[CLC-Discussion] Paid If Paid Incorporated By Reference From Subcontract To 713.23 Statutory Payment Bond

Tue Jul 7 08:15:15 PDT 2015

I believe that Bill's analysis is correct. I would add that since the Bond is a co-obligation the language may bar a subcontractor from suing the contractor on the Bond if the Owner did not make payment, just as it would a suit on the contract. But that language would not, in my opinion, bar suit against the surety. 

JOHN S. VENTO
Florida Bar Board Certified in Construction Law
Florida Supreme Court Certified Circuit Civil Mediator

Trenam Kemker
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-----Original Message-----
From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of William L. Grant
Sent: Monday, July 06, 2015 7:38 PM
To: Robert Worman; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Paid If Paid Incorporated By Reference From Subcontract To 713.23 Statutory Payment Bond

Robert, I have recorded liens when faced with subcontracts with this language, but clerks accept the bonds to transfer the liens because there is nothing in the bond to exempt it from subcontractor liens.  It appears to me that the bond is subject to subcontractor claims despite the language of the subcontract.  Also note the last sentence in 713.23(1)(a) - "Any form of bond given by a contractor conditioned to pay for labor, services, and material used to improve real property shall be deemed to include the condition of this subsection."  I have not researched the intent of subsection (f), but it does say, "The surety is not entitled to the defense of pro tanto discharge as against any lienor because of changes or modifications in the contract to which the surety is not a party; but the liability of the surety may not be increased beyond the penal sum of the bond."  I interpret this to say the surety is liable despite any contrary language in the subcontract.
________________________________________
From: clc-discussion-bounces at lists.flabarrpptl.org [clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Robert Worman [rworman at wormanlaw.com]
Sent: Monday, July 06, 2015 5:56 PM
To: clc-discussion at lists.flabarrpptl.org
Subject: [CLC-Discussion] Paid If Paid Incorporated By Reference From Subcontract To 713.23 Statutory Payment Bond

I have recently reviewed several large project subcontracts for clients where the contractor is incorporating by reference in the subcontract the risk shifting "paid if paid" condition precedent to also be a condition precedent in the contractor's Payment Bond.

Am I missing a case out there that allows a 713.23 bond to enjoy this condition precedent and still allow for the property's exemption from construction liens?  Isn't that the whole reason behind 713.245 payment bonds?

Am I wrong to think that if the contractor tries to make its 713.23 bond conditioned upon payment by the owner, and it is not otherwise designated as a Conditional Payment Bond with 713.245 referenced in the bond, then either (a) the condition precedent would be void, such that the property would be exempt from construction liens, or (b) the bond would be a common law bond, no lien exemption would be enforced, and the owner's interest in the property would be subject to construction liens?

Anyone's thoughts on this would be appreciated and should be sent directly to me unless you feel it is an issue worthy of all hearing your comments.

Regards,

Robert B. Worman
Worman & Sheffler, P.A.
2707 West Fairbanks Avenue
Suite 200
Winter Park, FL 32789
407 843-5353
rworman at wormanlaw.com<mailto:rworman at wormanlaw.com>
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