Construction Liens

Many individuals or associations have been victimized by unscrupulous contractors. These experiences include defective work resulting in costly disputes with contractors and efforts to correct deficiencies; contractors abandoning jobs; and the filing of liens on the owners’ property, despite payment for such services or goods having been made to the contractor. A basic understanding of construction lien laws may minimize exposure to the problems described above. Chapter 713, Florida Statutes (the “Construction Lien Laws”), provides protection to owners engaging contractors to perform work on their property, and it protects contractors, their subcontractors, suppliers and other professionals to ensure that they are paid for their services.

Under this law, lienors have the right to record a lien against real property if they are not paid for services, labor or materials provided for the improvement of such property. A lienor may be a contractor; subcontractor; sub-subcontractor; laborer; materialman who contracts with the owner, a contractor, a subcontractor, or a sub-subcontractor; or certain professionals (such as engineers or architects). While the owners of real property may be able to ascertain their exposure to a lien resulting from non-payment to a contractor that was engaged for the improvements, exposure to liens from non-payment to other lienors may be difficult to ascertain given that it is typically the contractor hired by the property owner that is entrusted with the obligation to pay the other parties having a right to place a lien on the property. For example, property owners may be aware that they have entered into a contract with a specific contractor, but they may be unaware that their contractor has engaged a subcontractor to excavate the land for the pool, and they have acquired the plaster and other materials from suppliers.

In the above example, lienors engaged by the contractor must be paid for their services, labor and materials. While the property owners may be aware that they have paid their contractor, they may be unaware of the subcontractors or suppliers. Failure to ensure that payment has been issued to the subcontractors and suppliers may result in the filing of a lien against the property, even if the owner paid the contractor.

The laws provide property owners with tools to notify the general public of their agreements with contractors hired for the improvement of real property so that potential lienors that have a right to file a lien on the owner’s property may then provide the owner with notice of their rights to lien for non-payment. In such cases, the property owner will file a Notice of Commencement in the public records of the county in which the property being improved is located. Those having lien rights for the work being performed and materials being supplied will be able to serve the property owner with a Notice to Owner advising the owner that they have been hired by the contractor to provide services or materials in connection with the project. Once a property owner is alerted as to the existence of all parties having a right to lien the property in connection with the improvement, the owner is in a position to ensure that all lienors are paid by the contractor, thus reducing each respective lienor’s rights to record a lien to the extent that they receive payment on the owner’s behalf. In order to ensure that lienors have been paid, the owner should condition that the contractor and other lienors provide releases of lien upon their receipt of payment.

The construction lien laws consist of a tedious set of statutes – complicated further by case law interpreting legal disputes involving such laws. Although the foregoing serves as a basic introduction of such laws, managers and directors must implement the procedures to protect against pitfalls such as those described above. Managers and directors should work closely with their engineers and attorneys to ensure that a contractor’s requested payment is conditioned upon satisfactory performance of work and compliance with procedures and forms included in the construction lien laws.

An appellate decision in a case from Miami-Dade County Circuit Court has significant implications for community associations and the property management firms that provide them with cleaning, security, concierge and maintenance services. The appellate court reversed the lower court’s decision and found that the property management firm was not entitled to a claim of lien under the state’s Construction Lien Law.

The ruling by the Florida Third District Court of Appeal found that the property management firm in the case is not entitled to a claim of lien under Chapter 713 of the Florida Statutes, which is commonly known as the state’s “Construction Lien Law.” In its decision, the appellate panel noted that the law is intended to protect those who have provided labor and materials for the improvement of real property, and improvement is defined to mean “any building, structure, construction, demolition, excavation, solid-waste removal, landscaping, or any part thereof existing, built, erected, placed, made or done on land or other real property for its permanent benefit.” The appellate court’s decision notes that the condominium involved in this case, Parc Central Aventura East, was not under construction when the services were being provided by Victoria, and prior court decisions have concluded that lawn mowing and shrubbery cutting services were not lienable under the Florida lien law. It also notes that other state courts have ruled that services such as cleaning stairways, washroom grouting, and sealing of bathroom walls were also not lienable.

This ruling reaffirms that claims of lien under Florida’s Construction Lien Law will not be granted to those who provide standard maintenance and upkeep services for properties that are no longer under construction. The decision will surely be referenced by the community association lawyers in South Florida at our firm and throughout the state in cases where management and maintenance services providers seek to obtain a claim of lien based on services that do not involve construction.

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Articles Posted in Construction Liens

Don’t Pay Twice for that Construction Project

Appellate Ruling Finds Property Management Firm is Not Entitled to a Construction Lien