What ways can a contractor lose there lien rights?
Full Question:
What ways can a contractor lose there lien rights?
04/24/2009 |
Category: Contractors ยป Construction... |
State: Florida |
#16126
Answer:
There are statutory requirements for serving notices and affidavits regarding lien rights, depending on the relationship of the contractor to the property owner and the amount of the contract. Different requirements apply depending on whether the contractor signed a contract with the owner (is in privity) or not. A lien must be filed within a certain time period and a lawsuit to enforce the lien rights must be grought within a year of filing. There are three main time periods that must be followed in order to protect and perfect lien rights in Florida. Those time periods involve serving the lienor's preliminary notice, recording a claim of lien and filing suit to foreclose a claim of lien.
Prior to filing a lien, a lienor who does not have a direct contract with the owner, must serve the owner with a Notice to Owner. The Notice to Owner must state the lienor's name and address, and a description of the real property and the nature of the services or materials being furnished. The Notice to Owner must be served before commencing, or within 45 days of commencing, to furnish the services or materials (but before owner's final payment to the contractor). For a lienor who performs work during the latter phase of a project, 45 days can be shortened if the project is completed, the contractor provides a Final Contractor's Affidavit, and the owner and lender make final payment to the contractor prior to receipt of the Notice to Owner.
A lienor who either has privity with the owner or who has preserved its lien rights by properly serving a Notice to Owner can record a Claim of Lien in the public records of the county where the property is located. The Claim of Lien may be recorded at any time during the progress of the work, but must be recorded no later than 90 days from the date the lienor last furnished labor, services or materials to the project. The Claim of Lien must also be served on the owner and on any other proper parties to be served within 15 days of its recording.
When a lien is filed, a person may contest the lien in a foreclosure suit or post a bond to contest the lien. The lien is removed from the records when a release or satisfaction of the lien is filed. Florida statutes allow the property owner to post a bond and contest the lien. The law provides that "The claim of any lienor upon whom the notice is served and who fails to institute a suit to enforce his or her claim against the payment bond within 60 days after service of the notice shall be extinguished automatically. The clerk shall mail a copy of the notice of contest to the lienor at the address shown in the notice of nonpayment or most recent amendment thereto and shall certify to such service on the face of the notice and record the notice. Service is complete upon mailing."
The following are from Florida statutes:
713.20 Waiver or release of liens. —
(1) The acceptance by the lienor of an unsecured note for
all or any part of the amount of his or her demand shall not
constitute a waiver of his or her lien therefor unless
expressly so agreed in writing, nor shall it in any way
affect the period for filing the notice under s. 713.06(2),
or the claim of lien under s. 713.08.
(2) A right to claim a lien may not be waived in advance. A
lien right may be waived only to the extent of labor,
services, or materials furnished. Any waiver of a right to
claim a lien that is made in advance is unenforceable.
(3) Any person may at any time waive, release, or satisfy
any part of his or her lien under this part, either as to
the amount due for labor, services, or materials furnished
or for labor, services, or materials furnished through a
certain date subject to exceptions specified at the time of
release, or as to any part or parcel of the real property.
713.21 Discharge of lien. —
A lien properly perfected under this chapter may be
discharged by any of the following methods:
(1) By entering satisfaction of the lien upon the margin of
the record thereof in the clerk's office when not otherwise
prohibited by law. This satisfaction shall be signed by the
lienor, the lienor's agent or attorney and attested by said
clerk. Any person who executes a claim of lien shall have
authority to execute a satisfaction in the absence of actual
notice of lack of authority to any person relying on the
same.
(2) By the satisfaction of the lienor, duly acknowledged and
recorded in the clerk's office. Any person who executes a
claim of lien shall have authority to execute a satisfaction
in the absence of actual notice of lack of authority to any
person relying on the same.
(3) By failure to begin an action to enforce the lien within
the time prescribed in this part.
(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.
(5) By recording in the clerk's office the original or a
certified copy of a judgment or decree of a court of
competent jurisdiction showing a final determination of the
action.
85.051 Time of bringing action. —
When there has been no record of a notice of lien, action to
enforce a lien (if it exists without such record) must be
brought within 12 months from the accrual of the unpaid
rent, the performance of the work, or the furnishing of the
materials, and if there has been such record, the action
must be brought within 12 months from the time of such
record.
713.015 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:
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.
(2)(a) If the contract is written, the notice must be in the
contract document. If the contract is oral or implied, the
notice must be provided in a document referencing the
contract.
