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A construction lien is a claimable
charge against real property to secure a debt
incurred for improvement of the property. Liens
can be very valuable legal tools so long as certain
procedural requirements have been satisfied. The
purpose of the lien law in Florida is to give
security to the contractor, subcontractor or material
supplier for a debt incurred for furnishing or
installing a product where the product itself
cannot be retained to secure payment of the debt.
Florida's construction lien law
is governed almost exclusively by Chapter 713,
Fla. Stat. (1995). Liens under Chapter 713 apply
only to work performed on privately owned property
with one exception. As of October 1, 1996, a lien
may be placed on the owner's real property for
money owed to a lienor for labor, services or
materials furnished to improve public property
required as a condition of obtaining the permit
for work on the owner's real property. We will
see in a later section that public projects cannot
be liened, but involve a payment bond furnished
either under section 255.05, Fla. Stat. (1995)
or the Miller Act.
Procedure for Perfecting Lien Rights
- General Contractors
Prior to starting work all contractors
should verify the ownership of the property by
reviewing the Notice of Commencement. Pursuant
to section 713.13, Fla. Stat. (1995), the owner
is required to record it in the public records
in the county where the project is located. A
copy of the Notice of Commencement must also be
posted at the job site. Section 713.135, Fla.
Stat. (1995) also provides assistance in securing
the necessary information by requiring that much
of the information in the Notice of Commencement
be included in the building permit application.
Failure to record and post the Notice of Commencement
will now result in disapproval of any inspection.
§ 713.135, Fla. Stat. (1995).
The Notice of Commencement is the
key source document to be used throughout the
course of performance to assure the perfection
of your lien rights. Specifically, this document
will describe the owner, the legal bounds of the
property, and all persons who are to receive notices
and claims under the lien statute. If a statutory
payment bond is provided, a copy must be attached
at the time of recordation of the Notice of Commencement.
§ 713.23(1)(a), Fla. Stat. (1995).
The date of recording of the Notice
of Commencement sets the priority date for all
subsequent construction liens. § 713.07(2), Fla.
Stat. (1995); L.M. Adamson v. First Federal Savings
and Loan Association, 519 So.2d 1036 (Fla. 1st
DCA 1988). If there is a failure to record the
Notice of Commencement, construction liens take
priority as of the date of filing. Consequently,
the first to file a Claim of Lien in the absence
of a Notice of Commencement will be paid before
any of those filing later in time.
For those contracting directly with
the owner there is no need to furnish a 45 day
"Notice to Owner" under the lien statute. Foley
Lumber Co. v. Koester, 61 So.2d 634 (Fla. 1952);
E. V. Construction Co. v. Newman, 418 So.2d 291
(Fla. 3d DCA 1982). Accordingly, the first step
in perfecting a general contractor's lien claim
is the recording of the Claim of Lien. A general
contractor's Claim of Lien must be recorded in
the county where the property is located within
90 days of the final furnishing of labor services
or materials to the job site. A copy of the Claim
of Lien must then be served on the owner and others
referenced in the Notice of Commencement either
before or within 15 days of recording. At least
five days before any lawsuit is commenced to enforce
the lien, the contractor must serve the owner
with a Final Contractor's Affidavit which recites
the names and amounts of unpaid lienors, if any,
contracting with the general contractor.
Failure to timely record the lien
or to serve the Final Contractor's Affidavit extinguishes
the general contractor's lien rights. Sunair Development
Corp. v. Gay, 509 So.2d 1361 (Fla. 2d DCA 1987);
Stenholm v. Calbeck, 265 So.2d 531 (Fla. 2d DCA
1972); Potts v. Orlando Building Service, Inc.,
206 So.2d 221 (Fla. 4th DCA 1968). Service of
the Final Contractor's Affidavit is a prerequisite
to filing a suit to foreclose a construction lien,
but not a prerequisite for recording a Claim of
Lien. In other words, a contractor need not serve
a Final Contractor's Affidavit prior to filing
a Claim of Lien. Quality Industries, Inc. v. Keyes,
509 So.2d 1248 (Fla. 2d DCA 1987). Indeed, the
Florida Supreme Court has ruled that a contractor
may amend its lien foreclosure complaint to show
delivery of a contractor's affidavit provided
it is within one year of recording the Claim of
Lien Holding Electric, Inc. v. Roberts, 530 So.2d
301 (Fla. 1988).
Procedure for Perfecting Lien Rights
- Subcontractors
A subcontractor's first step in
obtaining a lien claim is to serve on the owner
a Notice to Owner. The Notice to Owner should
be sent certified mail, return receipt requested.
This notice should be served regardless of any
existing decision not to lien a job since this
position can change at a later date. The Notice
to Owner must be received by the owner within
the earliest of the \following time periods:
1. 45 days of first furnishing labor,
services or materials for the project
2. Before final payment is made
by the owner in reliance on the Final Contractor's
Affidavit
A subcontractor is not relieved
of its obligation to timely file a Notice to Owner,
notwithstanding the owner's direct knowledge of
the subcontractor's work on the site. Tompkins
Land Co., Inc. v. Edge, 341 So.2d 206 (Fla. 4th
DCA 1976) (advice to subcontractor by owner that
fire hydrant was in the wrong place was not evidence
of notice under the lien statute). A copy of the
Notice to Owner should also be served on any lender
identified in the Notice of Commencement. If the
lender is responsible for making progress payments
to the general contractor, it will be obligated
to seek lien waivers from subcontractors.
After this first step, the subcontractor
must also follow all steps outlined above for
the general contractor, except there is no need
for a subcontractor to serve a Final Contractor's
Affidavit.
Procedure for Perfecting Lien Rights
- Sub-subcontractors
A sub-subcontractor must take all
steps taken by a subcontractor plus one additional
step. A sub-subcontractor must also serve a copy
of the Notice to Owner on the general contractor.
A copy of the Notice of Owner should also be served
on the lender as identified in the Notice of Commencement.
The lender will be obligated to seek lien waivers
from sub-subcontractors if it is responsible for
making progress payments to the general contractor.
The Notice to Owner must be served on the owner
prior to final payment to the subcontractor through
whom the sub-subcontractor is dealing.
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