Florida’s Construction Lien Law
Florida Statute 713, Part 1
What the Florida homeowner should know about:
* Notice to Owner
* Construction Lien ReleaseAccording to Florida law, those who work on your property or provide materials, and are not paid-in-full, have a right to enforce their claim for payment against your property. This claim is known as a construction lien. If your contractor fails to pay subcontractors or material suppliers, the people who are owed money may look to your property for payment, even if you have paid your contractor in full. Contractors, laborers, material suppliers, subcontractors, and professionals such as architects, engineers, designers, surveyors, construction managers or project managers all have a legal right to file a lien for non-payment for work or services provided on your property. Few homeowners who hire a contractor understand this complex law. Many homeowners are shocked to find out their contractor failed to pay the trades and now, they are forced to pay for the work twice. Many contractors fail to provide the proper legal notice in their contract with the homeowner. Florida law is very specific about this notice and it must be included in the contractor’s contract on any job exceeding $2,500.00 in value: “WARNING! FLORIDA’S CONSTRUCTION LIEN LAW ALLOWS SOME UNPAID CONTRACTORS, SUBCONTRACTORS, AND MATERIAL SUPPLIERS TO FILE LIENS AGAINST YOUR PROPERTY EVEN IF YOU HAVE MADE PAYMENT IN FULL. UNDER FLORIDA LAW, YOUR FAILURE TO MAKE SURE THAT WE ARE PAID MAY RESULT IN A LIEN AGAINST YOUR PROPERTY AND YOUR PAYING TWICE.
TO AVOID A LIEN AND PAYING TWICE, YOU MUST OBTAIN A WRITTEN RELEASE FROM US EVERY TIME YOU PAY YOUR CONTRACTOR.
___________________________________________________Provided you properly filed a Notice of Commencement, and provided your contractor posted the Notice of Commencement at the job site (your home), each subcontractor and supplier on your project should send you a Notice To Owner form. This form alerts you that they have furnished goods/services on your project and it is your responsibility to make sure they get paid. A sample notice is shown next:
NOTICE TO OWNERTo (Owner’s name and address) The undersigned hereby informs you that he or she has furnished or is furnishing services or materials as follows: (General description of services or materials) for the improvement of the real property identified as (property description) under an order given by . Florida law prescribes the serving of this notice and restricts your right to make payments under your contract in accordance with Section 713.06, Florida Statutes.
IMPORTANT INFORMATION FOR YOUR PROTECTION
Under Florida’s laws, those who work on your property or provide materials and are not paid have a right to enforce their claim for payment against your property. This claim is known as a construction lien.If your contractor fails to pay subcontractors or material suppliers or neglects to make other legally required payments, the people who are owed money may look to your property for payment, EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN FULL. PROTECT YOURSELF: —RECOGNIZE that this Notice to Owner may result in a lien against your property unless all those supplying a Notice to Owner have been paid. —LEARN more about the Construction Lien Law, Chapter 713, Part I, Florida Statutes, and the meaning of this notice by contacting an attorney or the Florida Department of Business and Professional Regulation. ___________________________________________________ Further, the law requires a Notice of Commencement be filed with the County Clerk’s office on any project with a value exceeding $2,500.00. This filing is important for your protection. This form identifies the property owner, contractor, lender, the property address and it serves to notice all parties involved who “you are” and how “you should be contacted” for proper notice. ___________________________________________________ Generally, these notices are sent via certified mail to both you and your contractor. What should you do next? * File these in your project folder * Advise your contractor you will need a Lien Release from this vendor prior to your paying the contractor What if the contractor advises they cannot pay the vendor until they receive payment from you? * Advise the contractor that you will issue a “Joint Payee" check, payable to both the contractor/vendor and you will require a lien release upon issuance of the check from both the contractor and the vendor. Progress payments: The homeowner should be careful and not “overpay” on progress payments. This is commonly referred to as “overbilling”. Contractors have a natural tendency to overbill and they tend to think in terms of what they need versus what they may have earned. When there is “job left over at the end of the money”, contractors try to justify “change orders” to make up the shortfall. Contractors quickly lose interest in a job that is out of profit. Hopefully, you can make sure they have profit at the end of the job by not overpaying them as the job progresses. Final payment: You should never release final payment to the contractor until you are sure that all suppliers have been paid by the contractor. You should receive a Final Lien Release from all suppliers who have provided a Notice to Owner filing as well as a Final Lien Release from the prime contractor. Be careful of late deliveries by contractors who may not have had time to provide a Notice to Owner at the end of the job such as sod/landscaping deliveries, decorating items or, in general, delivery of items which were not planned until the end of the job. Florida law allows suppliers up to 45 days to file a Notice to Owner. Homeowners should monitor the job progress and take note of who is working on the job. Take notes of the names of the subcontractors and suppliers on the job and feel free to contact them to make sure they are paid. If your prime contractor acts offended by this, simply remind them this is your responsibility under the Florida Lien Law and you have every right to protect yourself from paying twice. The Florida Lien Law is complex and can be unfair to the unsuspecting homeowner. Far too many homeowners are taken advantage of by unscrupulous contractors. If you have payment issues with your contractor, you should seek the advice of an attorney who specializes in construction law. Absentee owners are especially vulnerable in that you are not present to observe the project. Absentee owners who are undertaking major repairs/renovations are often unaware they can hire an Owner’s Representative to protect their interests. An Owner’s Representative will oversee the work, inspect the work, process payments and lien releases on the owner’s behalf. Typically, an Owner’s Rep will charge about 5% of the total job value. We provide Owner’s Representation services. Please call us to discuss your project.
Certified Construction Manager
The Building Inspector
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