Florida Lien Law F.A.Qs

Are all improvements lienable?

“Improve” means build, erect, place, make, alter, remove, repair, or demolish any improvement over, upon, connected with, or beneath the surface of real property, or excavate any land, or furnish materials for any of these purposes, or perform any labor or services upon the improvements, including the furnishing of carpet or rugs or appliances that are permanently affixed to the real property and final construction cleanup to prepare a structure for occupancy; or perform any labor or services or furnish any materials in grading, seeding, sodding, or planting for landscaping purposes, including the furnishing of trees, shrubs, bushes, or plants that are planted on the real property, or in equipping any improvement with fixtures or permanent apparatus or provide any solid-waste collection or disposal on the site of the improvement.

Some improvements, however, are not lienable. A lienor was not entitled to lien shopping mall property for a kiosk where the trial court found that such structure was not a permanent benefit to the mall. A maintenance landscaping service consisting of mowing a lawn and cutting shrubbery did not bestow a “permanent benefit” upon the land within the mechanic’s lien statute and thus, did not entitle the laborer to a mechanic’s lien. It is not the duty of the court to weigh the relative advantage to the owner of each structure erected on the land to determine whether there has been an improvement of the land sufficient to support a lien.

Because there is no bright line rule, a lienor is advised to serve a timely Notice to Owner at the outset of any work. Careful consideration can then be given to the validity of any lien that may be recorded and served for the work in question. But be careful, the risk of filing a lien on non-lienable work may be a judicial finding that the lien was improper and possibly fraudulent, subjecting the hopeful lienor to attorney’s fees – not a good result.

Can I amend my recorded claim of lien?

A Claim of Lien may be recorded at any time during the progress of the work but never later than 90 days after last furnishing labor or materials. A lien holder is also advised to file separate claims of lien for work done under separate direct contracts between the owner and general contractor. As well, there should be a separate Notice of
Commencement for every separate contract between the owner and the contract As an example, a contractor was required to file two claims of lien against property, once for construction and then for subsequent repair work done on the same property, even though work was done on the same structure. This was because the construction and repairs were done under two separate contracts.

Any recorded Claim of Lien may be amended at any time during the original period allowed for recording the Claim of Lien, as long as the amendment shall not cause any person to suffer any detriment by having relied upon the original Claim of Lien. Any amendment of the Claim of Lien shall be recorded in the same manner as provided for the recording of the original Claim of Lien. Amending a defective Claim of Lien does not necessarily render it enforceable.

More often than not, you will only have one opportunity to record and serve a Claim of Lien (which is too often filed quickly on the 89th or 90th day). Errors or omissions are permanent and remain with you throughout the enforcement process.

Can I collect the undisputed portion of my claim?

Most construction claims are made up of sums that are in dispute and sums which are undisputed. More often than not, the party holding the undisputed sum is holding it for no other reason than to exert leverage. Under Florida Construction lien law this need not be tolerated.

Any person who receives a payment for constructing or altering a permanent improvement to real property must pay, in accordance with the contract terms, the undisputed contract obligation. The failure to pay the undisputed obligation within 30 days after the date the labor, services, or materials are furnished, and payment for same became due, shall entitle any person providing such labor, services, or materials to certain extraordinary procedures and remedies.

The complainant must first file and serve a verified complaint alleging: the existence of a contract to improve real property, a description of the labor, services, or materials provided and allege that the labor, services, or materials were provided in accordance with the contract, the amount of the contract price, the amount, if any, paid pursuant to the contract, the amount that remains unpaid pursuant to the contract, the amount thereof that is undisputed, that the undisputed amount has remained due and payable pursuant to the contract for more than 30 days after the date the labor or services were accepted or the materials were received, and that the person against whom the complaint was filed has received payment on account of the labor, services, or materials described in the complaint more than 30 days prior to the date the complaint was filed.

