20 Days and It’s Over [Losing your Construction Lien Rights]
A savvy contractor or subcontractor is generally familiar with the steps necessary to properly obtain and record a construction lien. However, most lienors do not know that a statute exists which, if properly exercised, could have their liens discharged and cancelled in twenty days.
Florida Statute § 713.21(4) provides that:
A lien properly perfected under this chapter may be discharged by any of the following methods:
(4) By an order of the circuit court of the county where the property is located, as provided in this subsection. Upon filing a complaint therefor by any interested party the clerk shall issue a summons to the lienor to show cause within 20 days why his or her lien should not be enforced by action or vacated and canceled of record. Upon failure of the lienor to show cause why his or her lien should not be enforced or the lienor’s failure to commence such action before the return date of the summons the court shall forthwith order cancellation of the lien.
What Liens Does This Rule Apply to?
This applies to all liens properly filed of record – regardless of whether or not the underlying lien itself is valid. Therefore, the owner of the property, or any other person who is deemed to be an “interested party,” can arrange to have a summons issued to the lienor to show cause why the lien should not be enforced. Failure to show cause within the 20 day period will result in a discharge of the lienor’s lien. There is no allowance or an extension of time provided because of excusable neglect or failure to diligently respond.
A recent case arising out of Florida’s First District illustrates application of the statute, and holds that, for the most part, a showing of “good cause” means that the lienor must show that it is in the process of foreclosing the lien. In that case, a contractor filed a claim of lien against a property. The property owners then filed a petition with the court pursuant to Florida Statute § 713.21(4) for an order to show cause and argued that the lien was fraudulent. A summons to show cause was issued directing the lienor to show cause why the lien should not be discharged. The lienor advised the court that it was preparing a suit to enforce its lien, and the court in turn ordered the lienor to file the suit within 20 days from the date of the show cause summons. When the trial court granted an untimely motion for reconsideration filed by the lienor (i.e., a motion filed after the 20 day period expired), the property owner appealed. The appellate court ruled in favor of the property owner. It stated that the lienor “had 20 days from [the date of the summons] in which to either file an action to foreclose its lien or show cause why enforcement should not be commenced.” The court continued by stating that “[a]bsent informing the court that a lienor has already taken steps to foreclose its lien, rarely does a circumstance rise to the level of ‘good cause’ to avoid the mandatory 20-dy time limit.”
One can argue that strict application of this statute is unfair to unsophisticated lienors who do not have the ability to ramp up a foreclosure proceeding in 20 days. But that argument will apparently fall on deaf ears. The moral is that lienors must act promptly when served with a summons to show cause or run the very real risk that their liens will be discharged.