Unlicensed contracting in the State of Florida occurs every day and is a huge problem in this state. Chapter 489, Florida Statutes, regulates the “construction industry” in Florida “in the interest of the public health, safety, and welfare.” § 489.101, Fla. Stat.. In the fight against unlicensed contracting activities, the Florida Legislature and Courts have fashioned a host of remedies. The remedies for unlicensed activity are as follows:
- Criminal Sanctions: Unlicensed contracting is a crime. Any person who practices, offers to practice, or holds themselves out as licensed to practice contracting is subject to criminal prosecution pursuant to sections 489.127, F.S. First offense is a first degree misdemeanor under s. 775.082, F.S. Further offenses are third degree felonies under 775.083, F.S. Any offense committed during a Gubernatorial declared state of emergency (such as a hurricane) is a third degree felony under 775.083, F.S.
- Administrative Sanctions: Any person who practices, offers to practice, or holds themselves out as licensed to practice contracting is subject to civil penalties levied by the Department of up to $10,000.00 pursuant to section 489.13, F.S.
- Contractual Remedies: Pursuant to Section 489.128, F.S., contracts entered into by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor. This is many times the most significant of penalties for failing to ensure compliance with licensing requirements.
- Loss of Construction Lien Rights: Section 713.02(7) states that “notwithstanding any other provision of this part, no lien shall exist in favor of any contractor, subcontractor, or sub-subcontractor who is unlicensed as provided in s. 128 or s.489.532.” This prohibition would also include a loss of the unlicensed contractor’s bond claim.
- Treble Damages: Pursuant to Section 768.0425, any action against an unlicensed contractor resulting in injuries from the negligence, malfeasance or misfeasance shall entitle the consumer to treble damages.
- Disgorgement: In some instances, a party can recover the monies it has paid the unlicensed person. This concept is called disgorgement. Florida courts have allowed the disgorgement remedy in various settings. For example, in Vista Designs, Inc. v. Silverman, 774 So. 2d 884 (Fla. 4th DCA 2001), an unlicensed attorney was required to reimburse his client for monies paid by the client. The court found the contract between the unlicensed attorney and his client void and unenforceable, and that public policy favored disgorgement of the funds paid. Similarly, Florida courts have ordered disgorgement of commission funds paid to an unlicensed real estate broker, Cooper v. Paris 413 So2d 772 (Fla.1st DCA 1982), as well as restitution of funds paid to an unlicensed construction contractor, State v. Ledy, 16 Fla. L. Weekly Supp. 903a.
- Unfair and Deceptive Trade Practice: The notion that a person is holding themselves as a contractor, yet they are unlicensed is deceptive. Such conduct can support a claim for unfair and deceptive trade practices which, if successfully proven, will carry an award of the aggrieved party’s attorney’s fees. Furthermore, the representation of being licensed can also support a claim for fraud and punitive damages.
While the above remedies can help an owner recover against an unlicensed contractor, the better practice is to educate the consuming public to properly vet the contractor prior to engaging them to perform work. This would include, but is not limited to: obtaining references; checking on licensure at www.myflorida.com; public record searches for lawsuits; call the local building department to determine if this contractor has permitting privileges; checking on any local licenses; receiving a written contract – no verbal agreements; and not paying more than 10% as a deposit on any construction project.