Contractor License Discipline and Unlicensed Contracting in Florida

Content Area F, Complying with Government Regulations, is 15% of the Business and Finance exam, and state law questions make up a large share of it. Two Chapter 489 sections come up again and again: F.S. 489.129, which lists what a licensed contractor can be disciplined for and what the Construction Industry Licensing Board (CILB) can do about it, and F.S. 489.127, which makes unlicensed contracting a crime. Chapter 455, the general Department of Business and Professional Regulation (DBPR) statute, is on the B&F reference list (R1), and its own disciplinary section, 455.227, is a common comparison.

What the CILB can do: F.S. 489.129(1)

The board may take any of these actions against a certificateholder or registrant found guilty of a listed act:

• place on probation or reprimand
• revoke, suspend, or deny issuance or renewal of the certificate or registration
• require financial restitution to a consumer for financial harm directly related to the violation
• impose an administrative fine not to exceed $10,000 per violation
• require continuing education
• assess the costs of investigation and prosecution

Under 489.129(2), when the disciplined contractor is a qualifying agent or financially responsible officer and the violation relates to the business organization's project, the board may impose an additional fine up to $5,000 per violation against the business organization or its partners, officers, directors, trustees or members who participated or knew and failed to act.

Compare: Chapter 455

F.S. 455.227(2)(d), which applies across DBPR professions, allows a fine of up to $5,000 for each count or separate offense. Questions sometimes ask for "the maximum CILB fine under 489.129" ($10,000) versus "the maximum fine under 455.227" ($5,000). Read which statute the question cites.

Grounds for discipline (paraphrased)

For (r), if a licensee is convicted of misapplication of construction funds, the board must suspend all its Chapter 489 licenses for at least 1 year.

Financial mismanagement: 489.129(1)(g)

Financial mismanagement or misconduct occurs when:

1. Valid liens are recorded against the customer's property for supplies or services the contractor ordered, the contractor was paid for them, and the contractor does not remove the liens by payment or bond within 75 days after the date of the liens.
2. The contractor abandons the job and the percentage of completion is less than the percentage of the contract price paid, unless the contract entitles the contractor to keep the funds or the contractor refunds the excess within 30 days after abandonment.
3. The job is completed and the customer paid more than the contract price (adjusted for change orders), unless the increase was beyond the contractor's control, caused by the customer, or allowed by the contract.

Worked example: abandonment refund

A contractor signs an $80,000 residential contract, collects $50,000, and walks off when the work is 40% complete. The contract does not let it keep excess funds.

Step 1. Percent paid. $50,000 ÷ $80,000 = 62.5% Step 2. Compare. 62.5% paid is more than 40% complete, so the ground applies unless the excess is refunded. Step 3. Value of work done. 40% × $80,000 = $32,000 Step 4. Excess. $50,000 − $32,000 = $18,000, to be refunded within 30 days

Abandonment: 489.129(1)(j)

A project may be presumed abandoned after 90 days if the contractor terminates it without just cause or without proper notice to the owner (including the reason), or fails to perform work without just cause for 90 consecutive days.

Revocation consequences: 489.129(9)

A person whose license is revoked cannot be a partner, officer, director or trustee of a contracting business organization, or be employed in a managerial or supervisory capacity, for 5 years, and cannot reapply for certification or registration for 5 years after the revocation takes effect.

Unlicensed contracting: F.S. 489.127

F.S. 489.127(1) prohibits, among other things, falsely holding oneself out as licensed, using someone else's license, using a suspended or revoked license, contracting or advertising without being certified or registered, working without a required building permit, and operating a contracting business more than 60 days after its only qualifying agent leaves. A person working on an inactive or suspended license is considered unlicensed. A local business tax receipt is not a contractor license.

Criminal penalties for unlicensed persons

DBPR may also issue a stop-work order for all unlicensed work on a project (489.127(3)).

Licensees who lend their license

Under 489.127(4), a licensed contractor may not let an unlicensed person or unqualified business use its license number, and may not pull a permit for a job it has not contracted to do (with limited exceptions). A first violation is a first-degree misdemeanor; a repeat is a third-degree felony.

Civil consequence: F.S. 489.128

A contract entered into by an unlicensed contractor is unenforceable in law or equity by the unlicensed contractor, and the unlicensed contractor has no lien or bond claim for the work. The other parties' rights are not affected. This is why a licensed sub should never work under an unlicensed "GC."

Deposits on residential work: F.S. 489.126

A related money rule: a contractor who receives an initial payment of more than 10% of the contract price on residential work must apply for necessary permits within 30 days after the payment and start work within 90 days after the permit is issued, absent just cause or the customer's written agreement otherwise.

Practice Chapter 489 questions

Statute questions reward precise numbers: $10,000 vs. $5,000, 30 vs. 75 vs. 90 days, misdemeanor vs. felony. Our Florida Business and Finance Exam Prep includes original Chapter 489 and 455 questions with explanations, and 90 days of practice across the full exam. Related: business organization, construction lien law and the B&F exam overview.