I don’t have a signed contract. How do I lien and get paid?

Alex BarthetContracts, Getting Paid

You may be surprised, but you can still lien and get paid without a signed contract.

A contract is a meeting of the minds. Two parties agree in principal to certain key terms about what is expected of each of them. The lien law does not mandate that a contract be in writing, or signed, for it to be valid and enforceable.

The same law, however, requires that the owner have a contract with anyone who is a contractor. At the upper level of the construction process, a contractor is considered anyone with a direct contract with the owner. If a plumber has a direct contract with the owner, he is considered a contractor, even though the trade likely considers the plumber to be a subcontractor.

As long as the owner has some level of agreement with a contractor, the lien statute protects everyone in the construction chain. If a painter gets work and inadvertently transposes the digits on the address and paints at the wrong address, there are no lien rights because that owner didn’t have a contract with that painter to do the work. Again, when the owner and contractor have a contract, everyone in the chain has lien rights.

While a written contract isn’t mandated by the lien law, you should have one. If it’s in writing, there is less to debate. You can point to a specific provision in the contract – price, scope, insurance needed, etc.  – and avoid ambiguity and disputes. When a law firm is retained, it’s usually to deal with things not in a contract. So a written contract could save you time and money in the long run.

Be sure to include these key contract provisions:

  • Scope. What work you will perform, as well any exclusions – things you’re not doing and are not including in your price.
  • Price. How much you expect to be paid.
  • Payment terms. When and how you expect to get paid. Be wary of pay-when-paid provisions that can hold up your payment based on issues that may not even relate to you.
  • Start date. The intended day to start work or the triggering event that would initiate the work.
  • Completion date. This could be a duration or a specific date.

Mandatory disclosures should also be on your radar in creating contracts. These are items required by law to be given to another party in order to have a valid contract. They often apply to a certain class of contractor, typically residential contractors but not subcontractors. Without these extra two to three pages in your contract, your right to lien may be in jeopardy.  Mandatory disclosures can include:

  • Right of rescission. If you are selling your services to a homeowner, federal law mandates that you provide two copies of the Right of Rescission Notice explaining they can cancel the contract within three business days.
  • Florida Lien Law. A 12-point, capitalized, boldfaced font statement on the front page of your contract must disclose that not paying a contractor could result in a construction lien being placed on the property and potentially the sale of the property through foreclosure.
  • Construction defect. If you have a contract with an owner, you’re obligated to inform the owner that if there is a construction defect, Chapter 558 of Florida Statues will come into play before any lawsuit to hopefully resolve such the claim.
  • Florida Homeowner’s Construction Recovery Fund. A paragraph should explain that payment may be available from this fund to offset a loss resulting from violations by a licensed contractor.

Even without a written contract, you must secure lien rights by following these guidelines:

  • Send a notice to owner within 45 days of your first work or delivery of materials on project. Note that this must be received by 45th day, not just mailed.
  • Record a claim of lien within 90 days of the last true work on the project.
  • Serve a contractor’s final affidavit to the owner at least five days before a suit is filed to enforce the lien.
  • File any civil action no later than one year from recording the lien.

Every day that you are not collecting that debt is a day you jeopardize your ability to collect at all. If you have any form of contract, look to enforce it, including enforcing your lien rights.