community magazine CAI community magazine December 2017 - Page 31

So what’s the difference, my project is bonded either way, right? Well yes and no. With a Section 713.23 bond, it’s a once- and-done kind of thing. If prop- erly handled and recorded, the project is simply exempt from all future liens except for potentially the lien of the general contractor should the owner fail to pay the general. With the Section 713.24 bond, the project remains suscep- tible to liens, the owner continues to have a duty of making “proper payments” and obtaining releases of lien from subcontractors and suppliers prior to each disburse- ment, and the owner must issue and record a Notice of Bond when a lien is recorded to effectu- ate a lien transfer from the prop- erty to the bond. Further, the owner is much more likely to be swept up into any lawsuit to enforce the lien against the bond if for no other purpose than as a fact witness as to whether proper payments were made during the project or for strategic leverage. There is an- other risk. With an exemption bond, the bond amount is limited to the original contract price. With a Section 713.24 transfer bond, the owner potentially re- mains responsible to increase the amount of the bond to cover at- torney fees at 25% of the claim or an amount which a judge might determine appropriate. If the owner does not increase the bond amount, in a less than fortuitous set of circumstances, the owner and the project may have poten- tial exposure for attorney fees. Given the choice, an owner would benefit greatly having an exempt project under Section 713.23, rather than a transfer bond project under Section 713.24. So what does a wonderful 713.23 exemption bond cost com- pared to 713.24 transfer bond, you ask? This is the nice part, not a penny more, and in fact, poten- WWW.CAIWESTFLORIDA.ORG tially less. The bonds are the exact same bond. The difference is making sure you have a profes- sional with the competence, skill, knowledge and foresight to ob- tain the bond prior to commence- ment, and to properly prepare the Notice of Commencement and to record it along with the payment bond. One other thing, you can- not count on the contractor or lender who are supplying or re- quiring the bond to see to it that the Notice of Commencement is handled correctly. At least 50% of the projects that I run across in my practice have not been prop- erly exempted. The builder may lac FRWW'F6R"fP֗6FVBFR&BBFPVFW"6ǒWV7G2FRvW F&W&ǒ7WǒFR&BgW"ЧFW"WBb7FFRVFW'2@&Rf֖Ɩ"vFf&FƖVw2गB2FRvW.( 2GWGF&V6&@FRF6Rb6V6VVB6W"WB&V7BvPR&RFrVG&VBFW Fw2G'rFvWBW"&V7@fbF&&r7F'BR֖v@W6RBfRWW'B7W&PFBW"VB&B2&VV&W&ǒFVB6FBW &V7B2G'VǒWVBR6VW&WGFW"BvBvrPFB6VG( "FV6V&W"#pFRv6F`'Fr&@2WfW"&P&VBFvV&&V0&6RbFPvW"0fVBF'FVB`W&f&6P&G2g&FV 6G&7F"3