Client Alert

Construction Liens in Florida –

The Timing and Manner of Perfection are Critical

Christopher A. Staine, Partner | [email protected] | 941.364.2718

March 17, 2017

Among the hoest and most relevant blog and article topics is the

subject of construction liens. No maer the quantity or ubiquity

of such articles, construction liens are and will always be among

the most highly discussed topics in the construction industry.

This is because of the tremendous extra-contractual power leg-

islators granted those not in direct privity of contract with prop-

erty owners – the lower-tiered lien claimants. While contractors

also possess the same ability to impress upon an owner’s real

property a construction lien in the event of non-payment, the

strength lower-tiered lienors possess in the event of non-pay-

ment is virtually unparalleled when compared to just about ev-

ery other area of the law. But, in order for lower-tiered lienors to

take advantage of such power, they must fully and completely

comply with all notice requirements as part of the lien perfection

process. The same holds true for contractors, albeit with slightly

fewer lien perfection considerations.

Just one seemingly minor mistake could result in the lienor’s

absolute loss of its right to assert a lien claim in the event of

non-payment. For this reason, we periodically provide our cli-

ents with updates to the Florida Construction Lien Law, includ-

ing tips and practice points on how to perfect lien claims while

avoiding some of the mistakes and pitfalls that have haunted

potential lien claimants over the years.

The following is what we hope to be a succinct and user-friend-

ly overview of the lien perfection requirements, both as to con-

tractors and lower-tiered subcontractors. Although the Lien

Law cannot guarantee that lien claimants will receive payment

through the use of construction liens, the Lien Law will most

certainly increase the odds of receiving payment for labor, ser-

vices, and materials furnished on construction projects. For this

reason, all potential lienors should adhere, without deviation, to

the Lien Law’s strict, time-sensitive perfection requirements. By

following the lien perfection instructions provided herein, po-

tential lienors will eectively be able to mitigate, if not minimize

altogether, the odds of non-payment.

A. Lien Notice Requirements

Under the Florida Construction Lien Law, lienors are re-

quired to serve the property owner with a variety of notices

as part of the lien perfection process. The type and form of

notice, as well as the extent to which the lienor must furnish

the owner with a particular notice, will vary depending on

whether or not the lienor is in direct privity of contract with

the property owner.

For general contractors (i.e., those having a direct contract

with the property owner), the rst step in the lien perfec-

tion process can be found in the construction contract with

the owner. Specically, section 713.05 obligates contractors

to include a statutory form Lien Law disclosure in the di-

rect contract and is aimed to apprise the owner of their Lien

Law obligations. A short summary of this Lien Law disclo-

sure is as follows:

• Applicable only to direct contracts with the owner

• Required in all residential contracts (single or multi-

ple family dwellings up to and including 4 units) in

excess of $2,500

• Not required if the owner is a licensed contractor or

creates parcels for sale or lease in the course of his or

her business

• If contract is wrien, disclosure must be on the rst

page or on a separate page signed and dated by the

owner

• If contract is oral or implied, disclosure must be pro-

vided in a document that references the contract and

is signed and dated by the owner

• Disclosure must be in no less than 12-point capital-

ized, bold-faced type and provide the following:

