Insider Info: Understanding How Owners Try to Limit Your Lien Rights
When an owner refuses to compensate a contractor for the work they have contributed to a project, the contractor is often forced to file a mechanics lien claim against the owner. The mechanics lien is an effective tool for protecting your firm’s financial interests in the event of nonpayment, but it’s by no means a foolproof system.
From a complex and imperfect filing system to a host of confusing and strict deadlines, your claim of lien could be compromised by a variety of factors if you aren’t cautious. Plus, savvy owners will be proactive in their efforts to protect themselves against a contractor who is seeking a claim of lien against them.
It’s vital that you are in the know about the actions owners can take to guard themselves against construction liens in Florida. If you are dealing with nonpayment in the construction industry, consult a Jacksonville construction lawyer from Cotney Construction Law to ensure that you maintain your lien rights.
Owners Understand the Limitations of Your Lien Rights
It’s hard to protect yourself against something you don’t understand, which is why some owners choose to develop an intimate familiarity with the ins and outs of mechanics liens. They more than likely know who can submit a claim of lien against them and what circumstances are required to ensure the claimants lien is valid. This allows them to navigate along the seams of Florida law and bolster their case against your claim.
On the other hand, owners who haven’t taken the time to read up on mechanics liens likely have an attorney under retainer who knows exactly what to do when a contractor is taking steps to obtain due payment. Ideally, you will arm yourself with a knowledgeable Jacksonville construction attorney to level the playing field and boost the probability of a favorable outcome.
Enforcing a Release of Lien
Florida law states: “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.” While this might seem like an ironclad provision, the opposite is actually true.
In the past, contractors who have been paid by the owner have then turned around and withheld payment from subcontractors and suppliers. Since both subcontractors and suppliers can file a claim of lien against the property they furnished provisions of labor and materials to, the owner must have a way to guard against contractors who attempt to stiff their workforce at the owner’s expense. After all, once a lien is successfully filed against an owner’s property, the property could be sold to pay any outstanding balances related to labor, materials, or other services the contractor should have paid for after receiving payment.
Owners may issue a written statement called a Release of Lien to eliminate the threat of lien. Subcontractors and suppliers may be asked to sign this waiver before partaking in any billable services including provisions of labor or materials. If your contract calls for partial payments at various milestones throughout the project, the owner may issue a Partial Release of Lien to ensure that all completed work is protected against a retroactive claim of lien.
Remember, the cost of improvements made to real property must exceed $2,500 for your contract to include the mandatory construction lien provision. Before you sign a Release of Lien, consult a Jacksonville contractor attorney.
It’s normal for an owner to request that the contractor provides them with a list of all subcontractors and suppliers under contract. Transparency is important for owners, so there’s no reason to be alarmed if a piece of certified or registered mail asking for a list of names arrives on your doorstep. As the project is nearing completion, the owner may ask to see an affidavit noting which parties have yet to be paid for their provisions of labor or supplies. Once you have provided this affidavit, the owner may request that you obtain a final release of lien from each entity before finalizing payment. Before signing off on such a waiver, consult our Jacksonville construction lawyers for guidance.
Filing a Notice of Commencement
Once a construction project is signed off on, owners will file a Notice of Commencement before breaking ground to indicate that the project has officially begun thus indicating that the proverbial clock is ticking. The local authority that issues building permits must tender this form. The owner submits the form to the Clerk of the Circuit Court in the county where the project is taking place. Additionally, the owner will post a certified copy at the project site in plain sight, or alternatively, an affidavit noting that a Notice of Commencement has been recorded with the Clerk of the Circuit Court with an attached copy of the Notice of Commencement.
What does filing a Notice of Commencement achieve for the owner? For starters, it notes the intent to begin improvements and nails down a specific start date. This start date is important as it typically affects preliminary notice and mechanics lien requirements. The Notice of Commencement details important information including:
- Intent to set in motion improvements to real property
- Location of the property
- Description of the work being performed
- Bond information
- Identity of property owner, contractor, surety, and lender
- Additional information relevant to the project
Once the Notice of Commencement has been filed correctly with the building department, you will be responsible for meeting the deadlines established in the contract. It’s important to begin working as soon as you get the greenlight, as failing to uphold your contractual obligations could cause you to breach your performance bond or limit your ability to file a claim of lien against the property. If you start working before the Notice of Commencement is recorded with the Clerk of the Circuit Court, you may unknowingly violate the Florida Building Code since the building department cannot perform its first inspection until after it has been filed.
Contesting a Lien
During the one-year period in which a lien remains valid, the owner can file a Notice of Contest of Lien. Doing so gives the lienor 60 days to file a lawsuit enforcing the lien. If the lienor is unable to file the lawsuit in a timely fashion, their lien will be deemed invalid. Therefore, it’s vital that contractors, subcontractors, material suppliers, and other potential claimants are working with a Jacksonville construction lawyer who can expedite this process and ensure that the proper legal action is taken against the owner.
Consult Our Jacksonville Construction Lawyers
At Cotney Construction Law, our Jacksonville construction lawyers are well-versed in lien law in the State of Florida and have helped hundreds of claimants procure due compensation despite working with an owner who refuses to pay. Nonpayment is serious, and it’s important to recognize that owners will be proactive in protecting themselves against your lien. We fight for the construction industry and help contractors avoid the typical pitfalls associated with the lien process through handling partial and final release of lien, partial and final payment applications, as well as important lien documents and notices including:
- Notice to Owner
- Claim of Lien
- Contractor’s Final Payment Affidavit
- Notice of Contest of Lien
- Notice to Contractor
- Notice of Non-Payment
- Miller Act Notice
- Request for Sworn Statement of Account
If you would like to speak with one of our Jacksonville construction attorneys, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.