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Florida statutes specifically prohibit the ability to waive lien rights by contract.
Yes, pay-if-paid clauses in Florida are enforceable as long as they clearly and unambiguously set a condition precedent to the general contractor’s obligation to pay.
Yes, pay-when-paid clauses are enforceable in Florida, but they are treated as setting a reasonable time for when payment is to be made. The underlying obligation to pay still remains, regardless of whether the property owner has paid or not.
Yes, the Florida prompt payment provisions on private projects act as the default, the terms of the contract will govern the timing of payments.
Florida law doesn’t regulate the amount of retainage that can be withheld on a private project. Therefore, the terms of the contract will apply.
Yes, pay-if-paid clauses in Florida are enforceable as long as they clearly and unambiguously set a condition precedent to the general contractor’s obligation to pay.
Yes, pay-when-paid clauses are enforceable in Florida, but they are treated as setting a reasonable time for when payment is to be made. The underlying obligation to pay still remains, regardless of whether the public entity has paid or not.
No, the prompt payment requirements for both state and local government construction projects must be made according to the prompt pay schedule.
Retainage on public projects is capped at 5%, but the contract can provide for a lower percentage, incremental decrease, or early release of retention funds.
A construction contract outlines each party’s obligations, rights, and remedies on a project. But although the language in specific contract clauses is typically negotiable, Florida has certain rules that govern what the agreement must include — and what is prohibited.
Keep in mind that, while Florida’s rules for construction contract terms are written into state law, the courts determine how strictly those laws should be interpreted — and those interpretations can change.
On this page, you’ll find resources, legal information, and answers to frequently asked questions about Florida’s construction contract and payment terms requirements.
While Florida generally allows construction parties to set the terms of their agreement, there are some laws that regulate specific types of contract provisions. Any contract clause that contradicts the law is invalid and unenforceable.
“No lien” clauses
Under Florida’s lien laws, any clause purporting to waive lien or payment bond rights by contract is strictly prohibited and unenforceable. However, the recent Assignment of Benefit legislation related to emergency restoration work may operate to waive such rights.
Contingent payment clauses
There are two types of contingent payment clauses: pay-if-paid and pay-when-paid. Both of which are enforceable in Florida construction contracts, but are strictly construed, and must be clear and unambiguous in order to be enforceable. Any ambiguity concerning a pay-if-paid clause will be deemed a pay-when-paid clause, which is treated as setting a reasonable time for payment.
Payment timing clauses
Florida’s prompt payment laws set specific deadlines for payments on both private and public construction projects. The payment timing on private projects acts as the default. The payment schedule provided in the contract will apply, but if the contract is silent, then the prompt pay statutes will apply.
Conversely, all payments on both state and local government construction projects must be made according to the schedule set forth under the applicable prompt payment laws.
Retainage clauses
Florida regulates retainage differently on private and public projects. On private projects, there are no statutory limits to the amount of retainage that can be withheld, so this will be determined by the terms of the contract between the parties.
As for public projects, no more than 5% of retainage may be withheld. This applies to both state and local government projects. However, the contracting public entity may provide for less than 5% to be withheld. And can also provide for the incremental reduction in retainage, as well as the early release through the contract.
Florida also has laws that establish contract requirements for specific types of projects — particularly those that involve a homeowner.
Generally, all construction contracts in Florida must contain are required to disclose the contractor or subcontractor’s registration number issued by the Florida DPBR; if required. Furthermore, all construction contracts should also include a construction defect notice and opportunity to cure provisions.
Florida home improvement contracts
In addition to the requirements stated above, all Florida direct contracts for the improvement of residential property valued at over $2,500 must also include some additional provisions. Specifically a mechanics lien notice informing the owner of lien rights in Florida, as well as a notice informing the owner of the Florida Homeowner Construction Recovery Fund.
Construction contracts and payment terms are highly regulated in Florida. It can be confusing to figure out when payments must be made, how to make them, and how to best protect your company from expensive problems. Here are some frequently asked questions that come up with construction contracts and payment terms on Florida jobs.
No. Waiving lien rights before any work is performed (aka “no-lien clause“) is not allowed in Florida. Specifically, §713.20(2) of the Florida lien statute states:
“A right to claim a lien may not be waived in advance. A lien right may be waived only to the extent of labor, services, or materials furnished. Any waiver of a right to claim a lien that is made in advance is unenforceable.”
