In a proactive move aimed at protecting property owners, the Florida Department of Financial Services (DFS) has launched what it refers to as its “Check My Contract” program. This initiative is geared towards residential and commercial property insurance policyholders who have engaged, or are seeking to engage, contractors, restoration professionals, or public adjusters dealing with property damage claims after the recent onslaught of catastrophic storms.
Purpose of the “Check My Contract” Service
The DFS purports that this “Check My Contract” program is intended to serve a dual purpose:
- Consumer Protection: It allows policyholders to submit their repair contracts for an independent review by the DFS. This process aims to identify potential instances of insurance fraud and ensure that contractors are operating within the legal framework established for such agreements.
- Regulatory Compliance: The service seeks to ensure that all such contracts comply with Florida law, especially as it concerns emergency regulations, price gouging restrictions, and consumer rights.
Key Compliance Areas
Contractors should be aware that the DFS will scrutinize several critical aspects of the contracts submitted for review, such as compliance with:
- Emergency Orders and Rules: Contracts must adhere to any orders or rules enacted during declared emergencies. This includes specific early-cancellation language, as well as compliance with specific pricing guidelines and operational mandates that come into effect during such times.
- Price Gouging Provisions: The DFS will evaluate whether the terms of the contract suggest price gouging. Contractors should always ensure that their pricing is fair and consistent with industry standards, but especially in the wake of a natural disaster.
- Assignment of Benefits (AOB): For the most part, the use of AOBs has been prohibited in Florida for a number of years now. So, the DFS will be keenly looking for unlawful assignment agreements, rendering the contract void. Specifically, the DFS states if it determines an unlawful or invalid AOB exists, it will inform the consumer that it is “void, invalid, and unenforceable.” If your specific situation does happen to fall within the limited exceptions provided by Fla. Stat. § 627.7152 (2024), there are still numerous rigorous requirements that must be met.
- Consumer Rescission Rights: If the Governor has declared a state of emergency, contracts must include a clear and conspicuous notice to consumers regarding their right to rescind the contract within a certain timeframe. This itself is a relatively new law but can be found at Fla. Stat. § 489.147(6) (2024). In short, any contractor entering a contract with a residential owner to replace or repair a roof during a state of emergency is required to include in, or add as an attachment to, the contract the specific “notice” language provided. It must be in bold type, cannot be less than 18-point font, and a space must be reserved for the customer’s signature immediately following the notice. The exact notice-verbiage required is as follows:
“You, the residential property owner, may cancel this contract without penalty or obligation within 10 days after the execution of the contract or by the official start date, whichever comes first, because this contract was entered into during a state of emergency by the Governor. The official start date is the date on which work that includes the installation of materials that will be included in the final work on the roof commences, a final permit has been issued, or a temporary repair to the roof covering or roof system has been made in compliance with the Florida Building Code.”
- Roofing Specific Disclaimers: Although not specifically referenced in any DFS publications we have seen, you can bet the DFS will be on the lookout for these two additional “disclosures” that are required in roofing contracts where the customer’s insurance proceeds are to be paid to the contractor. Both are located in Fla. Stat. § 489.147 (2024) and must be at least 12-point font and at least half as large as the largest font size used:
- The consumer is responsible for payment of any insurance deductible; It is insurance fraud punishable as a felony of the third degree for a contractor to knowingly or willfully, and with intent to injure, defraud, or deceive, pay, waive, or rebate all or part of an insurance deductible applicable to payment to the contractor for repairs to a property covered by a property insurance policy; and, It is insurance fraud punishable as a felony of the third degree to intentionally file an insurance claim containing any false, incomplete, or misleading information.
- A contractor may not directly or indirectly engage in any of the following practices: (a) Soliciting a residential property owner by means of a prohibited advertisement; (b) Offering to a residential property owner a rebate, gift, gift card, cash, coupon, waiver of any insurance deductible, or any other thing of value in exchange for: (i) Allowing the contractor to conduct an inspection of the residential property owner’s roof; or (ii) Making an insurance claim for damage to the residential property owner’s roof.
Roofers engaged in insurance-related work for consumers must also comply with the other requirements set forth in Fla. Stat. § 489.147 and related laws, including providing a good faith estimate of the itemized and detailed cost of services and materials for repairs undertaken pursuant to a property insurance claim at the time of providing the customer with your contract.
Implications for Contractors
For contractors working in Florida, the introduction of the “Check My Contract” service presents both challenges and opportunities:
- Enhanced Scrutiny: With the DFS providing free-of-charge reviews of contracts for compliance, contractors must ensure that all agreements are transparent, fair, and legally sound. This could mean revising existing contracts or implementing additional compliance checks before entering into agreements with clients.
- Reputation Management: Engaging in transparent and compliant business practices will not only reduce the risk of legal complications but also enhance your reputation among policyholders and within the industry.
- Educational Opportunities: This initiative provides an opportunity for contractors to educate their clients about the importance of contract reviews and compliance, potentially positioning themselves as trusted advisors in the process.
- Expose and Weed-Out Bad Actors: Every year, Florida gets flooded with out-of-state so called “contractors,” oftentimes unlicensed and/or uninsured. With the new Check My Contract initiative, the “bad” ones will likely be identified quickly, opening up more business and opportunities for the good guys.
Conclusion
The launch of the “Check My Contract” service by the Florida DFS is a significant development for contractors operating in the state.
It’s understandably tough, if not impossible, for contractors to keep up with and navigate the evolving regulatory landscape here in Florida. On the bright side, simply knowing of this new program’s existence and the implications of it may be just the push needed to re-review those contracts and ensure you are fully compliant.
For further information, contractors are encouraged to stay informed about updates from the DFS and consider consulting with a Florida-based construction attorney to ensure their contracts meet all necessary standards.
About Our Author
Ben Lute is a member of the Adams and Reese Construction Team and Counsel in the firm’s Tampa office. Lute’s construction law practice includes full-service legal representation and consultation to his clients, such as contract review, drafting and negotiations, business development strategy, collections, construction litigation, defect litigation, prosecution of lien and bond claims, local and state contractor licensing – essentially any issue his contractor clients come across. He also handles matters concerning water law and other environmental issues.