(b) The failure to provide such written notice does not bar
the enforcement of a lien against a person who has not been
adversely affected.
(c) This section may not be construed to adversely affect
the lien and bond rights of lienors who are not in privity
with the owner. This section does not apply when the owner
is a contractor licensed under chapter 489 or is a person
who created parcels or offers parcels for sale or lease in
the ordinary course of business.
713.06 Liens of persons not in privity; proper payments. —
(1) A materialman or laborer, either of whom is not in
privity with the owner, or a subcontractor or
sub-subcontractor who complies with the provisions of this
part and is subject to the limitations thereof, has a lien
on the real property improved for any money that is owed to
him or her for labor, services, or materials furnished in
accordance with his or her contract and with the direct
contract and for any unpaid finance charges due under the
lienor's contract. A materialman or laborer, either of whom
is not in privity with the owner, or a subcontractor or
sub-subcontractor who complies with the provisions of this
part and is subject to the limitations thereof, also has a
lien on the owner's real property for labor, services, or
materials furnished to improve public property if the
improvement of the public property is furnished in
accordance with his or her contract and with the direct
contract. The total amount of all liens allowed under this
part for furnishing labor, services, or material covered by
any certain direct contract must not exceed the amount of
the contract price fixed by the direct contract except as
provided in subsection (3). No person may have a lien under
this section except those lienors specified in it, as their
designations are defined in s. 713.01.
(2)(a) All lienors under this section, except laborers, as a
prerequisite to perfecting a lien under this chapter and
recording a claim of lien, must serve a notice on the owner
setting forth the lienor's name and address, a description
sufficient for identification of the real property, and the
nature of the services or materials furnished or to be
furnished. A sub-subcontractor or a materialman to a
subcontractor must serve a copy of the notice on the
contractor as a prerequisite to perfecting a lien under this
chapter and recording a claim of lien. A materialman to a
sub-subcontractor must serve a copy of the notice to owner
on the contractor as a prerequisite to perfecting a lien
under this chapter and recording a claim of lien. A
materialman to a sub-subcontractor shall serve the notice to
owner on the subcontractor if the materialman knows the name
and address of the subcontractor. The notice must be served
before commencing, or not later than 45 days after
commencing, to furnish his or her labor, services, or
materials, but, in any event, before the date of the owner's
disbursement of the final payment after the contractor has
furnished the affidavit under subparagraph (3)(d)1. The
notice must be served regardless of the method of payments
by the owner, whether proper or improper, and does not give
to the lienor serving the notice any priority over other
lienors in the same category; and the failure to serve the
notice, or to timely serve it, is a complete defense to
enforcement of a lien by any person. The serving of the
notice does not dispense with recording the claim of lien.
The notice is not a lien, cloud, or encumbrance on the real
property nor actual or constructive notice of any of them.
(b) If the owner, in his or her notice of commencement, has
designated a person in addition to himself or herself to
receive a copy of such lienor's notice, as provided in
s. 713.13(1)(b), the lienor shall serve a copy of his or her
notice on the person so designated. The failure by the
lienor to serve such copy, however, does not invalidate an
otherwise valid lien.
(c) The notice may be in substantially the following form
and must include the information and the warning contained
in the following form:
WARNING! FLORIDA'S CONSTRUCTION LIEN LAW ALLOWS SOME UNPAID
CONTRACTORS, SUBCONTRACTORS, AND MATERIAL SUPPLIERS TO FILE
LIENS AGAINST YOUR PROPERTY EVEN IF YOU HAVE MADE PAYMENT IN
FULL.
UNDER FLORIDA LAW, YOUR FAILURE TO MAKE SURE THAT WE ARE
PAID MAY RESULT IN A LIEN AGAINST YOUR PROPERTY AND YOUR
PAYING TWICE.
TO AVOID A LIEN AND PAYING TWICE, YOU MUST OBTAIN A WRITTEN
RELEASE FROM US EVERY TIME YOU PAY YOUR CONTRACTOR.
NOTICE TO OWNER
To __(Owner's name and address)__
The undersigned hereby informs you that he or she has
furnished or is furnishing services or materials as follows:
__(General description of services or materials)__ for
the improvement of the real property identified as
__(property description)__ under an order given
by _______________.
Florida law prescribes the serving of this notice and
restricts your right to make payments under your contract in
accordance with Section 713.06, Florida Statutes.
