5 things you need to know about your Claim of Lien

Florida's lien laws apply to the construction related improvements of most real estate properties. This includes most commercial and residential construction. In the event of nonpayment, one of the most important tools any contractor has is the ability to enforce a claim for payment through Florida’s lien laws. Here are five things you should know about filing a Claim of Lien:

1. A notarized Claim of Lien may be recorded at any time during the progress of the work, but must be recorded no later than ninety (90) days of last providing construction related labor, services, equipment or materials at a project. The 90 day deadline cannot be extended. It is recorded at the County Recorders Office in the county where the project is located. The Claim of Lien must also be served on the owner and all other proper parties within 15 days of recording.

2. Prior to filing a Claim of Lien, a lienor who does not have a direct contract with the owner, must serve the owner a Notice to Owner in order to have lien rights on a particular project. A notice to owner notifies the property owner that you have been contracted by a party other than the property owner to provide services and/or materials to his or her property. The Notice to Owner puts the property owner on notice that failure to make sure that you are paid for services and/or materials provided could result in a lien being filed against the property and his or her having to pay twice for the same services and/or materials. The Notice to Owner must state the lienor's name and address, a description of the real property and the nature of the services or materials being furnished. The Notice to Owner must be served before commencing, or within 45 days of commencing, to furnish the services or materials. The 45 day deadline cannot be extended. If the lienor provides specially fabricated materials, then the first day is the day when fabrication began.

3. A Claim of Lien can only be signed by the lienor or its attorney.

4. A Claim of Lien automatically expires one year after it was recorded unless:

a) you have filed a lawsuit to foreclose on the Claim of Lien in a court of competent jurisdiction before the one year expiration date.

b) the owner records a Notice of Contest of Lien shortening the one year to 60 days from the date of recording of the Notice of Contest of Lien.

c) the owner files an action in Circuit Court and the clerk issues a twenty day summons to show cause which shortens the one year to twenty days from the date of service of the summons.

5. A lien can only extend to the right, title, and interest of the person who contracts for the improvements to the property. As such, the following rules apply:

a) Tenant Build-outs (Leaseholds): when an improvement is made by a lessee in accordance with an agreement between such lessee and the lessor, the lien will extend to the interest of the lessor. But where the lease expressly provides that the interest of the lessor will not be subject to liens for improvements made by the lessee (commonly referred to as a Notice of Prohibition of Liens), the lessee is under an obligation to notify the contractor of such provision in the lease. If the lease contemplates improvements, the lessor's interest is subject to a lien unless the lessor records the necessary disclaimer.

b) Property owned by husband and wife: when the contract for improving real property is made with a husband or wife who is not separated and living apart from his or her spouse and the property is owned by one or both, the spouse who contracts is be deemed to be the agent of the other to the extent of subjecting the right, title, or interest of the other in said property to liens unless the other spouse, within 10 days after learning of such contract, gives the contractor and records in the clerk's office, notice of his or her objection thereto.

c) Public Property: property owned by a local governmental entity, a county school board, a state agency (including colleges and universities) or the federal government is not lienable. However, any contractor entering into a formal contract with any public authority for construction improvements to public land is required to execute, deliver to the public owner, and record in the public records of the county where the improvement is located, an Unconditional Payment Bond with a surety insurer authorized to do business in this state as surety. An Unconditional Payment Bond serves as security against nonpayment.

What is a Notice to Owner?

Prior to filing a lien, a lienor who does not have a direct contract with the owner, must serve the owner a Notice to Owner in order to have lien rights on a particular project. A Notice to Owner notifies the property owner that you have been contracted by a party other than the property owner to provide services and/or materials to his or her property. The Notice to Owner puts the property owner on notice that failure to make sure that you are paid for services and/or materials provided could result in a lien being filed against the property and his or her having to pay twice for the same services and/or materials. The Notice to Owner must state the lienor's name and address, a description of the real property and the nature of the services or materials being furnished. The Notice to Owner must be served before commencing, or within 45 days of commencing, to furnish the services or materials. The 45 day deadline cannot be extended. If the lienor provides specially fabricated materials, then the first day is the day when fabrication began. A lien cannot be enforced unless the lienor has served the Notice to Owner. For a lienor who performs work during the final phase of a project, the Notice to Owner must be served before the project is completed, before the contractor has furnished its Final Contractor’s Affidavit and before the owner disburses final payment.

