Construction Claims of Lien

What is a Claim of Lien?

Central to construction law is lien law. In the event of nonpayment, contractors, subcontractors, suppliers, laborers, and professional service providers (“lienors”) may record a claim of lien against the property being improved. Claims of lien become a burden on the title of the property being improved, and act as tools to leverage payment from the owner of the property. Like mortgages, construction liens can be used to force the foreclosure sale of the liened property, and the proceeds of such a sale may be set aside to pay the lien amount. However, for claims of lien to be valid and enforceable, the lienor must first comply with a number of strict notice and time requirements. To balance the rights of property owners, Florida law sets forth another set of requirements for owners to follow in order to make proper payments and avoid having to pay for work twice because of a claim of lien.

Florida Lien Laws

Construction liens are covered in Chapter 713, Florida Statutes. All liens must be recorded in the public records of the county where the property is located within 90 days of the last day a lienor furnishes work for the improvement of the property (not including punch or warranty work). Additionally, if a lienor does not have a direct contract with the property owner (generally, subcontractors and suppliers of subcontractors), then a lienor must serve a Notice to Owner on the property owner (and sometimes a Notice to Contractor on the general contractor) within 45 days of the first day the lienor furnishes work for the improvement of the property. A lawsuit to foreclose on a claim of lien must be brought within 1 year of recording. These deadlines are of the utmost importance in the process of perfecting your lien rights.

Florida lien law is of course much more complicated than the above paragraph would indicate. It features numerous additional requirements, exceptions, and corner cases, and the legislature revises the statutes often—and sometimes significantly—in order to balance the rights of those affected.

What Charges Does a Lien Include?

One of the most important things to know when compiling the amount of a claim of lien is that it may only include charges for work actually performed for the improvement of the property. If work is incomplete, a lienor cannot include on the claim of lien the simple remaining balance of the contract, charges for materials not incorporated into the property, or items like lost profit and overhead based on work not performed. However, one exception is for specially manufactured goods. If unique materials (generally, ones that cannot be easily used on other projects, such as granite countertops or fabricated or custom doors) are fabricated but never delivered or incorporated into the property, a lienor may still include charges for those materials in the claim of lien.

Basically, a lienor must compile the lien amount as accurately as possible based on what has actually been contributed to the construction project, and, essentially, must compile it in good faith. If the amount is compiled with bad faith, such as with gross negligence or with the inclusion of items not actually furnished to the property, the lien may be deemed fraudulent. A fraudulent lien is completely invalid and unenforceable (even for amounts that are correct) and may subject the lienor to significant punitive damages. Florida law says that if a lienor consults with an attorney about the lien amount, there is a legal assumption that the lien amount was compiled in good faith.

Marlowe McNabb Machnik, P.A. can prepare and serve Notices to Owner / Contractor and prepare and record Claims of Lien. In addition, we can help you prepare or respond to various legal requests pertaining to lien law; evaluate your lien rights and compile your lien amount; or review and advise on your company’s notice and lien procedures.