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Business Information for

Clients and Friends of

Shumaker, Loop & Kendrick, LLP

Client Alert

ACCORDING TO FLORIDA’S CONSTRUCTION

LIEN LAW (SECTIONS 713.001-713.37, FLORIDA

STATUTES), THOSE WHO WORK ON YOUR PROP-

ERTY OR PROVIDE MATERIALS AND SERVICES

AND ARE NOT PAID IN FULL HAVE A RIGHT TO

ENFORCE THEIR CLAIM FOR PAYMENT AGAINST

YOUR PROPERTY. THIS CLAIM IS KNOWN AS A

CONSTRUCTION LIEN. IF YOUR CONTRACTOR

OR A SUBCONTRACTOR FAILS TO PAY SUBCON-

TRACTORS, SUB-SUBCONTRACTORS, OR MATE-

RIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED

MONEY MAY LOOK TO YOUR PROPERTY FOR PAY-

MENT, EVEN IF YOU HAVE ALREADY PAID YOUR

CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR

CONTRACTOR, YOUR CONTRACTOR MAY ALSO

HAVE A LIEN ON YOUR PROPERTY. THIS MEANS

IF A LIEN IS FILED YOUR PROPERTY COULD BE

SOLD AGAINST YOUR WILL TO PAY FOR LA-

BOR, MATERIALS, OR OTHER SERVICES THAT

YOUR CONTRACTOR OR A SUBCONTRACTOR

MAY HAVE FAILED TO PAY. TO PROTECT YOUR-

SELF, YOU SHOULD STIPULATE IN THIS CON-

TRACT THAT BEFORE ANY PAYMENT IS MADE,

YOUR CONTRACTOR IS REQUIRED TO PROVIDE

YOU WITH A WRITTEN RELEASE OF LIEN FROM

ANY PERSON OR COMPANY THAT HAS PROVID-

ED TO YOU A “NOTICE TO OWNER.” FLORIDA’S

CONSTRUCTION LIEN LAW IS COMPLEX, AND IT

IS RECOMMENDED THAT YOU CONSULT AN AT-

TORNEY.

• Failure to include disclosure could bar enforcement

of lien if owner has been adversely aected

• Contractor’s failure to furnish owner with Lien Law

disclosure does not impact lien rights of lienors not

in privity with owner

Practice Point: Although not included among the lienors’ lien

perfection notice requirements, lienors should be mindful of

the role the Notice of Commencement plays in the lien perfec-

tion process. For lienors not in direct privity with the owner,

the Notice of Commencement serves as an invaluable resource

for information for such lienors to prepare critical Lien Law

documents, such as the Notice to Owner and Claim of Lien, and

should be lienors’ starting point for preparing all required Lien

Law documents. However, since not all owners fulll their Lien

Law obligations, including properly posting and recording the

Notice of Commencement, lienors should be prepared to have

a back-up plan. Specically, in the event the owner has failed

Client Alert | Construction Liens in Florida – The

Timing and Manner of Perfection are Critical

to record a Notice of Commencement, lienors may use the in-

formation provided by the owner in the permit application for

preparation of Lien Law documents. Lienors would be ad-

vised not to rely on the information provided in the actual

permit since the permit is prepared by someone other than the

owner.

B. Perfection and Mailing Requirements

For Contractors: After the contractor has furnished the owner

with the required Lien Law disclosure, the contractor need not

furnish the owner with any other Lien Law notices in order to

perfect its lien rights. Rather, the contractor’s next step in the

perfection process consists of furnishing the owner with a con-

tractor’s nal payment adavit pursuant to s. 713.06(3)(d)1,

Fla. Stat. Like most Lien Law documents, the contractor’s nal

payment adavit is a statutory form document and involves

of the following:

• Applicable to contractors and lienors in direct privity

with owner

• Puts owners on notice as to unpaid lienors

• Must be furnished to the owner at the time of nal

payment (failure to do so will render the contractor

in default, with the ability to cure by furnishing to the

owner within one year of the date of recordation of the

Claim of Lien)

• Furnishing adavit to owner is an absolute condition

precedent to the enforcement of the lien – must be

furnished at least 5 days prior to commencement of

foreclosure action

• Adavit must be furnished regardless of size of project

and even if the contractor used no subcontractors, mate-

rialmen, or laborers

• Not applicable to design professionals and lienors not in

privity with owner

For Lower-Tiered Lienors: Unlike general contractors, the

path to lien perfection for lower-tiered subcontractors and

suppliers is far more complicated. For those not in direct priv-

ity of contract with the owner, the rst step in the lien perfec-

tion process is the Notice to Owner. The Notice to Owner:

• Gives the owner notice that the lienor is providing la-

bor, services, or materials upon the owner’s property

• Is not a recorded document and does not constitute

cloud on title

• Must be furnished by all lienors not in privity with the

owner

• Statutorily provided form document

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• In addition to the owner, the copies of the Notice to

Owner must be provided to: (i) the contractor (if not in

privity with the contractor); (ii) subcontractor (if lienor

is a materialman of a sub-subcontractor); (iii) construc-

tion lender; and (iv) all others designated in the Notice

of Commencement to receive Lien Law documents

• May be served by personal delivery, overnight mail,

certied mail return receipt requested, or, if the forego-

ing options are unavailable, by posting on the jobsite at

a conspicuous, weather protected, location.