After service of the complaint, the court will conduct an evidentiary hearing on the complaint, upon not less than 15 days written notice. The complainant is entitled to the following remedies up to the undisputed amount and upon proof of each allegation in the complaint: an accounting of the use of any such payment from the person who received such payment, a temporary injunction against the person who received the payment, subject to the bond requirements specified in the Florida Rules of Civil Procedure, prejudgment attachment against the person who received the payment, in accordance with each of the requirements of Florida’s lien law, and such other legal or equitable remedies as may be appropriate in accordance with the requirements of the law.

These remedies must be granted without regard to any other remedy at law and without regard to whether or not irreparable damage has occurred or will occur. The remedies, however, do not apply to the extent a bona fide dispute exists regarding any portion of the contract price or in the event the complainant has committed a material breach of the contract. The prevailing party in any proceeding under this section is entitled to recover costs, including a reasonable attorney’s fee, at trial and on appeal.

Can I still get paid?

Importantly, if a lienor has substantially complied with the Notice to Owner and Claim of Lien requirements both as to content and time, some errors or omissions should not prevent the enforcement of a Claim of Lien against a person who has not been adversely affected by such omission or error. Complying with all the technical statutory components for filing a claim, although desirable, is neither required nor can it form the basis for denial of the enforcement of an otherwise valid lien. Such liens are valid unless in the discretion of a trial court some prejudice is shown to the owner or another party.

The significance of this is quite obvious for both the lienor and the owner. From the lienor’s perspective, a slight error or omission should not invalidate its otherwise valid lien. A lienor, however, should not intend to rely on the equity of a court to overlook an error in a Claim of Lien or Notice to Owner; this would be a gamble with dire consequences.

Similarly, an owner should not expect that a technical oversight on the part of a lienor will necessarily result in an invalid lien. This is especially true if the owner was aware of the error early on and chose to do nothing about it. While there are many cases which have invalidated liens for technical omissions in the content of the lien, it is very possible that a court sitting in equity may find that the lien, overall, substantially complies with the lien law.

Can I take my materials back?

If for any reason the completion of an improvement is abandoned or though the improvement is completed, materials delivered are not used, a lien holder who has delivered materials for the improvement which have not been incorporated and for which he has not been paid may peaceably repossess such materials. That lien holder however, will then no longer have a lien on the real property or improvements and shall have no right against any person for the price of the materials. This right to repossess the materials shall not be affected by their sale, encumbrance, attachment, or transfer from the site, except if the materials have been transferred to a bona fide purchaser.

The right of repossession and removal shall extend only to materials whose purchase price does not exceed the amount remaining due to the repossessing lienor. If the materials have been partly paid for, the person delivering them may repossess the materials as allowed upon refunding the part of the purchase price which has been paid. The recovery of materials under Florida’s lien law should not be considered a preferential transfer under the Bankruptcy Code and should not be voided. As well, materials on a construction site which are about to be incorporated into the realty are immune from levy, execution, or attachment by the material supplier’s creditors. This is true even if the creditor holds a security interest in the payments from the general contractor to the debtor.

Can my lien be extinguished automatically?

An owner may occasionally benefit from shortening the time in which a lien holder may file suit to foreclose its lien. One way to accomplish this is to serve a Notice of Contest of Lien. Specifically, the lien of any lien holder upon whom such notice is served shall be extinguished automatically unless the lienor institutes a suit to enforce his or her lien within 60 days. The clerk shall mail a copy of the Notice of Contest to the lien claimant at the address shown in the Claim of Lien. Service shall be deemed complete upon mailing. The Notice of Contest acts by operation of law to discharge a lien on 60th day without any intervention of the court. Moreover, the filing of a Notice of Contest of Lien should not violate an automatic stay imposed by the Bankruptcy Code.

A more drastic method for shortening the limitation period of a Claim of Lien is to file a complaint against the lienor demanding that the lienor show cause why the lien in question should not be vacated. Upon the failure of the lienor to show cause why the lien should not be enforced or the lienor’s failure to commence such action before the return date of the summons, the court shall immediately order cancellation of the lien.