How to Defend a Construction Lien Foreclosure

Under Florida law, the improved property may be subject to a lien even if the owner has already paid the general contractor in full. This may sometimes result in the owner having to pay twice for the same work. If a construction lien is not paid, the improved property may be sold by the Court to satisfy the debt.

Florida’s lien laws are very complex and it is best to consult with a knowledgeable attorney if you are a defendant in a lawsuit seeking to foreclosure a Claim of Lien against your property.

Why am I being sued by a company with whom I did not have a contract?

Pursuant to Florida’s lien laws, those who provide labor, services, or materials to a construction project have the right to file a Claim of Lien against the property if they are not paid. A Claim of Lien is a cloud on title that could result in the owner having to pay twice for the same work.

How do I know if the Claim of Lien is enforceable?

Florida lien laws are very specific as to whom, how and when a contractor or supplier can file a Claim of Lien. There are also many prerequisites to filing of a Claim of Lien. Failure to comply with any of the many requirements of Florida Statute Chapter 713 could render the Claim of Lien unenforceable. Due to the complexity of Florida’s lien laws, it is best to consult an attorney that is knowledgeable in this area of the law to help you determine if the Claim of Lien is enforceable or not.

I already paid the general contractor for the work. Why am I being sued?

Project owners are obligated to understand and obey Florida’s lien laws. If a lien was filed against your property, it is very likely that you did not properly follow Florida lien laws. Unfortunately, payment to the contractor is not a defense in a lien foreclosure action. However, there are many other defenses that may be available to you, depending on the specific facts of your case. Some examples of commonly pled affirmative defenses in construction lien cases are:

• Failure to comply with the requirements of Florida’s Lien laws

• Non-lienable amounts sought

• Collateral sources

• Statute of Limitation

• Failure to comply with a condition precedent

• Failure to state a cause of action

What happens if I just ignore the complaint?

If a defendant fails to file a response to the complaint within 20 days from the date of service, the Plaintiff can ask the court to enter a default against that defendant. An order of default is treated as an admission (by that defendant) of all the allegations stated (by the plaintiff) in the complaint. Once the order is entered, the court will not allow a defaulted defendant to speak or otherwise defend the case. An order of default can only be set aside by the judge. However, the judge will not grant a request to set aside a default if the proper motion is not timely filed, if the motion is incomplete or if the motion was not scheduled to be promptly heard.

The Plaintiff can ask the court to enter a Final Judgment against you for the full amount requested in the complaint, plus attorneys’ fees, interest and costs, shortly after the default order is obtained. The property that is the subject of the lien can be sold at auction within 30 days in order to satisfy the debt.

What should I do?

If you have been sued, it might be in your best interest to consult with an attorney experienced in this area of the law. There are strict requirements and deadlines that need to be complied with in order to protect your interests.

This area of the law can be complicated and it might be best to consult an experienced attorney. If you have any questions, or need legal advice, please feel free to contact us at any time.

Got a Notice of Contest of Lien?

A Notice of Contest of Lien is a legal document by which an Owner can shorten the statutory one year time limit a Lienor has to file suit down to sixty (60) days. If a Lienor fails to file suit within the 60 day time limit, the Claim of Lien is automatically extinguished.

WHAT SHOULD I DO IF I GET ONE IN THE MAIL?

When an Owner files a Notice of Contest of Lien, the Lienor has only two options:

a. File a lawsuit to enforce the Claim of Lien or

b. Allow the 60 days to expire and recover absolutely nothing under the Claim of Lien

Simply put, you must file a lawsuit in a court of competent jurisdiction within 60 days from the day the Notice of Contest of Lien was recorded if you ever want to recover on your Claim of Lien.

Florida's Lien laws apply to the construction related improvements of most real estate properties. This includes most commercial and residential construction. If the contractor has posted a bond for the project, or the property is government owned, some different portions of Florida law will usually apply.

Under Florida law, the improved property may be subject to a Lien even if the owner has already paid the general contractor in full. This may sometimes result in the owner having to pay twice for the same work. If a construction Lien is not paid, the improved property may be sold by the Court to satisfy the debt.

