[CLC-Discussion] Construction contracting arrangement

Tue Oct 4 11:30:40 PDT 2022

Our client recently concluded the development of a new $150M luxury hotel property using a licensed CM as Agent who pulled the building permit and managed subs, schedule and budget under a CM Agreement while the client owner contracted directly with ALL trade contractors (through the CM who contracted as disclosed agent for the Owner).  Essentially, this is multi-prime contracting which is a form of project development more common up north than in Florida.   No issues with licensure since the Owner is not engaged in contracting but solely acting like any other Owner contracting with construction professionals for improvements on its property.

Michael Gibbons
Shareholder
215 N. Eola Dr. | Orlando, FL 32801
D: 407.418.6378 | P: 407.843.4600  | Ext: 1378
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LOCAL ROOTS. BROAD REACH. SM

From: clc-discussion-bounces at lists.flabarrpptl.org <clc-discussion-bounces at lists.flabarrpptl.org> On Behalf Of RPPTL CLC-Discussion
Sent: Tuesday, October 4, 2022 1:58 PM
To: 'clc-discussion at lists.flabarrpptl.org' <clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Construction contracting arrangement

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Good afternoon,

Does anyone have insight regarding certain licensing issues (described below) arising from the following potential contracting arrangement:

  *   The owner (who is not a licensed entity) of a multi-family residential property would enter into a contract with a construction management company (a licensed general contractor), whereby the general contractor would oversee/supervise various aspects of construction, including management activities related to subcontractors.
  *   However, the owner—not the general contractor—would enter into the underlying subcontracts with various subcontractors, where the scopes of work of many of these subcontractors would require a license (electrical, plumbing, etc.)

I think it is clear that construction management activities would require a license, but I am wondering whether Owner’s “contracting” with the subcontractors directly might sufficiently trigger the following licensing exemptions under chapter 489: either (1) the “Big Boy” exemption under section 489.119(7) or (2) the “Developer” exemption under §489.105(6) (I borrow the above “Big Boy” and “Developer” descriptions from Mr. Klingen’s informative article from the Florida Bar website<https://protect-us.mimecast.com/s/XI9JCYEl7ns3Wk3GI0tHeX/>).  I think that the two above exemptions may be subject to a few of the following issues under the above potential contracting arrangement:

  1.  With respect to the “Big Boy” exemption, the main issue would appear to be whether the construction manager would qualify under the “employ” language of the statute.  In other words, does this provision require that the licensed individual (company?) be employed as W-2 employee as opposed to an independent contractor—or borrowing from chapter 489’s definition of “employee”, must be “a person who receives compensation from and is under the supervision and control of an employer who regularly deducts the F.I.C.A. and withholding tax and provides workers’ compensation, all as prescribed by law.”?

  1.  With respect to the “Developer” exemption under §489.105(6), the main issue would appear to be whether this exemption could apply to the owner and subcontractor subcontract, or if that exemption is limited to contracts that involves the selling the completed residences.

Any help/guidance you may have would be greatly.  Appreciated; thank you!

Johnathan Ayers, Esq.
Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
150 West Flagler Street, Suite 2200
Miami, FL 33130
Direct:  305-789-3517
Email:  jayers at stearnsweaver.com<mailto:jayers at stearnsweaver.com>
www.stearnsweaver.com<https://protect-us.mimecast.com/s/c6-FC1wB6nTpAnpvtpqAQ6/>

Certified by the Florida Bar in Construction Law

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