At this time of the year, associations are busy making renovations and improvements to their common elements and areas. Most of the time, construction projects move relatively smoothly from contract to project completion. After the project has been completed and the contractor has been paid-in-full, however, an association may discover that a subcontractor or supplier has attempted to place a lien on association property. The following article contains some general tips for how to better protect associations from construction liens.
In 1935, the Florida legislature passed a statute creating mechanic’s liens. Today, mechanic’s liens are known as construction liens. Under Florida’s Construction Lien Law, those who contribute to the improvement of real property, and are not paid for their work or materials, may look to the property as security for the work performed. For example, if an association hires a contractor to replace a roof, and the contractor fails to pay its subcontractors or suppliers, then those companies or individuals may lien the association’s real property, even if the association paid the contractor in full. Associations may better protect themselves by recording a Notice of Commencement, requesting a list of potential lienors from the contractor, obtaining lien releases, and by obtaining a final payment affidavit.
A Notice of Commencement, in addition to other requirements, must identify the real property to be improved, describe the improvement, and identify, by name and address, the owner, contractor, surety (if there is a payment bond), and lender. Before work begins to improve any real property, an association must both record a Notice of Commencement in the clerk’s office, and post a certified copy at the job site. If an association fails to record and post a Notice of Commencement, or incorrectly prepares the Notice, an association may have to pay twice for the same work or materials.
Within forty-five (45) days of beginning work or furnishing materials, and before an association makes a final payment, most potential lienors who did not directly contract with an association must provide a Notice to Owner. The Notice to Owner identifies the lienor, contains a property description, and describes the materials or services the lienor provided. The lienor must serve the Notice to Owner on everyone above the lienor. For example, if an association hires a contractor to replace its roof, and the contractor hires a subcontractor to remove the existing shingles, then the subcontractor must serve a Notice to Owner on both the contractor and the association.
In a perfect world, an association that records and posts a Notice of Commencement should receive a Notice to Owner from subcontractors and suppliers who did not directly contract with the association. However, because some potential lienors are not required to file a Notice to Owner, and to further protect the association, it is beneficial for associations to request and obtain from the contractor a list of its potential lienors.
If a contract calls for progress payments before the work is completed, then an association should obtain partial lien releases from the contractor and all entities or persons who either provided the association with a Notice to Owner, or are named in the contractor’s list (discussed above) when the association issues a partial payment. Before making the final payment to the contractor, the association should also obtain final lien releases, and a final payment affidavit from the contractor stating that all work performed under the contract was fully completed, and that all lienors were paid in full.
Recording and posting a properly prepared Notice of Commencement, requesting a list of potential lienors from the contractor, obtaining lien releases, and requiring the contractor to provide a final payment affidavit will better protect associations from construction liens. However, Florida’s Construction Lien Law is a complex and lengthy statute. As such, if a specific issue arises, or you have questions regarding or need help preparing any of the above documents, we recommend you consult an attorney.
This Blog was prepared by Alan P. Gustafson, Esq. of Taylor & Carls, P.A. The information contained herein should not be acted upon without professional legal advice. The opinions expressed herein are as of the date hereof, and this law firm undertakes no obligation to advise of subsequent changes in the law.
The firm of Taylor & Carls, P.A., with offices located in Altamonte Springs, Oldmsar and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
Chapter 713, Florida Statutes is commonly known as Florida’s “Construction Lien Law.” The Construction Lien Law is a lengthy and complex statute. As such, this article is not intended as a comprehensive explanation of the Construction Lien Law. This article is intended only for summary and educational purposes. If you have specific questions regarding the Construction Lien Law, we recommend that you consult with an attorney. In addition, all of Florida’s statutes are available, in their entirety, through the website: www.leg.state.fl.us.
Please see Section 713.13, Florida Statutes for further requirements.
Please note, however, that professional lienors and laborers are not required to serve a Notice to Owner.
Section 713.20, Florida Statutes provides the required form for partial, and final lien releases, and Section 718.06, Florida Statutes specifies the required format for the contractor’s final payment affidavit.