[CLC-Discussion] Construction contracting arrangement

Tue Oct 4 13:53:58 PDT 2022

That’s a good argument in favor of the need for subcontracting but I don’t think it definitively answers the question.  The drafters had to refer to unlicensed trades as either “contractors” or “subcontractors”.  Under the circumstances, the choice of “subcontractor” makes sense but I don’t know that means such trades can only operate as a subcontractor under a contract with a licensed GC.  The statute lists 3 prerequisites to such unlicensed work being lawful: (i) the work must be within the licensure of the CGC, CBC or CRC, (ii) the supervising contractor must be responsible for the work, and (iii) the unlicensed trade being supervised must not be performing a scope of work requiring licensure under 489.105(3)(d)-(o).  It’s my contention that if each of (i)-(iii) are satisfied, the statutory intent is met.  I recognize that one could say that the statute also uses the term “subcontractor” and you can’t fall within the statute unless the unlicensed trade is a “subcontractor”.   The best response to that argument may be to display the Trade Contract Agreement signed by the CM (as agent for Owner) and the unlicensed subcontractor.  If (i)-(iii) above are met and there are agreements in place (though not a subcontract per se) making the CM responsible for supervising the unlicensed sub trade and making the CM responsible for the sub trade’s work, it is difficult for me to believe that the CILB or a court would find anything amiss here.

Michael Gibbons
Shareholder
215 N. Eola Dr. | Orlando, FL 32801
D: 407.418.6378 | P: 407.843.4600  | Ext: 1378
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From: clc-discussion-bounces at lists.flabarrpptl.org <clc-discussion-bounces at lists.flabarrpptl.org> On Behalf Of RPPTL CLC-Discussion
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Subject: Re: [CLC-Discussion] Construction contracting arrangement

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That’s an interesting interpretation that I hadn’t considered. I suppose the question is at least partly “responsible” to whom? I had always interpreted that statute just to pull subcontractors (which is the term used in that section) within the umbrella of the GC’s license so that the framer, concrete, etc. don’t have to have a GC license. In other words, those trades can be “subcontractors” but not “contractors.” That said:

  *   “Subcontract” or “subcontractor” isn’t defined in 489.105, but the term “subcontract” is used in 489.105(3)(m) in this sentence: Such contractor shall subcontract, with a qualified contractor in the field concerned, all other work incidental to the work but which is specified as being the work of a trade other than that of a plumbing contractor.

  *   It's also used in 489.113(3) several times, e.g.: A contractor shall subcontract all electrical, mechanical, plumbing, roofing, sheet metal, swimming pool, and air-conditioning work, unless such contractor holds a state certificate or registration in the respective trade category,

  *   And, importantly, I think, in (3)(a): A general, building, or residential contractor, except as otherwise provided in this part, shall be responsible for any construction or alteration of a structural component of a building or structure,

  *   And of course we all know how subcontractor is defined in the lien law, which might be persuasive in an analysis of what the term means in 489.

  *   And I think the definition of “contactor” in 489.105 is also pertinent (only excerpting the first part): Contractor” means the person who is qualified for, and is only responsible for, the project contracted for and means, except as exempted in this part, the person who, for compensation, undertakes to, submits a bid to, or does himself or herself or by others construct, repair, alter, remodel, add to, demolish, subtract from, or improve any building or structure, including related improvements to real estate, for others or for resale to others

Under the structure proposed in the original question, I think the idea was that these other trades would not be “subcontractors” but rather “contractors” in direct privity with the owner.

So I guess I go back to my original position. Unlicensed trades must contract with a GC. Licensed trades can contract directly with the Owner.

Bruce Partington | Shareholder
bpartington at clarkpartington.com<mailto:bpartington at clarkpartington.com> | (850) 432-1399<callto:(850)%20432-1399>

CLARK PARTINGTON
Office: (850) 434-9200 | Fax: (850) 432-7340
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Pensacola, Florida 32502
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
Sent: Tuesday, October 4, 2022 2:46 PM
To: clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Construction contracting arrangement

I don’t read Fla. Stat. s. 489.113(2) as necessarily requiring a contract between the unlicensed subcontractor (concrete, framer, fenestration etc…) and a properly licensed CGC, CBC or CRC.  Section (2) excerpted below states that the supervising contractor must be “responsible for the work”.  The source of the supervising contractor’s responsibility for the work may derive by operation of law as the building permit holder or by the terms of a separate CM Agreement with the Owner (to which the sub is not a party).  Having said that, when the CM Agent signs all trade agreements as agent for the owner, there is nominal privity of contract between the GC and the subcontractor (though the real party is the Owner).

(2) A person must be certified or registered in order to engage in the business of contracting in this state. However, for purposes of complying with the provisions of this chapter, a subcontractor who is not certified or registered may perform construction work under the supervision of a person who is certified or registered, provided that the work is within the scope of the supervising contractor’s license, the supervising contractor is responsible for the work, and the subcontractor being supervised is not engaged in construction work that would require a license as a contractor under any of the categories listed in s. 489.105<https://link.edgepilot.com/s/22069193/eGLQJQY7_UyvuMgFGVmBUg?u=http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute%26Search_String=%26URL=0400-0499/0489/Sections/0489.105.html>(3)(d)-(o). This subsection does not affect the application of any local construction licensing ordinances.

Michael Gibbons
Shareholder
215 N. Eola Dr. | Orlando, FL 32801
D: 407.418.6378 | P: 407.843.4600  | Ext: 1378
Email<mailto:Michael.Gibbons at lowndes-law.com> | Website<https://protect-us.mimecast.com/s/7vbQC82B3xuj5OVlfzZhxC/> | Bio<https://link.edgepilot.com/s/a6ffb3aa/EEo2V3Nt8UGLzpqKZQidzw?u=http://lowndes-law.com/people-detail/client/Michael-Gibbons> | vCard<https://link.edgepilot.com/s/192f824e/wF1nmBNCF0iSLt1FLnlSkg?u=https://lowndeslaw.dpmlocal.com/admin/vcard/generate.php?id=64>

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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
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Subject: Re: [CLC-Discussion] Construction contracting arrangement

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Direct contracting with the owner is fine for trades that hold licenses under 489.105(3)(d) – (q). But a trade outside of those categories will have to work under (and contract with) a 489.105(3)(a) – (c) contractor. For example, framing, concrete, structural steel, fenestration, various interior finishes, etc., all have to be under a GC (or BC or RC if they qualify for the particular project).

Bruce Partington | Shareholder
bpartington at clarkpartington.com<mailto:bpartington at clarkpartington.com> | (850) 432-1399<callto:(850)%20432-1399>

CLARK PARTINGTON
Office: (850) 434-9200 | Fax: (850) 432-7340
125 East Intendencia Street, 4th Floor
Pensacola, Florida 32502
clarkpartington.com<https://protect-us.mimecast.com/s/GVyVCgJQpGTl1PXrc6_xJZ/>

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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
Sent: Tuesday, October 4, 2022 1:06 PM
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Subject: Re: [CLC-Discussion] Construction contracting arrangement

The owner may hire multiple prime contractors without needing a construction license.  Each contractor (that you labeled as “subcontractors”) would need to be licensed in its field in order to contract to do the work.

Reese J. Henderson, Jr.
Shareholder
Florida Bar Board Certified in Construction Law
Florida Supreme Court Certified Circuit Civil Mediator
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
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Subject: Re: [CLC-Discussion] Construction contracting arrangement

This message originated outside of GrayRobinson.
________________________________
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/_DUYCv29QzuWnOmGuv8hgP/>).  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>
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