Lien Law

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Claim of LienA business trial lawyer may hear this question or something similar a number of times. The short answer is, “It depends.”

Most of the time, a person or business doesn’t have a right to record a claim of lien in the public records unless the person or business is a contractor, materialman, or supplier. In those circumstances, if the person or business meets other requirements of Florida’s lien law, then it may be appropriate to record a claim of lien.

It’s important to recognize that in most circumstances, however, there is no pre-judgment right to record a lien against real property just because the owner may owe money to a person or business.

A word of caution

Recording a claim of lien, in the absence of a valid basis to do so, can subject a person or business to a claim for attorneys’ fees or damages for slander of title. In the case of a fraudulent lien, the party against whom the lien was recorded has a complete defense to the foreclosure of the fraudulent lien. This can be decisive in a lawsuit against a debtor, as the creditor may have to compromise his or her total amount of damages sought in order to account for the damages or attorneys’ fees incurred in by the debtor defending against a fraudulent lien. The state attorney may even prosecute the filer of a fraudulent lien for a third degree felony.

While a minor mistake in preparing an otherwise valid claim of lien won’t render the lien fraudulent, the law of liens can be complicated. It’s important to consult your lawyer.

Legal options to collect a debt

Continue Reading “Can I put a lien on them?”

construction moneyA good place to start is our collection of previous blog posts on various types of liens. The answer is “Maybe.” Did you perform labor, provide services, or sell materials used on a construction job? If the answer is “Yes,” and you meet some other requirements, then you may be able to record a claim of lien.

Circumstances for Lien

In most other circumstances, however, you don’t have a pre-judgment right to record a lien against real property owned by someone who owes you money. But, even if you cannot record a lien against someone right now, you may have other options. Keep in mind that a lien is merely a right to look to property as security for a debt. You may still obtain relief against someone who owes you money if you have a valid basis on which to sue, such as a promissory note, an unpaid account, or a purchase/sale contract, and the statute of limitations has not expired. In many circumstances, a lien may only be important if a debtor has no liquid resources to pay a judgment.

No Assets?Continue Reading “They Owe Me Some Money – Can I Slap a Lien on Them?”

construction-money.jpgIn an April 9, 2015 post, Scott Beatty gave some great tips to owners on how to avoid paying twice for labor, services, or materials provided on a contraction job. This post looks at another facet of the same issue and provides tips to lienors on how best to preserve and enforce their lien rights on a construction job.

Although Florida’s construction lien law is dense, nuanced, and rife with pitfalls, adherence to the following steps will cover your necessary bases in the vast majority of situations where you are working on private/non-government owned property:

Before You Begin Work

Continue Reading Checklist to Preserve and Enforce Your Lien Rights

I know what you’re thinking. No sensible person would ever pay twice for a construction project. But the following scenario is, unfortunately, an all-too common reality for many property owners:

One day, you’re enjoying the view from the bay windows of your recently completed home addition (or newly constructed home). A small taste of buyer’s remorse begins to fill your mouth, but with a sip of coffee, you quickly cast it aside, knowing that the minor fortune you just paid to your contractor is well worth it. A knock on the door brings your mind back to the present. As you glide across the shiny new hardwood floor and open the door, you are met with a sharply dressed man who, after confirming your identity, hands you a stack of papers and leaves. The words on the papers are filled with legal mumbo-jumbo, but you understand enough to know that a masonry company is suing you for payment, and threatening to foreclose its claim of lien if you do not pay. Certain that this must be a mistake, you call your contractor. Your heart sinks when you hear the dreaded message: “The number you have reached is no longer in service….”

In Florida, the same law that protects construction lienors (contractors, sub-contractors, suppliers and laborers) also protects owners by putting limits on their liability to those very same lienors. Property owners can limit their exposure by ensuring that all payments made to the contractor are “proper payments.” By only making “proper” payments, an owner’s liability will not exceed the contract price (i.e., an owner won’t have to pay twice). To ensure that a payment is a “proper” payment, an owner should follow these general guidelines:

Before making any payment to the contractor, make sure to:
Continue Reading How to Pay Twice for Your Construction Project

Does the recording of a Notice of Commencement signed by the Landlord affect the Landlord’s rights under a previously recorded Notice of Lien Prohibition? The answer, of course, is: “it depends.” 

A “Notice of Lien Prohibition” is a tool sometimes available to landlords that prohibits contractors and materialmen from placing a lien on the landlord’s underlying fee interest to space that has been leased to a tenant, when a tenant has made improvements on the space but failed to pay the the contractor and/or materialman in full. This tool is available under Section 713.10 (2)(b) of the Florida Statutes, which provides the following protection for landlords:

The interest of the lessor shall not be subject to liens for improvements made by the lessee when:

1. The lease, or a short form or a memorandum of the lease that contains the specific language in the lease prohibiting such liability, is recorded in the official records of the county where the premises are located before the recording of a notice of commencement for improvements to the premises and the terms of the lease expressly prohibit such liability; or

2. The terms of the lease expressly prohibit such liability, and a notice advising that leases for the rental of premises on a parcel of land prohibit such liability has been recorded in the official records of the county in which the parcel of land is located before the recording of a notice of commencement for improvements to the premises, and the notice includes the following:

a. The name of the lessor.

b. The legal description of the parcel of land to which the notice applies.

c. The specific language contained in the various leases prohibiting such liability.

d. A statement that all or a majority of the leases entered into for premises on the parcel of land expressly prohibit such liability.

Steps to Take for Protection

To minimize the risk of a lien being placed on the landlord’s fee interest to rental property for Continue Reading Liens on Leasehold Interests – Landlords Beware

construction money.jpgFlorida’s Construction Lien Law is intended to provide a balance of protections for owners, contractors, subcontractors and material suppliers. Commercial landlords and lenders should be aware of recent changes to the Construction Lien Law which, in certain circumstances, have tipped the scale against their interests.

One of the most common problems faced by a commercial landlord is when a tenant’s contractor (or a subcontractor, supplier or laborer) records a construction lien against the landlord’s interest in the property. Such lien encumbers or “clouds” the landlord’s title to the property and can prevent the sale or refinancing of the property. It can also create a default under the landlord’s mortgage.Continue Reading Recent Changes to Florida's Construction Lien Law: Commercial Landlords and Lenders Beware