How to avoid home improvement contract problems
Home improvement contracts and residential real property construction contracts can be fraught with problems caused by delays and lack of materials. What a homeowner can do when the contractor simply does not perform or will not complete the job or what the contractor can do when the homeowner will not pay is grounded in the parties’ contract. In Florida home improvement and residential construction contracts must contain some specific language. It is that statutory language that provides additional solutions to both contractors and homeowners when they run into problems in completing the project.
What every general contractor must put in their contracts to comply with Florida law
Florida Homeowner’s Construction Recovery Fund disclosure
Every contract for the improvement of residential real property for more than $2,500 must contain an advisory about the Florida Homeowner’s Construction Recovery Fund. The required language is found in Section 489.1425 of the Florida Statutes. That statement informs the homeowner of the existence of that fund and how to make a claim in the event that the contractor causes damage or fails to fully perform.
Chapter 558 disclosures
Construction contracts between the owner and contractor or with a design professional must also contain a disclosure required by Section 558.005 of the Florida Statutes. That provision informs the homeowners that they must notify the contractor of any specific defects in the construction and are required to give the contractor sixty days to address those before filing any lawsuit. That Statute however does not operate as a penalty so the failure to include the language will not void or obviate the contract.
Florida lien law disclosures
Lastly Section 713.015 in the Florida Statutes mandates that all residential real property improvement contracts for more than $2,500 between a contractor and a property owner must contain a bold disclosure about lien rights in font greater than 12 point. Chapter 713 is commonly called Florida’s lien law and it also requires that the property owner sign the contract with the contractor. Florida’s lien law provides dates within which a contractor must provide certain disclosures such as the notice to owner and within which a contractor claiming a lien must record and serve that lien. The lien law is strictly construed meaning that if those dates are not followed then there can be no right to lien the property. For a more in depth examination please refer to my article Is It Mean to Lien.
What are the options for structuring home improvement contracts
In some home improvement contracts the agreed contract price may be divided into an initial payment and a final payment due when the work is complete. In that arrangement the first payment is usually designed to cover material and labor costs and the final payment largely composes the profit for the contractor. But this is not an absolute nor is it required by law meaning that the parties can negotiate any payment or draw schedule they like depending on the project.
Progress or draw payments are a useful method
One of the best methods by which contractors and homeowners can avoid construction contract disputes is to have a contract structure of progress or draw payments following the initial deposit that are tied to agreed milestones. Only when a milestone is reached and approved does the payment for that portion of the contract come due. This creates goals or targets for the contractor and limits the financial exposure for the homeowner.
What can a homeowner do if the contractor is not performing
If a homeowner has paid a contractor and the contractor is not performing the work or completing the job then the first action must be a written notice or demand on the contractor to perform or to explain the failure or inability to do so. This highlights for both the contractor and the property owner the importance of regular communication about the status of the project.
Regular communication can alleviate performance problems
Damages for the breach of a residential improvement contract may include the increased cost of labor and materials incurred with a second contractor hired to finish the job. Thus it benefits the contractor to keep the homeowner informed of the status of the project to avoid the homeowner terminating the contract and filing suit. In some cases changes or change orders by the homeowner may be the cause of the problems and result in delays.
Regular communication between the parties can alleviate problems because the homeowner making the changes would understand that their own changes will cause delays or price increases. Changes to any home improvement contract or change orders on work or materials should always be done in writing and signed by the parties so they both have a clear record and accurate understanding of the modification and the impact that may have on the project.
Regular communication between the parties can alleviate problems because the homeowner making the changes would understand that their own changes will cause delays or price increases. Changes to any home improvement contract or change orders on work or materials should always be done in writing and signed by the parties so they both have a clear record and accurate understanding of the modification and the impact that may have on the project.
The parties can modify their agreement to accommodate unforeseen issues
If a contractor is unable to obtain certain materials then the parties can adjust their agreement to accommodate that situation. They have the ability to substitute other materials or to agree to delay construction until the desired materials become available. If however the contractor has been paid but has not responded to any notice or ordered the required materials then unless the parties can reach an agreement the homeowner may be forced to terminate the contract and retain another contractor to complete the project. In that case the homeowner can then evaluate with counsel whether to pursue the contractor for the damages.
