Traditionally most construction businesses qualified for licensure through an individual who both held the license and controlled the financial aspects of their business. Over the years construction businesses have changed with mergers and acquisitions, as well as the separation of financial management from construction supervision. More and more, the qualifying individual for a construction firm is no longer the firm’s owner. In these instances, the original qualifier could be in breach of their original certifications for business entity licensure, namely they no longer have “final approval authority on all business matters, including contracts, specifications, checks, drafts, or payments, regardless of the form of payment, made by the business organization.” See Fla. Stat. § 489.119. If you have bought a construction business or are selling the business in which you are the qualifier, there is a good chance you will need to bifurcate the financial responsibility by appointing a Financially Responsible Officer (FRO). Florida Statute § 489.1195 outlines the option for construction businesses to appoint a financially responsible officer (FRO) who assumes responsibility over all financial matters of the business.

The Role of a Financially Responsible Officer

The Financially Responsible Officer is entrusted with various responsibilities, all aimed at upholding financial accountability within the construction entity:

  • Financial Oversight: The FRO is tasked with overseeing the financial operations of the construction company, ensuring compliance with state regulations and contractual obligations.
  • Bond Requirements: One of the primary obligations of the FRO is to secure and maintain a sufficient surety bond, as mandated by Florida law. The bond required under this statute is specifically set at $100,000, providing substantial coverage for potential liabilities.  This bond serves as a form of financial security, providing for payment of fines and penalties that the licensing board could levy in the event the financially responsible officer mismanages the company’s finances.
  • Record-Keeping: Maintaining accurate financial records is essential for demonstrating compliance with statutory requirements. The FRO oversees the maintenance of these records, including financial statements, contracts, and payment records.
  • Compliance Monitoring: The FRO must ensure that the construction company complies with all relevant laws and regulations concerning financial matters, including tax obligations and licensing requirements.

Additional Considerations

It’s important to note that when a construction company is sold or the qualifying agent no longer has ownership in the company, a FRO bond is likely required at that time. This ensures continuity of financial responsibility and protects stakeholders in the event of significant changes in company ownership or management. The agents at Florida Surety Bonds are well versed in the requirements for Financially Responsible Officer Bonds and stand ready to help you ensure compliance with the licensure of your business.