Florida Statute 489.126: Deposits, Abandonment, and Penalties

Florida Statute 489.126 governs what a contractor must do after taking a customer’s money for residential construction: apply for permits promptly, start the work on time, keep going, and never pocket funds beyond the value of what has actually been built. Missing those obligations is not just a contract problem. It is a felony, graded by the dollar amount involved, and it applies to anyone who takes money to perform residential construction, licensed or not.

Who the Statute Covers

The reach here is broader than many people assume. Section 489.126 defines “contractor” to include every category of contractor listed in Florida Statute 489.105(3), and it extends to any person performing or promising to perform that type of work “without regard to the licensure of the person.”¹ An unlicensed handyman who takes a deposit for a remodel faces the same criminal exposure as a certified general contractor.

The statute is limited to residential real property, covering repair, restoration, improvement, addition, and new construction.² Misapplication of funds on commercial or other non-residential jobs is handled by a separate statute, Section 713.345, discussed briefly below.

Deadlines After a Deposit Over 10 Percent

When a contractor receives an initial payment that exceeds 10 percent of the total contract price, two clocks start. All necessary permits must be applied for within 30 days of receiving the payment. Actual construction must begin within 90 days after the permits are issued.¹ If local building codes do not require a permit for the project, the permit deadline does not apply.

These deadlines can only be extended if the homeowner agrees to a longer timeframe in writing. A contractor who misses both deadlines and does not refund the money must show “just cause” for the delay. Homeowners have a specific tool to strengthen a later case: a written demand sent by certified mail asking the contractor to apply for permits, start the work, or return the money. If the contractor does not respond within 30 days, the law creates an inference that no just cause exists.² Skipping this step is common and can weaken a prosecution.

The 90-Day Abandonment Rule

A contractor who has received money exceeding the value of work actually completed cannot stop working on the project for 90 consecutive days. If the written contract sets a different period for continued performance, that period controls.¹ This is the provision aimed at the familiar pattern of a contractor collecting a large draw, doing partial work, and then vanishing to chase other jobs.

Meaningful work resets the clock. Token appearances or minor tasks performed only to reset the timer are unlikely to satisfy a court. The core question is whether the contractor was paid more than the finished work is worth and then walked away.

How Prosecutors Prove Intent

Proving that a contractor deliberately misapplied funds would normally require tracing dollars through bank accounts. The statute short-circuits that problem with a prima facie presumption. When a contractor stops working for the 90-day period (or the period the contract specifies), and the stoppage was not caused by the homeowner terminating the agreement, the law presumes the contractor received money in excess of the work’s value.¹

Once the state establishes payment, a work stoppage, and a gap of at least 90 days, the burden shifts to the contractor to explain. Claims like “I always meant to come back” or “I planned to refund the money eventually” are not recognized defenses.

Felony Penalties by Dollar Amount

Violations are graded as felonies based on the amount misapplied or received beyond the value of work performed.

The statutory fines look small next to the amounts sometimes stolen, but they are only one layer of the total consequence. Restitution, license discipline, and civil damages usually dwarf them.

Restitution to the Homeowner

Florida Statute 775.089 requires the sentencing court to order the defendant to pay for damage or loss caused directly or indirectly by the offense, unless the court finds clear and compelling reasons not to. If full restitution is denied, the court must state its reasoning on the record.⁵

In construction fraud cases, restitution typically equals the gap between what the homeowner paid and the fair market value of the work actually completed. The court can measure loss by fair market value, replacement cost, or actual repair cost, whichever best serves the purposes of restitution.⁵ Collecting from a convicted contractor who has already spent the money is often the hard part, but the order stands as an enforceable judgment.

License Discipline

Beyond the criminal case, the Construction Industry Licensing Board can discipline a contractor’s license under Florida Statute 489.129. Available penalties include probation, reprimand, administrative fines up to $10,000 per violation, mandatory continuing education, restitution to the consumer, and suspension or revocation of the license.⁶

A conviction for misapplication under the companion statute, Section 713.345, triggers a mandatory board response: all of the contractor’s licenses under Chapter 489 must be suspended for at least one year from the date of conviction, and the board can add other penalties on top of that.⁶

The Homeowner’s Civil Claim

Criminal charges belong to the state. Homeowners who want their money back have a separate civil path under Florida Statute 772.11, which lets a person injured by theft sue for three times actual damages plus reasonable attorney’s fees and court costs, with a $200 minimum recovery.⁷

Before filing suit, the homeowner must send the contractor a written demand for either $200 or the treble damage amount. A contractor who pays within 30 days of receiving the demand is released from further civil liability for that specific act of theft.⁷ The civil case must be proven by clear and convincing evidence, a higher bar than an ordinary civil claim but lower than the criminal standard. Treble damages and fee-shifting often push contractors to settle at the demand stage.

Non-Residential Projects Fall Under a Different Statute

Section 489.126 does not reach commercial or other non-residential jobs. Those are governed by Section 713.345, which requires anyone receiving payment to improve real property to apply the funds toward the labor, services, and materials owed on that project before diverting money elsewhere, with a bona fide dispute over the amount owed as a recognized exception.⁸ A contractor who takes payment across both residential and commercial jobs can face charges under either statute or both.

Bankruptcy Does Not Wipe Out the Debt

Filing for bankruptcy will not discharge a debt for misapplied construction funds. Under 11 U.S.C. Section 523(a)(4), a bankruptcy discharge does not eliminate debt arising from “fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”⁹ Because Florida treats construction payments as funds that must be applied to the project, a homeowner or subcontractor holding a judgment for misapplied funds can keep collecting after the bankruptcy case closes.

1
Florida Senate. Florida Statutes 489.126 – Moneys Received by Contractors
2
Florida Senate. Florida Code 489.126 – Moneys Received by Contractors
3
Florida Senate. Florida Code 775.082 – Penalties, Applicability of Sentencing Structures, Authorized Terms of Imprisonment and Fines
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Florida Senate. Florida Code 775.083 – Fines
5
FindLaw. Florida Statutes Title XLVI – Crimes 775.089 – Restitution
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Online Sunshine. Florida Statutes 489.129 – Disciplinary Proceedings
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Online Sunshine. Florida Statutes 772.11 – Civil Remedy for Theft or Exploitation
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Online Sunshine. Florida Statutes Chapter 713 – Liens, Generally
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Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge