If you are a (sub)contractor or you hire a (sub)contractor and the project improvements cost more than $2,500, it is important to have a basic grasp of the construction lien process. If you are a contractor you need to protect your investment on labor and materials. Without basic knowledge of the lien process you could miss out on money you rightfully earned. If you are someone who hires a contractor you need to protect yourself. Otherwise you may be liable to pay a twice for the same labors and materials if your contractor fails to pay his suppliers or subcontractors. The construction lien process can be complicate and has strict deadlines. If you need help or have questions about a lien issue it is recommended you contact an experienced attorney at The Law For All today.
Under Florida law a (sub)contractor or material supplier (“lienor”) who provides labor, work, or materials for the improvement of private real property located within Florida has a lien on that property for the value of the materials, labor, or work provided. Florida Statutes § 713.02 and § 713.06.
Florida law does not require that you have a written contract to file a mechanics lien, therefore, contracts can be oral, written, express or implied. However, in Florida the following parties do not have rights to file a Florida mechanics lien:
1) NOTICE TO OWNER
You must strictly follow the Florida Notice to Owner provisions after providing the first labor or materials, or you can lose your lien rights.
If you did not contract directly with the property owner you must serve a Notice to Owner within 45 days of “furnishing labor and/or materials to the construction project.” However, there are two exceptions: (1) individual wage-laborers (2) architects, engineers, or other design professionals are not required to do so.
If you are a property owner you may request a list of subcontractors and suppliers working on the project from your direct contractor (i.e. general contractor). After you make the request, the contractor has 10 days to supply you with the list of all subcontractors and suppliers that they have hired.
Who must receive the notice to owner? The following rules apply:
If you were hired by the general contractor, send the notice to the property owner.
If you were hired by a subcontractor, send the notice to the property owner and the general contractor.
If you were hired by a sub-subcontractor, send the notice to the property owner, the general contractor and the subcontractor.
What if you don’t know who these parties are, don’t worry? Florida’s laws allow you to reply with publicly available information.
***The Florida Notice to Owner must be sent Certified Mail with Return Receipt Requested. It must also contain a specific warning and information, set forth in Florida § 713.06 (2-c).***
2) YOU MUST FILE YOUR MECHANICS LIEN WITHIN 90 DAYS FROM LAST DOING WORK
In Florida you must record your mechanics lien within 90 days from the last day you provided labor, services or materials to a construction or renovation project. This 90 day timeframe does NOT always begin the date the project was completed. It often begins days or even weeks before. The 90-day period begins to run when the substantive portion of your work is completed. You cannot include touch-ups, correction of deficiencies in work, or warranty work in determining this date. For equipment rentals the last date of furnishing is the last date the equipment was actually on site and available for use.
Where do I file the claim on lien?
Be careful where you are recording your lien, if it is the wrong place it may be NULL and VOID. While most counties in Florida maintain property records with the Clerk of Court, some exceptional counties in Florida have designated a “County Recorder” to be responsible for property records. It is important to determine where you must file your lien ahead of time so that you don’t miss your deadline.
EXAGGERATING A FLORIDA LIEN CLAIM IS A 3RD DEGREE FELONY
Do not exaggerate your mechanics lien.
While this seems easy to avoid, it can sometimes be tough to distinguish between a “mistake” and a willful or negligent exaggeration. Florida does not allow you to include amounts for unapproved change orders, unperformed work, or similar claims for damage payments within the mechanics lien. Thus, doing so can lead to a fraudulently exaggerated lien because Florida mechanics lien law only allows lienors to encumber the property for the value of its actual permanent improvement to the property.
Similarly, lien claimants should not add costs, lien fees, interest, or attorneys fees to their Florida mechanics lien. There is no need to include any of these amounts on the lien claim because these amounts may be recoverable if you win in litigation.
KNOW THE DEADLINE TO ENFORCE YOUR LIEN
In Florida mechanic liens are only effective for a specifically defined period of time—1 year from the date the lien was recorded. Once that 1 year period passes, the lien expires, unless you’ve filed a lawsuit to foreclose upon the property and the lien.
This 1-year period can be dramatically shortened by the property owner to as little as 60 or 20 days from when the lien is recorded. Contact The Law For All now for more information regarding the following enforcement deadline exceptions:
If you are a private property owner concerned about “liens” on the title to the property you can exempt the property from liens by securing a bond payment in anticipation of construction. The Law for All can help you with this process on a flat fee basis; however, for those who want to try to do it themselves see Florida Statutes § 713.23 (Payment Bond) and § 713.245 (Conditional Payment Bond). The bond acts as security for the payment of the lienor instead of the property itself. Therefore, when the project is bonded, the lienor has a claim against the bond for the value of the work and/or the materials provided to improve the property whereas the lienor has a claim against the property when the project is not bonded. Property owners do have the ability to transfer liens to bonds after a lien is recorded. Florida Statutes § 713.24.
1. If your contractor filed a claim of lien on your property, a Release of Lien is a written statement that removes your property from the threat of lien. Before you make any payment, it is important you receive this waiver from suppliers and subcontractors covering the materials used and work performed for the project.
2. If your contract calls for partial payments before the work is completed, you can get a Partial Release of Lien covering all workers and materials used up until that point.
3. Before you make the last payment, make sure you obtain an affidavit from your contractor that specifies all unpaid people who performed labor, services or provided materials to your property. It is important that your contractor provides you with final releases from these parties before you make the final payment.
4. You must file a Notice of Commencement before beginning a home construction or remodeling project. You can find this form at your local authority that issues building permits. You must record the form with the Clerk of the Circuit Court in the county where the property being improved is located. You must also post a certified copy at the job site.
5. You must file the Notice of Commencement with the building department before the building department can perform the first inspection. The Notice of Commencement notes the intent to begin improvements, the location of the property, description of the work and the amount of bond (if any). It also identifies the property owner, contractor, surety, lender and other pertinent information. Failure to record a Notice of Commencement or incorrect information on the Notice could contribute to your having to pay twice for the same work or materials.
The list below summarizes some common errors made while filing construction liens in Florida. The Florida Construction Lien Laws can be found in Chapter 713 of the Florida Statutes. These laws have been held to require strict compliance. Therefore, careful attention to the details of time periods and notice requirements are essential to protecting the lien rights of contractors, subcontractors, sub-subcontractors and certain material supplies men.
1. Failure to Timely Serve Notice to Owner:
For most lienors not in direct contact with the owner, the Notice to Owner must be served within 45 days of the first furnishing of labor and materials on the project. However, it is important to note that despite the 45 days it must be served before final payment by the owner. Many business owners think the 45 day period doesn’t begin to run until the last day on the job and others wait until the first missed payment before they file a Notice to Owner. By this time it is often too late.
2. Failure to Serve Notices on Proper Parties:
In addition to being timely, in order to ensure proper service of the Notice to Owner, it must be served on the proper parties. This information can be taken from the Notice of Commencement. Property owners are required to record and post the Notice of Commencement at the job site. The Notice may list additional parties which must be served copies of the Notices. If you can't find the Notice - ASK! If there is no Notice of Commencement recorded or posted, you may rely on the information contained in the Building Permit Application.
3. Failure to Serve Notices by Proper Method:
All notices must be served by certified mail, return receipt requested, to the address listed on the Notice of Commencement. However, you may serve Notices by hand or by facsimile transmission if the Notice of Commencement provides a fax number for service of notices.
4. Overstatement of Amounts Due:
You must be truthful in your amounts owed. If you are not the property owner can allege willful exaggeration of amounts due in a Claim of Lien as a complete defense to your recorded Lien. This will result in discharge of your Lien and has the potential for you to be liable to the lienor for costs, attorney's fees and potential damages. It is important to claim only the amount that is legitimately due.
5. Failure to Respond to Sworn Statement Requests:
If you are requested, in writing, to furnish a Sworn Statement of Account pursuant to § 713.16, Florida Statutes, setting forth the labor and materials and the amounts due, you must provide such statement within thirty (30) days. If the statement is not furnished, is not "sworn," or is a false or fraudulent statement you may lose your lien rights.
6. Failure to Timely File a Claim of Lien:
The Claim of Lien must by recorded within ninety (90) days after the final furnishing of labor and materials. It is important to be accurate in calculating the ninety (90) day time period (as discussed above). If the last day is a Saturday, Sunday or a legal holiday, the time period is extended to the next business day.
7. Failure to Provide Copy of Claim of Lien:
You are required to serve a copy of the Claim of Lien within fifteen (15) days of recording, by certified mail, return receipt requested, to all parties entitled to receive notices pursuant to the Notice of Commencement. Though the failure to do this will not automatically invalidate your lien, it may raise defenses if the Owner, Contractor or others suffered damage as a result.
8. Failure to Foreclose Claim of Lien Within One (1) Year:
The Claim of Lien is only valid for one (1) year after recording. If an action to foreclose the Claim of Lien is not filed within that 1 year period, the lien is no longer valid and the security of the lien is lost. Again, if the last day is on a Saturday, Sunday or legal holiday, the time period is extended to the next business day.
Filing a construction lien requires careful attention to avoid any potential "pitfalls" along the way. Many times, lienors are aware that time periods have expired and that notices have not been given in compliance. DO NOT file your Claim of Lien anyway to try to intimidate the owner or contractor into payment. The consequences of these actions may include liability for attorney's fees, damages for slander of title and, in extreme cases, criminal liability.