IMPORTANT INFORMATION FOR YOUR PROTECTION
Under Florida's laws, those who work on your property or
provide materials and are not paid have a right to enforce
their claim for payment against your property. This claim is
known as a construction lien.
If your contractor fails to pay subcontractors or material
suppliers or neglects to make other legally required
payments, the people who are owed money may look to your
property for payment, EVEN IF YOU HAVE PAID YOUR CONTRACTOR
IN FULL.
PROTECT YOURSELF:
— RECOGNIZE that this Notice to Owner may result in a lien
against your property unless all those supplying a Notice to
Owner have been paid.
— LEARN more about the Construction Lien Law, Chapter 713,
Part I, Florida Statutes, and the meaning of this notice by
contacting an attorney or the Florida Department of Business
and Professional Regulation.
__(Lienor's Signature)__
__(Lienor's Name)__
__(Lienor's Address)__
Copies to: __(Those persons listed in Section 713.06(2)(a)
and (b), Florida Statutes)__
The form may be combined with a notice to contractor given
under s. 255.05 or s. 713.23 and, if so, may be entitled
"NOTICE TO OWNER/NOTICE TO CONTRACTOR."
(d) A notice to an owner served on a lender must be in
writing, must be served in accordance with s. 713.18, and
shall be addressed to the persons designated, if any, and to
the place and address designated in the notice of
commencement. Any lender who, after receiving a notice
provided under this subsection, pays a contractor on behalf
of the owner for an improvement shall make proper payments
as provided in paragraph (3)(c) as to each such notice
received by the lender. The failure of a lender to comply
with this paragraph renders the lender liable to the owner
for all damages sustained by the owner as a result of that
failure. This paragraph does not give any person other than
an owner a claim or right of action against a lender for the
failure of the lender to comply with this
paragraph. Further, this paragraph does not prohibit a lender from
disbursing construction funds at any time directly to the
owner, in which event the lender has no obligation to make
proper payments under this paragraph.
(e) A lienor, in the absence of a recorded notice of
commencement, may rely on the information contained in the
building permit application to serve the notice prescribed
in paragraphs (a), (b), and (c).
(f) If a lienor has substantially complied with the provisions
of paragraphs (a), (b), and (c), errors or omissions do not
prevent the enforcement of a claim against a person who has
not been adversely affected by such omission or error.
However, a lienor must strictly comply with the time
requirements of paragraph (a).
(3) The owner may make proper payments on the direct contract
as to lienors under this section, in the following manner:
(a) If the description of the property in the notice
prescribed by s. 713.13 is incorrect and the error adversely
affects any lienor, payments made on the direct contract
shall be held improperly paid to that lienor; but this does
not apply to clerical errors when the description listed
covers the property where the improvements are.
(b) The owner may pay to any laborers the whole or any
part of the amounts that shall then be due and payable to them
respectively for labor or services performed by them and
covered by the direct contract, and shall deduct the same
from the balance due the contractor under a direct contract.
(c) When any payment becomes due to the contractor on the
direct contract, except the final payment:
1. The owner shall pay or cause to be paid, within the
limitations imposed by subparagraph 2., the sum then due to
each lienor giving notice prior to the time of the payment.
The owner may require, and, in such event, the contractor
shall furnish as a prerequisite to requiring payment to
himself or herself, an affidavit as prescribed in
subparagraph (d)1., on any payment made, or to be made, on a
direct contract, but the furnishing of the affidavit shall
not relieve the owner of his or her responsibility to pay or
cause to be paid all lienors giving notice. The owner shall
be under no obligation to any lienor, except laborers, from
whom he or she has not received a notice to owner at the
time of making a payment.
2. When the payment due is insufficient to pay all bills of
lienors giving notice, the owner shall prorate the amount
then due under the direct contract among the lienors giving
notice pro rata in the manner prescribed in subsection (4).
Lienors receiving money shall execute partial releases, as
provided in s. 713.20(2), to the extent of the payment
received.
3. If any affidavit permitted hereunder recites any
outstanding bills for labor, services, or materials, the
owner may pay the bills in full direct to the person or firm
to which they are due if the balance due on the direct
contract at the time the affidavit is given is sufficient to
pay the bills and shall deduct the amounts so paid from the
balance of payment due the contractor. This
subparagraph shall not create any obligation of the owner to pay any
person who is not a lienor giving notice.
