Preserving Your Lien Rights During Arbitration
Construction liens provide contractors with a solution to protect themselves from non-payment for services or materials provided during the improvement of real property. Florida lien laws require the lienor to bring an action to enforce the lien with the courts within a given time period. Otherwise, the lienor’s lien rights will expire.
As Tampa construction attorneys, we know that during the drafting of a construction contract, it is quite common for contractors, subcontractors, suppliers and design professionals to negotiate the contractual right to go through arbitration rather than litigation for dispute resolution. When construction contracts include provisions for arbitration as an alternative to dispute resolution, complex issues can arise relating to the enforcement of a lien and the arbitration agreement.
Preserving Your Lien Rights
What is interesting about opting for arbitration is that the contractor, subcontractor, supplier or design professional may inadvertently be forfeiting their lien rights in the process of doing so. Based on Florida case law, requesting arbitration alone on a lien claim within the required time frame will not preserve a lienor’s right to enforce a lien. As such, lienors should exercise due care when enforcing their right to arbitrate to avoid forfeiting their construction lien rights.
When arbitration is available, to ensure that your lien rights are preserved, it is often found necessary to simultaneously file (1) an action to foreclose on the claim of lien in a court of law; (2) a motion to stay the litigation; and (3) a demand for arbitration. Taking these steps will help ensure that your lien rights and your right to arbitrate the dispute are properly protected. It is highly recommended to seek the counsel of an experienced construction attorney in Tampa if you find yourself involved in this situation.
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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.