A lienor’s motion for extension of time to respond to the property owner’s motion for discharge of lien does not constitute “good cause” as required by the mechanic’s lien statute for tolling of the statutory 20-day period. Strict compliance with statutory provisions is required in order to protect a lien. The court has no discretion to extend the 20-day period, even if the lienor requests additional time to obtain counsel.

Do I always need to send a Notice to Owner?

A lien holder who does not have a direct contract with the owner must serve the owner with a Notice to Owner. This includes a subcontractor, a materialman and even a materialman to a sub-subcontractor and is a prerequisite to perfecting and recording a Claim of Lien. If the materialman to a sub-subcontractor knows the name and address of the subcontractor, it must also serve a copy of the Notice to Owner on the subcontractor as well.

The failure of a subcontractor or a materialman to serve a copy of the Notice to Owner on the owner bars a potential lienor’s claim.

The Notice to Owner must be served before commencing work but not later than 45 days after commencing work. However, it must always be served before the date of the owner’s disbursement of the final payment after the contractor has furnished the Contractor’s Final Affidavit. While this is typically a rare event, it may be of importance to those lienors who appear very late on the job or for jobs of very short duration.

Do I have to disburse payments I receive?

It is a felony for a person, firm, or corporation, or an agent, officer, or employee thereof, who receives any payments on account of improving real property to not apply such portion of any payment to the payment of all amounts then due and owing for services and labor which were performed on, or materials which were furnished for, such improvement prior to receipt of the payment. This does not, however, prevent any person from withholding any payment, or any part of a payment, in accordance with the terms of a contract or pursuant to a bonafide dispute regarding the amount due. There is no private right of action for the misappropriation of construction funds.

Do I have to provide a Contractor’s Final Affidavit?

If an owner fulfills all of its duties under the mechanic’s lien law, then its liability for all lien claims will not exceed the contract price. While an owner is not required to comply with the notice requirements of the lien law, it does so at the risk of paying twice for improvements where the contractor may not have paid certain lienors.

An owner should not make a final payment unless it has received the Contractor’s Final Affidavit. A final payment under a building contract, made by the owner to the general contractor without first securing sworn statements from the contractor, is not considered “properly made”. As a result, the owner becomes responsible to the contractor’s unpaid subcontractors and materialmen in the amount of the final payment.

In addition, the owner must file a Notice of Commencement. A materialman’s lien was found to be enforceable against a homeowner where the homeowner, without knowledge of unpaid materials, paid a contractor in full upon completion of the contract and the homeowner had neither filed a Notice of Commencement nor obtained a contractor’s affidavit. This was the case even though the materialman did not serve a Notice to Owner until after the homeowner had paid the contractor in full.

An owner must pay careful attention if the contractor abandons the project or is terminated. Specifically, the owner must comply with the re-commencement procedures so that all future payments to the new contractor are considered proper. Following the abandonment of a construction contract by a general contractor, liability of the owner to subcontractors may be limited to the contract price remaining after deducting payments properly made.

Do you know the crucial difference between proper and improper Payments?

If an owner fulfills all of its duties under the mechanic’s lien law, then its liability for all lien claims will not exceed the contract price. While an owner is not required to comply with the notice requirements of the lien law, it does so at the risk of paying twice for improvements where the contractor may not have paid certain lienors. An owner should not make a final payment unless it has received the Contractor’s Final Affidavit. A final payment under a building contract, made by the owner to the general contractor without first securing sworn statements from the contractor, is not considered “properly made”. As a result, the owner becomes responsible to the contractor’s unpaid subcontractors and materialmen in the amount of the final payment.

In addition, the owner must file a Notice of Commencement. A materialman’s lien was found to be enforceable against a homeowner where the homeowner, without knowledge of unpaid materials, paid a contractor in full upon completion of the contract and the homeowner had neither filed a Notice of Commencement nor obtained a contractor’s affidavit. This was the case even though the materialman did not serve a Notice to Owner until after the homeowner had paid the contractor in full.

