Construction Law

What to Do if a General Contractor Misappropriated Funds featured image

What to Do if a General Contractor Misappropriated Funds

On June 24, 2020, a Lakeland contractor was arrested for three counts of misappropriation of construction funds and one count of making a false statement. The contractor in question was hired as a general contractor for the construction of two warehouses. When the project owner was notified that subcontractors on the project had gone without payment, they contacted the Polk County Sheriff’s Office — they even made partial payments to several subcontractors to keep them from going out of business. All told, subcontractors on the project sustained a combined loss of $1,408,451 — money that went towards outdoor adventures, sporting goods, country clubs, and vehicles for the general contractor. 

Not every project owner is going to be as proactive or generous as the one mentioned above. With profit margins so slim in the construction industry, subcontractors need to know what to do when they notice signs of misapplication of construction funds. Fortunately, the law is on your side. Let’s take a look at what you can do if a general contractor has failed to pay you on a project. For assistance with a payment issue on your project, the Lakeland construction attorneys with Cotney Attorneys & Consultants can always assist. 

Related: Everything You Need to Know About Obtaining Final Payment on a Construction Project

Florida Law on Moneys Received for Real Property Improvements

Florida Statute 713.345 stipulates that a person “who receives any payment on account of improving real property must apply such portion of any payment to the payment of all amounts then due and owing for services and labor which were performed on, or materials which were furnished for, such improvement prior to receipt of the payment.” Regardless of the amount, a general contractor who misappropriated construction funds is guilty of a felony. Unfortunately, this law alone does not justify legal action on your part. In order to obtain owed funds, you will need to file a mechanic’s lien. 

Related: Perfecting a Lien in Florida

A Mechanic’s Lien Is Your Best Option

A mechanic’s lien is a contractor's best tool for obtaining funds from a party that is unwilling or unable to pay. Remember, a lien attaches to property, meaning that you can still obtain funds even if a general contractor has misappropriated them. Florida Statute 713.345 also states that it can be inferred that a person knowingly and intentionally misapplied construction funds when a valid lien has been recorded and that person fails to pay for a period of at least 45 days from receipt of the funds. If you’ve been denied payment for work or materials you provided, a mechanic’s lien filed by a Lakeland construction attorney is your best chance at obtaining payment and seeing justice served. 

If you would like to speak with a Lakeland construction attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.