For anyone seeking to hire others to work on their house or business property, it is essential to understand basic construction lien law. Unfortunately, many owners don’t understand the law and can pay twice for the same work. This blog’s purpose is a brief introduction to the construction lien law of Florida, found under Chapter 713 of the Florida Statutes.
What is Construction Lien Law?
A construction lien is a secured claim that can attach to the property when a contractor, laborer, or material supplier who has improved the property is unpaid, so long as they have complied with the lien law. The lien protects the lienor from non-payment, and if enforced, provides for attorney’s fees to the prevailing party, at the court’s discretion. Construction liens are a cloud on the title such that a property subject to lien cannot typically be transferred, sold, or refinanced without resolving the lien. A valid and perfected construction lien can even be enforced against homesteaded property in Florida.
Who is entitled to a Construction Lien and in what amount?
The entity recording a lien is known under the law as a “lienor.” Lienors can be any licensed contractor, subcontractor or sub-subcontractor, laborer, material supplier, or when construction licensing is not required, anyone who furnishes a permanent improvement to property under a direct contract with the property owner. A lienor can also enforce a lien if it has a subcontract or purchase order with a builder who has a direct contract with an owner, so long as it has timely served the owner with a written “Notice to Owner” in compliance with Ch. 713. Care is required by any owner who receives such a Notice because if releases are not obtained from all entities furnishing notice when paying the contractor, the owner may be subject to liens and having to pay twice for the same scope or improvement.
Lienors must be careful not to record an overstated lien which can be considered fraudulent and expose the lienor to the owner’s attorney’s fees. Calculation of the correct lien amount depends on whether the work is substantially complete. When work is not substantially complete, the lienor is entitled only to the reasonable value of what has been furnished and installed or delivered, regardless of the contract amount.
Notice Periods and Duration of Lien
Unless a direct contract with the owner exists, a Notice to Owner in the statutory form must be served by any lienor within 45 days of contracting or the first furnishing of labor, services, or materials to the job. If not, the lien of any subcontractor or material supplier will not be valid and can expose the lienor to an adverse attorney fee award under the lien law. All lienors have only 90 days from first furnishing labor, services, or materials to record a lien for those services. However, a lien can be recorded at any time and can secure payment for services rendered within 90 days of lien recording under a direct contract with an owner. There are exceptions when a Notice to Owner is required.
Once recorded, liens are valid and a cloud on the title for one year and then expire if suit to foreclose the lien has not to be brought within that year (from when the lien was recorded.) An owner can shorten the time for the lienor to file suit to foreclose to 30 days from recording through the filing of a suit for an Order to Show Cause Complaint or 60 days through the furnishing and recording of a Notice of Contest of Lien.
If in doubt or for maximum protection, hire a Construction Lien Lawyer familiar with construction lien law to help you navigate Florida’s technical lien law requirements.