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CONTRACTOR LIEN RIGHTS
April 1, 2002
Many associations find themselves in a dispute with
contractors because they do not comply with the Florida
Construction Lien Law (Chapter 713, Florida Statutes – The
Mechanic’s Lien Law). There are stories of community
associations who have paid roofers, painters and paving
companies all of the required funds, received release of
liens and final release of lien, when the project was
finished, only to receive a notice of lien from a supplier
of materials or labor that they had never been paid from
the contractor. This can be very expensive for the
association as they may be paying for the same work twice!
The State of Florida Construction Lien Law is a mandatory
statewide legislation, which shall be enforced in every
jurisdiction throughout the State. Applicants for a permit
on a building project that exceeds $2,500 in value are
required to provide information concerning the Owner,
Mortgage lender and the Architect/Engineer. In addition
the application has to have the Owners notarized signature
affixed.
A certified copy of the recorded Notice of Commencement
must be posted and maintained, along with the permit, from
the start of the job through the final inspection. The
State mandates that no inspections shall be approved
without the Notice of Commencement being posted. This
requirement applies to all permitted work regardless of
building valuation or funding (cash or credit) source.
What to do to protect your association – For your
protection, if you are planning to spend over $2,500 on
building or improvements, before your start building,
repairing or replacing, it is suggested:You consult an
attorney regarding the Mechanics Lien Law before starting a
major construction project. Make sure that all
requirements for recording and posting the “Notice of
Commencement” have been accomplished. Before making any
payments to your contractor, you should get a sworn
statement in writing that the contractor has paid all the
bills for your job.
If you have received a “Notice to Owner” from anyone, you
should require your contractor to get a sworn statement
from each such person stating that they have been paid for
all work done on your job. This should be done before
making any payments to your contractor. If a Mechanics
Lien is filed against your property, consult an attorney
immediately.
The Mechanics Lien Law provides a method by which a
contractor, subcontractor, laborer, building material
supplier, architect, landscape architect, interior
designer, engineer, or land surveyor may claim lien on real
property on which they have done work, or to which they
have furnished materials. If the lien is not satisfied,
your property may be sold to pay the lien.
What is it? A “lien” is a charge or encumbrance on real
property (land that is improved and the improvements
thereon, including fixtures), which must be satisfied by
the property owner to ensure clear title. “Attachment”
means that if a court finds a claim a lien valid, the
owners’ property may be seized and sold to satisfy the lien
if it is not voluntarily paid.
A “Notice of Commencement” is a notice, which is filed with
the Clerk of the Circuit Court in the county where the work
will be performed. The notice should not be recorded
before the construction or development mortgage is
recorded, but must be recorded before actual construction
begins. It contains detailed information on the property
owner, financing arrangements, and other specifics
regarding the construction project. If a performance bond
is to be posted, a copy of the bond must be attached to the
“Notice of Commencement”.
The owners’ responsibility – Before any construction
begins, and after the construction mortgage has been
recorded, the owner should take the following steps: At the
time application is made for a building permit, a “Notice
of Commencement” form may be created by the Association’s
attorney or obtained from an office supply store. Complete
the “Notice of Commencement” form with the required
information and retain a certified copy.
After the building permit is issued, record the Notice of
commencement with the Clerk of the Circuit Court in the
county where the work will be performed. If a performance
bond is to be posted, a copy of the bond must be attached
at the time of, or prior to, recordation of the “Notice of
Commencement”. Post the certified copy of the “Notice of
Commencement” at the job site. There is no requirement to
post a copy of the bond at the construction site. An
owner’s failure to comply with these requirements could
affect title to your property.
When can a lien be filed against your property? – There are
two instances, which can result in a lien being filed
against your property: 1. If you fail to pay your
contractor for work performed, your property can be subject
to a Mechanics’ Lien filed by the contractor. 2. If a
laborer, subcontractor, or a person supplying materials to
your property is not paid and has given you a “Notice to
Owner” and your contractor fails to pay laborers,
subcontractor, or material man, they can file a Mechanics
Lien against your property. A “Notice to Owner” is a
written statement that gives you the name, address, and
description of the work to be done by the subcontractor or
material man.
The steps to protect the association may seem to be very
involved but by following the Florida Mechanics’ Lien Law,
the association will be protected from loss and potential
delays in having any sales/transfers take place.
Copyright 2007© Associated Property Management of the Palm Beaches, Inc.
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