Some of the factors that regularly impact that decision are the cost of pursuing the contractor, the time it will take, and the likely or possible outcomes or results of that action. For attorneys some issues that impact the analysis are whether the fees are recoverable, the venue for the dispute whether a court or arbitration and where that might occur, and the recoverability of any ultimate award against the contractor which includes whether the contractor has any insurance or bond from which the homeowner might be able to recover.
Some of the factors that regularly impact that decision are the cost of pursuing the contractor, the time it will take, and the likely or possible outcomes or results of that action. For attorneys some issues that impact the analysis are whether the fees are recoverable, the venue for the dispute whether a court or arbitration and where that might occur, and the recoverability of any ultimate award against the contractor which includes whether the contractor has any insurance or bond from which the homeowner might be able to recover.
How can a homeowner recover money paid to a contractor that is not doing the work
One method by which a homeowner can recover money they paid a contractor who is not performing the contract or doing any work is by utilizing Section 489.126 of the Florida Statutes. Under that law a contractor that receives more than 10% of the total contract price as an initial payment is obligated to apply for any necessary permits within 30 days of the payment. That Statute also mandates that the contractor must start work within 90 days after the permit is issued and requires that the contractor must continue to perform work during any given 90-day period unless the parties agree otherwise in their contract.
What do I have to put in my written demand
If the contractor fails to comply with that Statute the homeowner must first send a written demand by certified mail with a return receipt either demanding performance or a refund of the payment. If after the contractor receives that demand notice it does not perform work and also fails to refund the payment then the law will infer that the contractor intended to keep the money. The significance of that legal presumption is that it provides the support for a civil theft claim that can multiply the amount threefold. Civil theft is the civil parallel to criminal theft that results in an award of monetary damages for the theft. But the party bringing that claim has to show the requisite intent to deprive the owner of property. If the contractor refuses to refund the payment after receiving the proper demand then the law will infer that element and the homeowner need not prove it by any additional evidence making it much easier for the homeowner to win a civil theft claim.
Summation on how to avoid problems in home improvement contracts
Residential construction and improvement contract disputes can most often be avoided by regular communications and updates between the contractor and homeowner. When payment is made without action the homeowner can demand the payment back under Florida law. If a contractor performs work and the homeowner does not pay then the contractor can pursue both the property owner on the contract breach and go after the property through Florida’s lien laws. Importantly for the contractor a party who improves residential real estate and is not paid is one of the exceptions to Florida’s homestead protection.
Draw schedules in a residential home improvement contract will help the parties adhere to a target schedule. Regular communications can more easily address unforeseen and uncontrollable delays such as the lack of availability or price increase of materials as well as issues with the construction or improvements themselves. Each situation is dependent on the contract showing exactly to what the parties agreed. Therefore documenting the agreement and the performance on both the contractor and homeowner sides of the transaction can avoid disputes and will assist in resolving them later. The best initial action that either a homeowner or a contractor can take when any dispute arises is to consult with a qualified attorney with experience in these matters.
Draw schedules in a residential home improvement contract will help the parties adhere to a target schedule. Regular communications can more easily address unforeseen and uncontrollable delays such as the lack of availability or price increase of materials as well as issues with the construction or improvements themselves. Each situation is dependent on the contract showing exactly to what the parties agreed. Therefore documenting the agreement and the performance on both the contractor and homeowner sides of the transaction can avoid disputes and will assist in resolving them later. The best initial action that either a homeowner or a contractor can take when any dispute arises is to consult with a qualified attorney with experience in these matters.
Prepared by business litigation expert attorney David Steinfeld

David Steinfeld is one of the few Board Certified business law experts in Florida. He has been licensed for almost 30 years. He is AV-Preeminent rated, ranked as one of the Best Lawyers in America by U.S. News and World Report, and consistently named a Florida Super Lawyer and one of Florida’s Legal Elite. Dave has also received Martindale’s prestigious Judicial Edition Award for high reviews by Judges, its Platinum Client Champion Award and has a 10.0-Superb rating on AVVO as well as a 10.0 rating on Justia, lawyer reviews websites.
Check out business lawyer David Steinfeld online for helpful videos and articles on Florida business law, real estate disputes, and electronic discovery solutions for your business. This article is provided for informational purposes only.
Check out business lawyer David Steinfeld online for helpful videos and articles on Florida business law, real estate disputes, and electronic discovery solutions for your business. This article is provided for informational purposes only.