However, Florida law also provides significant protection for property owners. If the law is followed properly, the owner can greatly reduce the risk of having Liens filed against the property and can also greatly reduce the risk of having to pay for work twice.

Project owners are obligated to understand and obey Florida’s Lien laws. By following the law, the owner can make sure that all members of the project team are paid in full while also protecting the property from Liens.

In the event of nonpayment, one of the most important tools any contractor has is the ability to enforce a claim for payment through Florida’s Lien laws. In the same way that a contractor should come to the jobsite with the proper tools and equipment, he should also properly plan to protect his right to be paid for the work he does.

Florida’s Construction Lien Law is complex and it is best to consult an attorney when specific problems arise. If you have any questions, or need legal advice, please feel free to contact us at any time.

PAY-WHEN-PAID CLAUSES

in subcontracts

A pay-when-paid clause links the timing of a subcontractor's payment to when the owner pays the general contractor. A pay-when-paid clause is legally defined as a condition precedent to payment. Although pay-when-paid clauses are not included in the standard subcontract forms produced by the AIA and ConsensusDOCS, almost every subcontractor has seen such a clause. Considering the frequency with which they are found, are pay-when-paid clauses enforceable?

Well, it depends on how the clause is written, and in what state the contract is being evaluated. In Florida, the courts have consistently held that a pay-when paid clause is enforceable and therefore, a general contractor does not have to pay a subcontractor until the general contractor gets paid.

A subcontractor needs to decide, before signing, whether the risk of nonpayment by the general contractor is worth it. Keep in mind that you will still need to pay suppliers.

Nonpayment in one project can greatly impact your ability to pay overhead.

Your own credit might be at risk. Below is a list of additional things to consider before agreeing to a pay-when-paid:

• Evaluate the owner and determine the likelihood of potential default.

• Consider your relationship with the general contractor.

• Consider your relationship with your suppliers.

• Consider whether you can bear the risk of not getting paid on all or a portion of the project.

There is no easy answer to the question of whether agreeing to a pay-when-paid clause is worth the risk, but understanding the nature of the law and the factors that should be considered in making the decision can help you make an informed decision. Remember that if the owner does not pay the general contractor, you might not have the money to pay your suppliers. Failure to pay your suppliers could have a negative impact on your credit.

If you are a subcontractor who is not getting paid of a pay-when-paid clause, not everything is lost.

One way to get around a pay-when paid clause is getting paid by the property owner. You can record a Claim of Lien and file a lawsuit against the owner. If there is an unconditional payment bond on the project, then serve a Notice of Nonpayment and file a lawsuit to obtain payment under the bond. The pay-when-paid clause does not apply to the lien or the bond. The pay-when-paid clause does not apply to the lien or the bond. See OBS Co., Inc. v. Pace Construction Corp., 558 So.2d 404 (Fla. 1990) (finding that pay- when-paid language in subcontract does not prevent subcontractor from suing payment bond); see also Everett Painting Co. v. Padula & Wadsworth Const., Inc., 856 So.2d 1059, 1061 (Fla. 4th DCA 2003) (“However, this [pay-when-paid] contract provision is not a defense that is available to Surety.”).

If the only thing standing between you and your money is the pay-when-paid clause,

then you might be able to get paid sooner than you originally thought.

However, there are strict requirements and deadlines that need to be complied with in order to protect your interests. This area of the law can be complicated, and it might be best to consult an experienced attorney. If you have any questions, or need legal advice, please feel free to contact us at any time.

HOW TO AVOID PROBATE

Let us help get you started

The two best ways to avoid probate is Estate Planning with the addition of creating a Living Trust. While these 2 legal structures work differently, it is highly recommended to establish your trustees and heirs to your assets for ease of transfer.

Estates make a one-time transfer of your assets after death while a living trust is an effective way to create a clear direction for ongoing transfers of assets both before and after death.

Creating an estate plan and a living trust consists of establishing a plan that details who will receive any of your assets when you can no longer handle them yourself.

Want to know more of the Florida Probate rules? Take a peak at the link below. For more one on one questions, give us a call so we can assist.

https://www-media.floridabar.org/uploads/2022/01/Probate-Rules-11-04-21-02.pdf

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What is a Notice to Owner?