4. No person furnishing labor or material, or both, who is
required to serve a notice under paragraph (2)(a) and who
did not serve the notice and whose time for service has
expired shall be entitled to be paid by the owner because he
or she is listed in an affidavit furnished by the contractor
under subparagraph (c)1.
5. If the contract is terminated before completion, the
contractor shall comply with subparagraph (d)1.
(d) When the final payment under a direct contract becomes
due the contractor:
1. The contractor shall give to the owner a final payment
affidavit stating, if that be the fact, that all lienors
under his or her direct contract who have timely served a
notice to owner on the owner and the contractor have been
paid in full or, if the fact be otherwise, showing the name
of each such lienor who has not been paid in full and the
amount due or to become due each for labor, services, or
materials furnished. The affidavit must be in substantially
the following form:
CONTRACTOR'S FINAL PAYMENT AFFIDAVIT
State of Florida
County of _____
Before me, the undersigned authority, personally appeared
__(name of affiant)__, who, after being first duly sworn,
deposes and says of his or her personal knowledge the
following:
1. He or she is the __(title of affiant)__, of __(name
of contractor's business)__, which does business in the
State of Florida, hereinafter referred to as the
"Contractor."
2. Contractor, pursuant to a contract with __(name of
owner)__, hereinafter referred to as the "Owner," has
furnished or caused to be furnished labor, materials, and
services for the construction of certain improvements to
real property as more particularly set forth in said
contract.
3. This affidavit is executed by the Contractor in
accordance with section 713.06 of the Florida Statutes for
the purposes of obtaining final payment from the Owner in
the amount of $_____.
4. All work to be performed under the contract has been
fully completed, and all lienors under the direct contract
have been paid in full, except the following listed lienors:
NAME OF LIENOR ____________________ AMOUNT DUE
Signed, sealed, and delivered this _____ day of _____, _____,
By __(name of affiant)__
__(title of affiant)__
__(name of contractor's business)__
Sworn to and subscribed before me this _____ day of _____
by __(name of affiant)__, who is personally known to me
or produced _____ as identification, and did take an oath.
__(name of notary public)__
Notary Public
My Commission Expires:
__(date of expiration of commission)__
The contractor shall have no lien or right of action against
the owner for labor, services, or materials furnished under
the direct contract while in default for not giving the
owner the affidavit; however, the negligent inclusion or
omission of any information in the affidavit which has not
prejudiced the owner does not constitute a default that
operates to defeat an otherwise valid lien. The contractor
shall execute the affidavit and deliver it to the owner at
least 5 days before instituting an action as a prerequisite
to the institution of any action to enforce his or her lien
under this chapter, even if the final payment has not become
due because the contract is terminated for a reason other
than completion and regardless of whether the contractor has
any lienors working under him or her or not.
2. If the contractor's affidavit required in this
subsection recites any outstanding bills for labor, services, or
materials, the owner may, after giving the contractor at
least 10 days' written notice, pay such bills in full direct
to the person or firm to which they are due, if the balance
due on a direct contract at the time the affidavit is given
is sufficient to pay them and lienors giving notice, and
shall deduct the amounts so paid from the balance due the
contractor. Lienors listed in said affidavit not giving
notice, whose 45-day notice time has not expired, shall be
paid in full or pro rata, as appropriate, from any balance
then remaining due the contractor; but no lienor whose
notice time has expired shall be paid by the owner or by any
other person except the person with whom that lienor has a
contract.
3. If the balance due is not sufficient to pay in full all
lienors listed in the affidavit and entitled to payment from
the owner under this part and other lienors giving notice,
the owner shall pay no money to anyone until such time as
the contractor has furnished him or her with the difference;
however, if the contractor fails to furnish the difference
within 10 days from delivery of the affidavit or notice from
the owner to the contractor to furnish the affidavit, the
owner shall determine the amount due each lienor and shall
disburse to them the amounts due from him or her on a direct
contract in accordance with the procedure established by
subsection (4).
4. The owner shall have the right to rely on the
contractor's affidavit given under this paragraph in making
the final payment, unless there are lienors giving notice
who are not listed in the affidavit. If there are lienors
giving notice who are not so listed, the owner may pay such
lienors and any persons listed in the affidavit that are
entitled to be paid by the owner under subparagraph 2. and
shall thereupon be discharged of any further responsibility
under the direct contract, except for any balance that may
be due to the contractor.
