ARTICLE
1 November 2024

Florida Courts Disagree On Contractor's License Requirements For Disaster Recovery Tasks

On the heels of a record-breaking three hurricanes making landfall in Florida in 2024 – Debby, Helene, and Milton – disaster recovery is obviously a hot topic as residents and business owners work to recover.
United States Florida Real Estate and Construction

On the heels of a record-breaking three hurricanes making landfall in Florida in 2024 – Debby, Helene, and Milton – disaster recovery is obviously a hot topic as residents and business owners work to recover from the financial and physical damages that the storms have left behind.

One common question on the mind of Florida residents is "Do disaster recovery services require a builder contractor's license, and if so, what specific tasks require one?" Unfortunately, the complete answer to that question is unclear after a split decision took place between a Florida trial court and an appellate court on a dispute dating back seven years ago from Hurricane Irma.

Case Summary

In a case that began in 2017 – Incident365 Florida, LLC vs. Ocean Pointe V Condominium Association, Inc., et al. – there is a dispute between a disaster mitigation company and various related condominium associations over which disaster recovery tasks in their agreements require a building contractor's license. The underlying action stems from several service agreements (totaling approximately $1.4 million) that disaster mitigation service company Incident entered into with each of the condominium associations following Hurricane Irma in 2017. Buildings and units within each condominium association sustained water intrusion during the storm.

The case required an analysis of Florida Statute 489.105(3) to determine the meaning of "contractor" and "building contractor" and specific terms within the statute. The court had to interpret these terms to determine which disaster recovery tasks legally required a license. The court also tackled if the lack of a license means the remediation company cannot recover under Section 489.128 (which holds agreements by unlicensed contractors to be unenforceable).

A Florida trial court relied on dictionary definitions to determine the undefined terms in the statute, such as "remodel," "repair," and "improve." Based on this interpretation, the trial court found that all the tasks listed in the agreement required a building contractor's license. These tasks included:

  • Water damage mitigation
  • General and structural dehumidification
  • Disposal of removed material off property location
  • Anti-microbial application
  • Mold remediation
  • Structural removal of affected substrates

However, on Oct. 2, 2024, the State of Florida's Third District of Appeal rendered a decision that disagreed with the trial court.

The appeals court ruled that only one task – the structural removal of affected substrates, such as removing damaged drywall – might require a license because it involves changes to the physical building or structure. Further, almost all the tasks in the agreement – water damage mitigation, general dehumidification, structural dehumidification, disposal of removed material off property location, anti-microbial application, and mold remediation – did not require a building contractor's license because they did not involve the physical building or structure.

Consequently, the appellate court reversed the trial court's ruling and remanded the case for further proceedings.

How Does This Impact Remediation Companies?

For now, the appeals court ruling may provide some clarity for remediation companies. It confirms that tasks unrelated to the physical building or structure do not require a building contractor's license.

However, the case only addresses seven tasks. Companies performing tasks that were not discussed may face uncertainty about whether a license is required. Additionally, since this case was remanded, there will be ongoing uncertainty until the trial court renders a final decision.

How Does This Impact Insurance Companies?

For now, the appeals court ruling may provide some guidance for insurance companies dealing with claims related to disaster recovery services.

Insurers may assess claims more accurately and deny coverage for work requiring a license if unlicensed contractors perform it. However, the same uncertainty applies to insurance companies. Insurers must wait for further rulings to ensure their claim assessments are accurate, which could potentially lead to delays in claim processing.

Conclusion

With a split decision between the Florida courts, there are still areas of ambiguity. So, we await the trial court's decision which will hopefully provide more clarity, specifically regarding structural removal.

Both remediation and insurance companies should stay on the lookout for any legal developments that could resolve some of this uncertainty. Business owners, residents, and condominium association owners are also staying tuned as they continue to recover from an unfortunate Atlantic hurricane season.

Adams and Reese will keep clients updated on any future legal developments in this case and pressing situation around disaster recovery work and required contractors' licenses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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