By: Barry Kalmanson
Florida law provides criminal penalties for a person, firm or corporation (or an agent, officer or employee thereof) who knowingly and intentionally misapplies construction funds. Section 713.345, Florida Statutes defines the misapplication of construction funds as receiving payment on account of improving real property and not disbursing the funds due and owing to lienors for services and labor which were performed on, or materials which were furnished for, an improvement prior to receipt of the payment, unless the amounts withheld are in accordance with the terms of a contract. The penalties vary depending on the amount misapplied. Section 713.345, Florida Statutes, states that there is “[a] permissive inference that a personal knowingly and intentionally misapplied construction funds” when:
✔ a valid lien has been recorded against the property of an owner;
✔ more than 45 days have passed since the person who ordered the labor, services or materials received sufficient funds to pay for such labor, services or materials; and
✔ the person has failed to remit sufficient funds to pay for the labor, services or materials.
Based on the amount misapplied, the violator should be charged as follows:
$100,000 or more – Felony of the first degree
$1,000 – $100,000 – Felony of the second degree
$1,000 or less – Felony of the third degree
