Overbroad statements in case law have left some with the incorrect impression that contractors may not include charges for overhead and profit charges when compiling their lien amounts.
The confusion is due in large part to Martin v. Jack Yanks Construction Co., 650 So. 2d 120, 121-22 (Fla. 3d DCA 1995) , where the court stated that “recovery for overhead and profit as separate items are not within the purview of the lien law.” However, when viewed in the context of the entire case and of the case law to which it cites, this statement stands for a different proposition. Unlike the remedies offered under a contractual theory of liability—which would allow a contractor to recover lost profit even where a project is not fully completed — a lien foreclosure claim only operates to award a contractor’s overhead and profit for work actually performed.
Both Martin and the case on which it relies, Surf Properties, reject an award of overhead and profit when the contractor performed little or none of its contractual obligations. But Surf Properties notes with approval that other jurisdictions allow the inclusion of overhead and profit in liens when the work is actually performed. Broderick, cited with approval in Martin, implicitly approves recovery of overhead and profit once both are ascertained through an express or implied-in-fact contract.
Furthermore, a main purpose of Florida construction lien law is to protect contractors who furnish labor, services, or materials to real property by assuring them of full payment. Both Sections 713.05 and 713.06 state that a contractor who complies with the statutory provisions shall have a lien on the real property improved for any money that is owed to him for labor, services, materials, or other items required by, or furnished in accordance with, the contract. Clearly, it is the legislature’s intent that liens enforce a contractor’s right to be paid the unpaid balance of the contract—including the contractually provided overhead and profit.
While a majority of construction lien cases at the trial court level assume recoverability of overhead and profit for work actually performed, the lack of clear instruction at the appellate level, and the continuance of vague, unsupported assertions in cases like Politano v. GPA Constr. Group, 9 So. 3d 15, 16 (Fla. 3d DCA 2008) (“the contractor had included items that it should not have, including overhead and profit”), allow some lien defendants to illogically insist that liens are fraudulent when they include amounts for overhead and profit.
This argument most often arises where the contract—such as a cost-plus contract—identifies certain amounts or percentages which represent profit, overhead, or supervision.
See also Ponce Investments, Inc. v. Financial Capital of America, 718 So. 2d 280 (Fla. 3d DCA 1998).
Surf Properties, Inc. v. Markowitz Bros., Inc., 75 So. 2d 298 (Fla. 1954); Broderick v. Overhead Door Co., 117 So. 2d 240 (Fla. 2d DCA 1959).
Strunkel v. Gazebo Landscaping Design, Inc., 660 So. 2d 623, 626 (Fla. 1995).