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:
Verify that the notice of commencement has not expired (payments made after expiration of the notice of commencement are not “proper” payments);
Obtain a partial release of lien from anyone that has served a “Notice to Owner” to the extent of each payment being made;
Obtain a partial release of lien from the contractor to the extent of each payment being made; and
Obtain an affidavit from the contractor which states that all potential lienors have been paid to the extent of the payment made.
Before making your final payment to the contractor, make sure to:
Obtain a final contractor’s affidavit (in the form set out in Fla. Stat. §713.06(3)(d)), which states that all potential lienors have been paid, or lists those that have not been paid. If lienors are listed as not paid, you owe a duty to ensure that they are paid before you pay the contractor; and
Verify that every lienor who timely served you with a “Notice of Owner” has been paid in full and has provided you with a release of lien.
If you follow these steps, any lien in excess of the contract price will be paid from the remaining final payment due to the contractor (in full or pro-rata depending upon whether the remaining amount due is sufficient to pay each lienor) to those lienors who are either listed in the final contractor’s affidavit as not being paid or who gave you timely notice. This way, your liability as the owner will not exceed the contract price and you will not be forced to pay twice for your improvements.
Florida’s lien law is lengthy and complex. It is often confusing to the attorneys and judges who must deal with it. Although the basic provisions for ensuring proper payments are described above, there are a number of other provisions that may be applicable to your particular situation and must be followed. When in doubt, consult with an attorney that is knowledgeable with the lien law. You’ll sleep better knowing that you reduced the chances of having to pay more than you contracted to pay, and knowing that the dreaded knock at the door will not come.