• To be timely, Notice to Owner may be served at any

time prior to commencement of work or rst delivery

of materials to the jobsite, or after commencement but

before one of the following events has occurred:

• 45 days after the date of commencement of the

lienor’s work or rst delivery of materials to the

jobsite; or

• the contractor presents the owner with its nal

payment adavit and the owner disburses nal

payment to the contractor

• Not required for underground subdivision/site work

improvements

• Failure to timely serve Notice to Owner constitutes an

absolute bar to enforcement of lien!

Practice Point: Service of the Notice to Owner is almost uni-

versally accomplished by sending via certied mail return

receipt requested. If serving the Notice to Owner using this

method, service will be eective as of the date of mailing if

placed in the mail within 40 days of the date of commencement

of the lienor’s work or rst delivery of the materials. However,

if placed in the mail after the 40th day, the eective date of ser-

vice is gauged by the date of the owner’s receipt of the Notice

to Owner. Accordingly, it is imperative that lienors desiring

to serve the Notice to Owner by certied mail not only place

the Notice to Owner in the mail by the 40th day, they should

also retain the certied mail log in order to establish the date

of mailing.

C. Lien Defects and Amendments Thereto

Unlike the time requirements prescribed under the Lien Law,

which are strictly construed, lien notices and the claim of lien

itself may contain errors and omissions without necessarily

invalidating the lien claim. Section 713.08(3), Fla. Stat. states

“the negligent inclusion or omission of any information in the

claim of lien which has not prejudiced the owner does not con-

stitute a default that operates to defeat an otherwise valid lien.”

Client Alert | Construction Liens in Florida – The

Timing and Manner of Perfection are Critical

Section 713.08(4)(a) also permits insubstantial discrepancies

by stating the “omission of any of the foregoing details [from

the statutory claim of lien form] shall not, within the discretion

of the trial court, prevent the enforcement of such lien against

one who has not been adversely aected by such omission or

error.”

While every eort should be made to rectify any errors in

the claim of lien prior to recording, the Lien Law recognizes

the doctrine of substantial performance. However, errors in

the lien will serve to create unwanted distractions should the

lienor seek judicial enforcement of the claim of lien, and even

worse, should the court nd the error somehow prejudiced the

property owner, the error could render the lien invalid and

unenforceable. Such an example of the court’s discretion to

invalidate a lien claim on account of seemingly innocuous er-

rors can be found in the case of Allstar Building Materials, Ltd.

v. Donald F. Kronauer, 724 So. 2d 616 (Fla. 5th DCA 1998). In

this case, the court refused to enforce the lien based on errors

contained in the lienor’s notice to owner. Specically, the lien-

or had erroneously reduced the size of the type used in the

lien and also failed to include the words, “Important Informa-

tion for Your Protection” in the notice. Further, the lienor had

sent a copy of the lien to the contractor, as well as the owner.

Again, while the Lien Law takes into account the potential for

errors or omissions in the various Lien Law documents, lien-

ors would be well advised to take extra precautions to avoid

against such errors.

D. Time Limit for Recording the Claim of Lien

Whether a contractor or lower-tiered subcontractor or sup-

plier, the lien perfection process ultimately culminates in the

recordation of the claim of lien and the ling of a lawsuit to

foreclose the claim of lien. In short, the claim of lien, which is

a statutory form document, details the lienor’s involvement on

the project and the value of the labor, services, and/or materi-

als for which the lienor is unpaid. From a timing standpoint,

the lien may be recorded at any time during the course of the

work but must be recorded within 90 days of the date of nal

furnishing labor or material.

