Construction Contract Prompt Payment Law.

(1) This section may be cited as the “Construction Contract Prompt Payment Law.”

(2) This section applies only to written contracts to improve real property entered into after December 31, 1992, and for which a construction lien is authorized under part I of chapter 713.

(3) The terms used in this section have the same definitions as the terms defined in s. 713.01. As used in this section, the term:

(a) “Obligor” means an owner, contractor, subcontractor, or sub-subcontractor who has an obligation to make payments under a contract that is subject to this section.

(b) “Obligee” means a contractor, subcontractor, sub-subcontractor, or materialman who is entitled to receive payments under a contract that is subject to this section.

(c) “Chain of contracts” means the contracts between the owner and the contractor, the contractor and any subcontractor or materialman, the subcontractor and any sub-subcontractor or materialman, and the sub-subcontractor and any materialman.

(4) An obligor must pay an obligee with whom the obligor has a contract when all of the following events have occurred:

(a) The obligee is entitled to a payment at the time and under the terms specified in the contract between the obligor and the obligee, and the obligee has furnished the obligor with a written request for payment; and

(b) The obligor, except an owner, has been paid for the obligee’s labor, services, or materials described in the obligee’s request for payment by the person immediately above the obligor in the chain of contracts; and

(c) The obligee has furnished the obligor with all affidavits or waivers required for the owner to make proper payments under s. 713.06.

(5)(a) Any payment due under the provisions of subsection (4), excluding any amounts withheld pursuant to subsection (7), shall bear interest at the rate specified in s. 55.03 plus an additional 12 percent per annum, computed beginning on the 14th day after payment is due pursuant to subsection (4).

(b) If the request for payment is incomplete or contains an error, the obligor has 14 days within which to return the request for payment to the obligee for completion or correction. The obligor must specify in writing the reasons for the return of the request for payment. If the obligor does not return the request for payment, together with the specified reasons within the time provided in paragraph (a), the obligor must pay interest as provided in paragraph (a). If the obligor does return the request for payment within the time provided in paragraph (a), the time period for computing interest begins to run on the 14th day after the request for payment is completed or corrected and payment is otherwise due pursuant to subsection (4).

(6)(a) The right to receive interest on a payment under this section is not an exclusive remedy. This section does not modify the remedies available to any person under the terms of a contract or under any other statute. This section does not modify the rights of any person to recover prejudgment interest awarded to the prevailing party in any civil action or arbitration case. During the period that interest accrues under this section, the interest rate shall be the rate specified in s. 55.03 plus an additional 12 percent per annum or the rate specified in the contract, whichever is greater. A person shall not be entitled to receive both the contract interest and the statutory interest specified in this section.

(b) This section does not create a separate cause of action other than for the collection of interest due pursuant to subsection (5).

(c) If an obligor pays an amount less than the full amount due under the contract between the obligor and the obligee, the obligor may designate the portion of the labor, services, or materials to which the payment applies. In the absence of such a designation by the obligor, the obligee may apply the payment in any manner the obligee deems appropriate. This paragraph does not modify the obligation to make or demand a designation under the provisions of s. 713.14.

(d) An obligee may not waive the right to receive interest before a payment is due under a contract subject to this section. An obligee may waive the interest due on any late payment on or after the date the payment is due under subsection (4).

(e) Unless the contract specifically provides to the contrary, a dispute between an obligor and obligee does not permit the obligor to withhold payment from the obligee or from any other obligee for labor, services, or materials provided to the obligor and which are not subject to or affected by the dispute.

(7)(a) An owner and a contractor may agree to a provision that allows the owner to withhold a portion of each progress payment until substantial completion of the entire project. The owner shall pay the contractor the balance of the contract price, including the amounts withheld from the progress payments, within 14 days after any of the following events occur.

1. Pursuant to the terms of the contract, an architect or engineer certifies that the project is substantially complete and, within the time provided in the contract between the owner and the contractor, the owner submits a written punchlist to the contractor and the contractor substantially completes all of the items on the punchlist.

2. The issuance of a certificate of occupancy for the project, and within the time provided in the contract between the owner and the contractor, the owner submits a written punchlist to the contractor and the contractor substantially completes all of the items on the punchlist.

3. The owner or a tenant of the owner takes possession of the construction project and, within the time provided in the contract between the owner and the contractor, the owner submits a written punchlist to the contractor and the contractor substantially completes all of the items on the punchlist.

Any funds retained by the owner beyond the time period specified in this subsection shall accrue interest at the rate specified in subsection (5), computed from the date the payment is due to the date the payment is received by the contractor. If the contract between the owner and the contractor does not provide a time period for the owner to submit a written punchlist to the contractor, the time period shall be 15 days from the issuance of the certificate of substantial completion, the issuance of the certificate of occupancy, or the date the owner or the owner’s tenant takes possession of the project, whichever first occurs. If no written punchlist is given to the contractor within the time provided in this subsection, interest begins to accrue 14 days after the issuance of the certificate of substantial completion, the issuance of the certificate of occupancy, or the date the owner or the owner’s tenant takes possession of the project, whichever first occurs. For construction projects that are to be built in phases, this subsection applies to each phase of the total project. The contract between the owner and the contractor may specify a shorter time period for disbursing all or any portion of the final payment and the retainage.

(b) Except as provided in paragraph (a), an obligor and obligee may agree to a provision that allows the obligor to withhold a portion of each progress payment until completion of the entire project. The amounts withheld shall bear interest 14 days after payment of such amounts are due under the terms of the contract between the obligor and obligee and the other requirements of subsection (4) have been satisfied.

(c) An obligee may, from time to time, withdraw all or any portion of the amount retained from progress payments upon depositing with the obligor:

1. United States Treasury bonds, United States Treasury notes, United States Treasury certificates of indebtedness, or United States Treasury bills;

2. Bonds or notes of the State of Florida; or

3. Certificates of deposit, within the insured limits, from a state or national bank or state or federal savings and loan association authorized to do business in this state.

Amounts may not be withdrawn in excess of the market value of the securities listed in subparagraphs 1., 2., and 3. at the time of such withdrawal or in excess of the par value of such securities, whichever is less. The obligee shall execute and deliver all documents reasonably required to allow the obligor to document the transfer and the obligee shall pay any recording or registration costs incurred by the obligor in connection with the transfer. The obligor shall pay the obligee any interest or income earned on the securities so deposited within 30 days after the date such interest or income is received by the obligor. If the deposit is in the form of coupon bonds, the obligor shall deliver each coupon to the obligee within 30 days after the date the coupon matures. An obligee may withdraw funds retained from progress payments only to the extent the obligor has withdrawn such funds for the obligee’s labor, services, or materials from the person immediately above the obligor in the chain of contracts.