An owner must pay careful attention if the contractor abandons the project or is terminated. Specifically, the owner must comply with the re-commencement procedures so that all future payments to the new contractor are considered proper. Following the abandonment of a construction contract by a general contractor, liability of the owner to subcontractors may be limited to the contract price remaining after deducting payments properly made.

Does Final Inspection count as "Last Work" under the lien law?

A sprinkler contractor submitted its final pay application through a sworn statement, noting that no additional work was required on the project and that one hundred percent of its work was completed. Ninety four days later when it wasn’t paid, it served its Notice of Non-Payment with the project surety. In the lawsuit that followed, the surety moved for summary judgment against the sprinkler company alleging late notice. The circuit court agreed, as did the District Court of Appeal.

The 90-day period in which a claimant must give notice to a payment bond surety on a statutory bond claim is strictly interpreted. The sprinkler company argued that its cut off date should be extended to account for the work done to attend the final inspection to actually activate the fire protection system, and to complete several punch list items. But Florida’s courts have made clear for some time that remedial or corrective work does not extend the time for filing a claim. Such work is merely incidental to a completed contract and is considered unsubstantial.

Not only did the sprinkler company wait four days too long, it also couldn’t overcome its own earlier affirmative statements that all its work was completed.

What is a Statement of Account?

A lack of privity between parties to a construction project often results in a lack of information. This is easily overcome by requesting the needed information pursuant to Florida’s lien law. The owner may serve in writing a demand to the lienor for a written statement under oath of his or her account. The Statement of Account will include, if requested, the nature of the labor or services performed and to be performed, if any, the materials furnished, the materials to be furnished, if known, the amount paid on account to date, the amount due, and the amount to become due, if known. The failure or refusal to furnish the Statement within 30 days after the demand or the furnishing of a false or fraudulent statement will deprive the lienor of his or her lien.

The demand must be served on the lienor at the address and to the attention of any person who is designated in the notice to owner. If the demand is not served upon the designated persons and at the address as set forth in the notice to owner, then the failure or refusal to furnish the statement will deprive the lienor of his or her lien.

The demand must prominently display the following (or similar) warning: WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT, SIGNED UNDER OATH, WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR LIEN. The failure to notarize an otherwise accurate and timely Statement of Account is fatal to a mechanics’ lien claim. This is in light of the strict compliance required within the mechanic’s lien statutes, even in absence of any showing of prejudice to the owner.

Who gets greatest protection under Florida lien law?

Sometimes those performing work on a job site don’t easily fall into the category of a subcontractor or materialman. For example, a laborer, generally defined as any person other than an architect, landscape architect, engineer, surveyor and mapper, is someone who, under a properly authorized contract, personally performs on the site of the improvement labor or services which benefit the real property; he is not one who furnishes materials or labor service of others.

A laborer is generally extended the greatest protection under Florida lien law while having to comply with the least amount of statutory prerequisites to enforce a lien. As an example, a laborer need not serve a notice to owner to perfect his or her lien. The rationale for exempting laborers from certain notice requirements is that an individual laborer will not work long without pay and consequently will not have a large claim unknown to the owner or general contractor.

A labor pool, however, is not a laborer. An employer, on behalf of its employees, cannot file and foreclose a mechanic’s lien as a laborer, where the employer provides the labor services of individuals with whom it contracts. Florida law clearly distinguishes between those who personally perform work and those who merely furnish persons to do the work. A business entity does not come within the general classes included in the definition of laborer.For all practical purposes, a labor pool or temporary labor supply firm is a subcontractor or a sub-subcontractor and as such must comply with all of the notice requirements of that class of lienor.

When it comes to construction liens, don’t find yourself in deep water without a life line. Knowing the ins and outs of this complex area of the law can allow you to swim ahead of the pack, securing your work and obtaining payments due.