Moody and Shea, P.A.

What are the Consequences for Misapplying Construction Payments?

One provision of the Construction Lien Law statutes which is actually unrelated to construction liens, or even to any civil rights or remedies of parties to a construction contract, is the criminal penalties for misapplication of construction funds found in Florida Statutes section 713.345. The statute applies to individuals, firms, and corporations, as well as to their agents, officers, and/or employees, all of whom are referred to herein as a “person”. Under the statute, when a person receives any payment relating to the improvement of real property, the person must apply such portion of the payment to the payment of all amounts then due and owing for labor, services, and/or materials which were furnished for the improvement prior to the date of receipt of the payment. Exceptions are provided for withholding payment pursuant to terms of a contract, or in the event of a bona fide dispute.

Anyone who knowingly and intentionally fails to comply with the statute is guilty of a felony, the degree of which is determined based upon the aggregate amount of payments which are misapplied, as follows:

If the aggregate amount misapplied is $100,000 or more, a first degree felony;

If the aggregate amount misapplied is $1,000 or more, but less than $100,000, a second degree felony; and

If the aggregate amount is less than $1,000, a third degree felony.

The threshold aggregate dollar amounts for the second and third degree felonies were lowered substantially as a result of legislation which became effective on October 1, 2005.

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