5. The owner shall retain the final payment due under the
direct contract that shall not be disbursed until the
contractor's affidavit under subparagraph 1. has been
furnished to the owner.
6. When final payment has become due to the contractor and
the owner fails to withhold as required by subparagraph 5.,
the property improved shall be subject to the full amount of
all valid liens of which the owner has notice at the time
the contractor furnishes his or her affidavit.
(e) If the improvement is abandoned before completion, the
owner shall determine the amount due each lienor giving
notice and shall pay the same in full or prorate in the same
manner as provided in subsection (4).
(f) No contractor shall have any right to require the owner
to pay any money to him or her under a direct contract if
such money cannot be properly paid by the owner to the
contractor in accordance with this section.
(g) Except with written consent of the contractor, before
paying any money directly to any lienor except the
contractor or any laborer, the owner shall give the
contractor at least 10 days' written notice of his or her
intention to do so, and the amount he or she proposes to pay
each lienor.
(h) When the owner has properly retained all sums required
in this section to be retained but has otherwise made
improper payments, the owner's real property shall be liable
to all laborers, subcontractors, sub-subcontractors, and
materialmen complying with this chapter only to the extent
of the retentions and the improper payments, notwithstanding
the other provisions of this subsection. Any money paid by
the owner on a direct contract, the payment of which is
proved to have caused no detriment to any certain lienor,
shall be held properly paid as to the lienor, and if any of
the money shall be held not properly paid as to any other
lienors, the entire benefit of its being held not properly
paid as to them shall go to the lienors.
(4)(a) In determining the amounts for which liens between
lienors claiming under a direct contract shall be paid by
the owner or allowed by the court within the total amount
fixed by the direct contract and under the provisions of
this section, the owner or court shall pay or allow such
liens in the following order:
1. Liens of all laborers.
2. Liens of all persons other than the contractor.
3. Lien of the contractor.
(b) Should the total amount for which liens under such
direct contract may be allowed be less than the total amount
of liens under such contract in all classes above mentioned,
all liens in a class shall be allowed for their full amounts
before any liens shall be allowed to any subsequent
class. Should the amount applicable to the liens of any
single class be insufficient to permit all liens within that
class to be allowed for their full amounts, each lien shall
be allowed for its pro rata share of the total amount
applicable to liens of that class; but if the same labor,
services, or materials shall be covered by liens of more
than one class, such labor, services, or materials shall be
allowed only in the earliest class by which they shall be
covered; and also if the same labor, services, or materials
shall be covered by liens of two or more lienors of the same
class, such labor, services, or materials shall be allowed
only in the lien of the lienor farthest removed from the
contractor. This section shall not be construed to affect
the priority of liens derived under separate direct
contracts.
713.05 Liens of persons in privity. —
A materialman or laborer, either of whom is in privity with
the owner, or a contractor who complies with the provisions
of this part shall, subject to the limitations thereof, have
a lien on the real property improved for any money that is
owed to him or her for labor, services, materials, or other
items required by, or furnished in accordance with, the
direct contract and for unpaid finance charges due under the
lienor's contract. A materialman or laborer, in privity with
the owner, or a contractor shall also have a lien on the
owner's real property for any money that is owed to him or
her for labor, services, or materials furnished to improve
public property if the improvements to the public property
are a condition of the permit to improve the owner's real
property. No lien under this section shall be acquired until
a claim of lien is recorded. A lienor who, as a
subcontractor, sub-subcontractor, laborer, or materialman
not in privity with the owner, commences to furnish labor,
services, or material to an improvement and who thereafter
becomes in privity with the owner shall have a lien for any
money that is owed to him or her for the labor, services, or
materials furnished after he or she becomes in privity with
the owner. A lienor may record one claim of lien to cover
both his or her work done in privity with the owner and not
in privity with the owner. No lienor under this
section shall be required to serve a notice to owner as provided in
s. 713.06(2). A lienor, except a laborer or materialman, who
is in privity with the owner and claims a lien under this
section shall furnish the contractor's affidavit required in
s. 713.06(3)(d). A contractor may claim a lien for any
labor, services, or materials furnished by another lienor
for which he or she is obligated to pay the lienor,
regardless of the right of the lienor to claim a lien; but,
if the lienor claims a valid lien, the contractor shall not
recover the amount of the lien recovered by the lienor, and
the amount of the contractor's claim of lien may be reduced
accordingly by court order. No person shall have a lien
under this section except those lienors specified in it, as
their designations are defined in s. 713.01.