However, Florida recently passed legislation related to “Assignment of Benefits” contracts with respect to emergency restoration or other insurance work. The new legislation purports to specify that:
“Notwithstanding any other provision of law . . . acceptance by an assignee of an assignment agreement is a waiver by the assignee and its subcontractors of claims against a named insured for payments arising from the assignment agreement. The assignee and its subcontractors may not collect or attempt to collect money from an insured, maintain any action at law against an insured, claim a lien on the real property of an insured . . .” [emphasis added].
It is unclear how the two provisions above will be reconciled, and it is unclear if this legislation is a change in course in Florida whereby a party may waive third parties’ lien rights.
Pay-if-paid and pay-when-paid clauses are enforceable under Florida law on both public and private projects but are strictly construed. These types of risk-shifting provisions under Florida law are only susceptible to two possible interpretations.
Pay-if-paid clause
They may be interpreted as setting a condition precedent for payment, (i.e. a pay-if-paid clause) if the provision clearly and unambiguously indicates the intent to shift the risk of nonpayment to the subcontractor and sets a condition precedent to the prime contractor’s obligation to pay. (OBS Co. v. Pace Const. Corp.)
Even with a valid pay-if-paid clause, the provision cannot prevent a subcontractor from pursuing payment through lien or payment bond claims. Unless there is a conditional payment bond posted (available only on private projects), but only if both the bond agreement and the subcontract include such a provision.
Pay-when-paid clause
If the contingent payment provision is found to be ambiguous, then the clause will be treated as requiring payment within a reasonable time. (Aetna Cas. & Sur. Co. v. Warren Bros. Co.) These provisions act as still requiring payment but agreeing that payment could be postponed while the contractor seeks payment from the owner.
Note, that even a seemingly valid pay-if-paid clause can be treated as a pay-when-paid clause if the prime contract is incorporated and requires proof of payment to subs and suppliers prior to final payment. (Int’l Eng. Serv. v. Scherer Constr.)
No-damages-for-delay clauses are enforceable in private and public construction contracts, but are limited to specific circumstances.
Such clauses cannot be used to preclude payment for any delays resulting from “fraud, concealment, or active interference with performance under the contract.” This includes any “knowing delay which is sufficiently egregious,” or the willful concealment of foreseeable circumstances which impact timely performance. (Newberry Square Dev. Corp. v. S. Landmark, Inc.,)
While the Florida prompt pay statutes set forth the general timeline by which payment must be made, there are certain exceptions.
Private projects
The prompt payment statutes governing private projects act as the default pay schedule. All payment must be made “according to the terms of the contract.” However, if the contract is silent regarding timing provisions, then payments must be made by the owner within 14 days, and all other payments made within 30 days of payment or receipt of an invoice; whichever is later.
Public projects
On the other hand, the timing under the public prompt pay provisions in Florida may not be altered by contract. All payments must be made according to the prompt payment deadlines. Generally, this means payments to the prime contractor within 25 days of approval, payments to subs within 10 days of receipt of payment, and 7 days for all other down-chain payments.
Private projects
Florida does not regulate the amount of retainage that can be withheld on a private project. Thus, the amount withheld will be determined by the terms of the contract between the parties.
Public projects
Florida recently amended the retainage laws for public projects and allows no more than 5% to be withheld from each progress payment on both state and local government projects. However, the contracting public entity may provide for less retainage, incremental reduction, or the early release of withheld retention by contract.
All Florida construction contracts
Every construction contract and subcontract in Florida must include the contractor’s registration or certification number issued by the Florida DPBR; if required.
Also, all construction contracts should also include specific notice language regarding the notice and opportunity to cure process for construction defects set forth under Fla. Stat. §558.001 et seq. The notice should be in all caps and state:
ANY CLAIMS FOR CONSTRUCTION DEFECTS ARE SUBJECT TO THE NOTICE AND CURE PROVISIONS OF CHAPTER 558, FLORIDA STATUTES.
Home improvement contracts
In addition to the above requirements, direct contracts for the improvement of residential property (dwellings up to 4 units) with a contract value of $2,500 or more must contain the following notices:
• “Mechanics Lien Notice” in 12pt, capitalized, boldfaced font under Fla. Stat. §713.015.
• “FL Homeowner’s Construction Recovery Fund Notice” including the FL Construction Industry Licensing Board phone number and address found under Fla. Stat. §489.1425.
The statute of limitations for a breach of contract claim in Florida varies depending on whether the contract is written or oral.
Written contracts
A breach of a written contract claim in Florida must be brought within 5 years from the date of the breach.
Oral contracts
A breach of an oral or implied contract claim in Florida must be brought within 4 years from the date of the breach.
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