Over the years, the issue of the date of “nal furnishing”

has been hotly litigated. In particular, a frequently liti-

gated issue has been the extent to which punch list items,

corrective work, and demobilization constituted “nal fur-

nishing” for purposes of triggering the lienor’s 90-day lien

recordation period. The long-standing test courts applied in

determining when the lien recordation had commenced was

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articulated in Aronson v. Keating, 386 So. 2d 822 (Fla. 4th DCA

1980), which applied a four-prong test consisting of whether

the work was done: (1) in good faith; (2) within a reasonable

time; (3) in pursuance of the contract; and (4) necessary to a n-

ished job. Fortunately, in 2007, the Florida legislature claried

the Lien Law to expressly state that “nal furnishing” does not

include work performed on account of punch list or remedial

work. However, “nal furnishing” does include cleaning up

debris and demobilization. Furthermore, in the event the un-

derlying direct contract is terminated, the lienor is required to

record its claim of lien within 90 days of such termination or

90 days after the nal furnishing of labor, services, or materials

by the lienor, whichever occurs rst.

Practice Point: For lower-tiered lienors, the lienor’s receipt

of either: (i) an owner’s adavit of intention to recommence

construction, or (ii) notice of termination of the notice of com-

mencement could signicantly impact such lienor’s lien claim.

More specically, where a lienor has been served with either

of the owner’s adavit of intent to recommence or notice of

termination of the notice of commencement, such lienor must

record its lien claim within 30 days of service in order to main-

tain “relation back priority” to the original notice of com-

mencement (which is necessary to maintain the lienor’s priori-

ty position). The lienor’s failure to timely record its lien claim

within this 30-day period does not impact the enforceability

of the lien claim (provided it is recorded within the 90-day re-

cordation period), but rather only impacts the priority of the

lienor’s claim. For this reason, lienors that have yet to be paid

for their services should err on the side of caution and record

their lien claims immediately upon receipt of the adavit of

intention to recommence construction or notice of termination

of the notice of commencement.

E. Filing Suit

An action to foreclose a claim of lien must be commenced

within one year of the date on which the lien was record-

ed, and in the case of an amended claim of lien (amending

the date of nal furnishing), within one year of the date on

which the amended claim of lien was recorded. If the last

day of the one-year foreclosure period falls on a weekend or

holiday, action may be led on the following business day.

Client Alert | Construction Liens in Florida – The

Timing and Manner of Perfection are Critical

Equally as important, an owner’s unfullled promise to make

payment (in an eort to induce the lienor to hold o ling its

lien foreclosure action within the one-year period) does not

relieve the lienor from having to timely commence its action,

and in fact, the owner’s unfullled promise will not serve as a

defense to a motion to dismiss in litigation.

In most cases, the one-year anniversary of the lien

recordation serves as the applicable deadline by which the

lienor’s foreclosure action must be led. However, in cer-

tain instances, this one-year period may be signicantly

shortened. Specically, an owner may reduce the lien

foreclosure period by either: (1) recording and serving a no-

tice of lien contest; or (2) ling of complaint for order to show

cause. Where a lienor has been served with a recorded notice

of lien contest, the lien foreclosure period is shortened to a pe-

riod of 60 days from the date on which lienor was served with

the notice of lien contest.

By contrast, where the owner has led a complaint for order

to show cause (requiring the lienor to “show cause” as to why

its lien should not be discharged), the lienor is required to re-

spond to the show cause complaint within 20 days of service of

the complaint; otherwise the lien will be discharged. It should

be noted that in situations where the owner has led a show

cause complaint, the lienor’s commencement of an action to

foreclose its claim of lien will satisfy the show cause require-

ment. However, the lienor’s failure to timely respond to the

complaint for order to show cause will result in a discharge of

the lien, which is not subject to appeal, even when the lienor

may be able to assert excusable neglect and a meritorious de-

fense.

As noted in the outset of this article, while the Lien Law cannot

guarantee that lien claimants will receive payment through

the use of construction liens, the Lien Law is an eective meth-

od of increasing the odds of obtaining payment. If you have

concerns or questions about the Florida Construction Lien

Law, please contact Chris Staine, Board Certied Construction

aorney with Shumaker, Loop & Kendrick, LLP, at cstaine@

slk-law.com or 941.366.6660.

This is a publication of Shumaker, Loop & Kendrick, LLP and is intended as a report of legal issues and other developments of general interest to our clients,

attorneys and staff. This publication is not intended to provide legal advice on specific subjects or to create an attorney-client relationship.