Ground up construction in Florida

One statewide code, enforced locally

Florida builds to a single statewide code. Under section 553.73 the Florida Building Commission adopts the Florida Building Code for use statewide without local adoption and updates it every three years, while each county or city building department enforces it. A local government can amend it only to be more stringent, and only for a documented local need.

In Miami-Dade and Broward the code’s High-Velocity Hurricane Zone provisions apply: the hurricane provisions South Florida adopted after Hurricane Andrew. Windows, exterior doors, roofing, shutters and structural components are covered by the state’s product approval system under section 553.842, so the budget should name approved products, not just a price per opening.

The notice of commencement comes before the first inspection

Florida’s construction lien law starts with a document the owner records. Under section 713.13 the owner records a notice of commencement with the clerk and posts a certified copy or a notarized statement of filing at the site. It names the owner, the contractor and any lender making a loan for the construction, and it tells everyone who works on the job where to send their notices.

Under section 713.135, on a direct contract over $5,000 the building department will not perform or approve any inspection after the first until a certified copy of the recorded notice is filed, and every building permit carries a warning that failing to record one may result in paying twice for the improvements.

• If construction does not actually start within 90 days of recording, the notice is void under section 713.13(2).
• A notice is effective for one year after recording unless it states a later date. Payments made after it expires are improper payments under the statute, and the form warns they can mean paying twice.
• The construction lender is named on the notice, which is how lienors know who is funding the job.

Notices to owner and the 90 day lien window

A subcontractor or supplier who has no contract with the owner protects its lien rights by serving a notice to owner before it starts, or within 45 days after it first furnishes labor or materials, under section 713.06. A lienor then has until 90 days after its final furnishing to record a claim of lien under section 713.08.

The protection for the owner, and for the lender behind the draws, is paperwork collected before money moves. When the work is finished, the contractor owes the owner a final payment affidavit listing anyone unpaid, and the owner may rely on it in making final payment unless a lienor who served a notice is missing from it. In practice, each draw should come with releases from the contractor and from every lienor who has served a notice to owner.

Who can build it: licensed contractors and the owner-builder limit

Florida lets an owner act as their own builder only for themselves. Section 489.103 exempts owners building one-family or two-family residences for their own use and occupancy, not for sale or lease, and selling, leasing or offering the home within one year of completion creates a presumption that it was built for sale. A county building department puts it more bluntly: the property cannot be offered for sale, lease or rent for one year after completion.

For a house built to sell or to rent, that means a licensed contractor pulls the permit. An investor who files as an owner-builder to save the contractor’s fee is taking a risk the statute anticipated.

Private providers can review plans and inspect

Section 553.791 lets the fee owner, or the contractor with the owner’s written authorization, hire a private provider for plan review, inspections or both instead of the local building department. A private provider must be a licensed engineer, architect or building code administrator, and the building department keeps the right to audit their work and still reviews zoning, fire and other items outside the building code.

The local government must reduce its permit fee by the cost it saves by not doing the work itself. On a schedule built around inspections, a private provider can be the difference between a draw that funds this week and one that waits for the county’s calendar.

Flood elevation, documented

In a flood hazard area, section R322.2.1 of the Florida Building Code requires the lowest floor at or above the base flood elevation plus one foot, or the community’s design flood elevation if higher; in coastal high-hazard areas the measurement moves to the bottom of the lowest horizontal structural member. The Division of Emergency Management’s guidance on the current eighth edition repeats the rule.

The code also requires as-built documentation of that elevation, prepared and sealed by a registered design professional, so it belongs in the draw schedule as a deliverable, not as an afterthought at the certificate of occupancy.

Impact fees are due at permit

Florida counties and cities charge impact fees on new homes for roads, schools, parks and public safety. Section 163.31801 bars collecting them any earlier than the date the building permit is issued, and one large county states simply that its impact fees are paid when the permit is issued.

The same statute requires 90 days’ notice before a new or increased fee takes effect, limits an increase to 50 percent of the current rate phased in over years, and allows an increase no more than once every four years. A budget that prices the fee from last year’s schedule should check for a pending increase.

Taxes on a construction loan and on the land while you build

A construction mortgage usually secures money advanced over time, and Florida taxes it that way. Under section 201.08 documentary stamps of 35 cents per $100 are paid on the initial amount at recording, and again on each future advance when it is made; the mortgage cannot be enforced as to an advance until the tax on it has been paid. The 2 mill intangible tax works the same way for future advances under section 199.143.

Property is assessed as it stands on January 1, and under section 192.042 an improvement not substantially completed on that date carries no value for that year. A house under construction on January 1 is usually assessed as land; the first January 1 after it is substantially complete, it is assessed at full value.

Where the construction money comes from

Ground up construction is placed with institutional capital, and draws are released against work actually finished and inspected. What Entrusted Capital funds directly, from its own capital, is the Florida lot underneath it, so the parcel is secured while the plans, permit and builder come together; the construction loan is placed once they are settled.

• The plan set, the permit or permit application, and the line item budget.
• The licensed contractor and the construction contract.
• The flood zone and the elevation the plans are drawn to.
• The recorded notice of commencement before the first inspection.