors, residential pool/spa
contractors, swimming pool/spa servicing contractors, plumbing contractors, underground
utility and excavation contractors, solar contractors, and pollutant storage systems
contractors.12
The ECLB is responsible for licensing and regulating electrical and alarm system contractors in
Florida under part II of ch. 489, F.S.13 Master septic tank contractors and septic tank contractors
are regulated by the Department of Environmental Protection under part III of ch. 489, F.S.14
Construction Contractor Licensing Categories
"Certified contractors" are individuals who pass the state competency examination and obtain a
certificate of competency issued by the DBPR. Certified contractors are able to obtain a
certificate of competency for a specific license category and are permitted to practice in that
category in any jurisdiction in the state.15
“Certified specialty contractors” are contractors whose scope of work is limited to a particular
phase of construction, such as drywall or demolition. Certified specialty contractor licenses are
created by the CILB through rulemaking. Certified specialty contractors are permitted to practice
in any jurisdiction in the state.16
8
See ss. 489.113 and 489.516, F.S., respectively.
9
Section 455.227(2), F.S.
10
See s. 489.107, F.S.
11
See s. 489.105(3)(a)-(c), F.S.
12
Section 489.105(3) (d) - (q), F.S.
13
Section 489.507, F.S.
14
See ss. 489.551-489.558, F.S. Prior to July 1, 2021, the Department of Health regulated septic tank contracting; See
s. 50, ch. 2020-150, L.O.F.
15
See ss. 489.105(6)-(8) and (11), F.S.
16
See ss. 489.108, 489.113, 489.117, and 489.131, F.S.
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“Registered contractors” are individuals who have paid the required fee, taken and passed a local
competency examination and licensing requirements, if any, who may practice the specific
category of contracting for which he or she is approved only in the local jurisdiction for which
the license is issued.17
Florida Homeowners’ Construction Recovery Fund
The Florida Homeowner’s Construction Recovery Fund (recovery fund) was created by the
Legislature in 1993 after Hurricane Andrew.18 The recovery fund is the last resort to compensate
homeowners who have suffered a covered financial loss at the hands of state-licensed general,
building, and residential contractors. Covered losses include financial mismanagement or
misconduct, project abandonment, or fraudulent statement of a contractor or related party.19 A
homeowner must have engaged a contractor for construction or improvement of the
homeowner’s Florida residence, and the damage must have been caused by a Division I licensee
or a Division II licensee.20
A claim must involve an act by a contractor under specific statutory provisions relating to
mismanagement, abandonment of a project, and actions that give rise to disciplinary actions by
the CILB against contractors, as follows:
 Section 489.129(1)(g), F.S., allows disciplinary proceedings for committing mismanagement
or misconduct in the practice of contracting that causes financial harm to a customer.
Financial mismanagement or misconduct occurs when the contractor fails to remove a valid
lien after payment within 75 days of the recording of the lien, the contractor has abandoned
the job and has been paid for more than is completed, and the customer is made to pay more
than the contract price.
 Section 489.129(1)(j), F.S., allows disciplinary proceedings for abandoning a construction
project, under certain conditions. A project is presumed abandoned after 90 days if the
contractor terminates the project without just cause or without proper notice to the owner,
including the reason for termination, or fails to perform work without just cause for 90
consecutive days.
 Section 489.129(1)(k), F.S, allows disciplinary proceedings for signing a false statement with
respect to a project or contract indicating that the work is bonded, subcontractors have been
paid for all work which results in a financial loss to the owner, purchaser, or contractor, or
that workers’ compensation and public liability insurance are provided.
Section 713.35, F.S., provides for criminal penalties for any person who knowingly and
intentionally makes an affidavit, a waiver or release of lien, or other document, whether or not
under oath, with false information about the payment status of subcontractors, sub-
subcontractors, or suppliers.
17
Section 489.117, F.S. See also s. 489.105(3)(a)-(o), F.S.
18
See ch. 93-166, s. 21, Laws of Fla. and see Department of Business and Professional Regulation, 2024 Agency Legislative
Bill Analysis for SB 414 at 2 (Nov. 20, 2023) (on file with the Senate Committee on Regulated Industries).
19
See ss. 489.140-489.144, F.S.
20
Section 489.1402, F.S., defines the term “residence” to mean “a single-family residence, an individual residential
condominium or cooperative unit, or a residential building containing not more than two residential units in which the owner
contracting for the improvement is residing or will reside 6 months or more each calendar year upon completion of the
improvement.”
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If a final judgment, CILB-issued restitution order, or arbitration award is not expressly based on
s. 489.129(1)(g), (j), or (k), F.S., the claimant must present to the CILB sufficient evidence to
show that that the contractor engaged in activity that is described in those subsections.21
The fund is financed by a 1.5 percent surcharge on all building permit fees associated with the
enforcement of the Florida Building Code.22 The local government that collects the permit fees
retains 10 percent of the surcharge, and the net surcharge proceeds are then allocated equally to
the recovery fund and the operations of the Building Code Administrators and Inspectors
Board.23
Duty of Contractor to give Notice of Fund
Section 489.1425, F.S., creates a duty for a contractor to provide notice to a customer of rights
under the recovery fund. Any agreement or contract for repair, restoration, improvement, or
construction to residential real property must contain a written statement explaining the
consumer’s rights under the recovery fund, except where the value of all labor and materials does
not exceed $2,500, and must be substantially in the form required by statute.
Requirements to Make a Claim
The claimant must have obtained a final judgment, arbitration award, or CILB-issued restitution
order against the contractor for damages that are a direct result of a compensable violation. The
statute of limitations to make a claim is one year after the conclusion of an action or award in
arbitration that is based on the misconduct.24Certain persons are not eligible to make a claim
against the recovery fund.25
Limits
Section 489.143, F.S., relating to payment from the recovery fund, provides that an eligible
claimant may be paid an amount equal to the judgment, award, or restitution order or $25,000,
whichever is less, or an amount equal to the unsatisfied portion of such person’s judgment,
award, or restitution order, but only to the extent and amount of actual damages suffered by the
claimant, and subject to the maximum per-claim amount and a total lifetime per-licensee
maximum.26
21
Fla. Admin. Code R. 61G4-21.003.
22
Section 468.631(1), F.S.
23
The DBPR has the authority to transfer excess cash to the recovery fund if it determines it is not needed to support the
operation of the Building Code Administrators and Inspectors Board; the amount transferred cannot exceed the amount
appropriated in the General Appropriations Act or approved by the Legislative Budget Commission for payment of claims
from the recovery fund. Id.
24
Section 489.141(1)(f), F.S.
25
Section 489.141(2), F.S., provides certain persons are precluded from making a claim for recovery under the recovery
fund, if: (a) The claimant is the spouse of the judgment debtor or licensee or a personal representative of such spouse; (b) The
claimant is a licensee who acted as the contractor in the transaction that is the subject of the claim; (c) The claim is based
upon a construction contract in which the licensee was acting with respect to the property owned or controlled by the
licensee; (d) The claim is based upon a construction contract in which the contractor did not hold a valid and current license
at the time of the construction contract; or (e) The claimant was associated in a business relationship with the licensee other
than the contract at issue.
26
Section 489.143(2), F.S.
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The maximu