By Bruce Kaleita, Esquire
Often, Florida contractors and suppliers are not paid for work that they deserve payment on. When this happens, the best way to collect your money is to lien the job on which you have done work. For the contractor who worked directly for the owner of the job, all that has to be done is to record a Claim of Lien, provided of course that you calculate your lien claim properly.
Florida Contract Requirements In Order to Have A Lien Right.
There is a law requiring contractors who deal with the owner to include a written notice in their contract. It reads as follows:
A713.015 Mandatory provisions for direct contracts.
(1) Any direct contract greater than $2,500 between an owner and a contractor, related to improvements to real property consisting of single or multiple family dwellings up to and including four units, must contain the following notice provision printed in no less than 12‑point, capitalized, boldfaced type on the front page of the contract or on a separate page, signed by the owner and dated. If you don’t have it in your contract, you don’t have a claim of lien:
ACCORDING TO FLORIDA’S CONSTRUCTION LIEN LAW (SECTIONS 713.001‑713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY 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 SUBCONTRACTORS, SUB‑SUBCONTRACTORS, OR MATERIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR PAYMENT, 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 LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY. TO PROTECT YOURSELF, YOU SHOULD STIPULATE IN THIS CONTRACT 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 PROVIDED TO YOU A “NOTICE TO OWNER.” FLORIDA’S CONSTRUCTION LIEN LAW IS COMPLEX, AND IT IS RECOMMENDED THAT YOU CONSULT AN ATTORNEY.
The Notice of Commencement.
For contractors who are dealing directly with the owner, remember also that you should record a Notice of Commencement before starting the job and furnish a copy to the owner. This notice sets up the date to which all later Claims of Lien relate back to. It can also be used to require future lienors to notify the contractor when they claim a lien or deliver a Notice to Owner.
The Notice To Owner.
For subcontractors or suppliers who are not dealing with the owner but rather with the General, Residential or Building Contractor, you must remember to set up your future right to a lien before you do the work or supply the materials. This is done by sending to the Owner a Notice To Owner which establishes your right to a construction lien in the future. It is not offensive to an owner for you to send a Notice To Owner, it is required by law. You can tell an owner that you did it because the law requires it. Some owners think the Notice To Owner is a lien claim. It is not, and you will have to explain it to the owner from time to time. Do so politely and the owner will understand. It is beneficial to the owner to know who is working on his job, so he can insist they all be paid. The owner should ask for and receive a Partial Release of Lien when progress payments are made, and a Final Release and Waiver of Lien when the final payment is made, from all contractors, subcontractors and suppliers. This is a way to make sure everyone is paid.
Timing of Recording of The Notice of Commencement.
The Notice of Commencement must be recorded before any work is done. It is usually the owner’s responsibility to file this, but the owner does not know this. Therefore the general, residential or building contractor is usually the person who prepares and records it, and he asks the owner to sign it. The purpose of the Notice of Commencement is to establish the date to which all later claims of lien relate; that is, it sets up an equal date of effectiveness for all later claims of lien. Because recorded documents acquire priority when they are recorded, the Notice of Commencement makes all later claims of lien be of the same date as the recording of the Notice of Commencement, to avoid losses to the lienors based on when their claims of lien are recorded. All liens date back to the date of the Notice of Commencement.
Timing of Delivery of The Notice To Owner.
The Notice To Owner must be sent to the owner before commencing work, or within 45 days after commencing work. If it is late, it is no good. Failing to serve the Notice To Owner or serving it in an untimely way will result in loss of your lien rights.
Use Certified Mail In Sending All Notices.
All of these notices must be mailed by certified mail return receipt requested. Sending it by any other means will be ineffective and can cost you your lien. Notices can also be hand delivered but you must keep a record of such hand delivery. It is better to send everything by certified mail. Use ExpressNotices to do this and you will be covered.
Calculating the Claim of Lien.
In order to properly calculate your claim of lien, remember that you may claim your lien only for labor furnished and materials incorporated into the job, in accordance with your contract. Lost profits, interest, attorneys fees, and unearned money cannot be included in the amount, unless you have already earned the right to be paid for them. Usually this will mean carefully figuring the amount due under the contract, and claiming only that. (In litigation for breach of contract, you probably will be able to recover lost profits, but in your claim of lien, the only profit you can recover is the profit you have already earned by doing the work you did.) Make sure the numbers you give to ExpressNotices are accurate.
Filling Out The Claim of Lien
You can fill out your Claim of Lien form yourself, but this can be risky. It may be better to give this job to ExpressNotices, in order for them to use the right form and to record it themselves. You would otherwise have to locate the form in the Florida Statutes for the Claim of Lien, fill it out yourself, and take the Claim of Lien to the Clerk of Court’s Recording Office, and record it yourself. You can also use your attorney to prepare and record your claim of lien. It is better to use a service such as ExpressNotices.
Collecting Your Lien.
A claim of lien cannot be collected, like a judgment. It must first be foreclosed, by a lawsuit against the owner and against all inferior parties in the public records. Inferior parties are those whose interests in the property are recorded after the claim of lien. It is very advisable to use an attorney to do this. When the lien is foreclosed, provided that the lien is properly filed, the court orders the sale of the owner’s property to pay the lien claim. This can be very persuasive to an owner, who will usually try to force the General, Residential or Building Contractor to pay off the lien claim rather than risk losing his property. It is a breach of contract for a contractor to fail to pay his suppliers or subcontractors, if it results in claims of lien. The Construction Lien Law, Section 713.29, Florida Statutes, permits you to recover your attorneys fees in a lien foreclosure action.
Using Your Contract To Collect Payments.
If you end up not being able to foreclose a lien against a property, remember that you can use your construction contract to collect money owed. To do this, you must have certain terms written out in your contract. These include a A Time Is Of The Essence Clause, a Prevailing Party Attorneys Fees Clause, and other clauses which it is very important to have. There are, unfortunately, no standard suppliers of construction contracts that comply with the law. See the author for Florida construction contracts for your profession.