Any direct home improvement contract which exceeds $2,500.00 is generally subject to Florida’s construction lien laws. Many home improvement projects involve not only the contractor directly hired to complete the project, but several subcontractors, material suppliers, and laborers (these additional parties are often referred to under Florida’s construction lien laws as “lienors”). Florida’s construction lien laws impose upon the owner certain notice and payment obligations aimed at protecting those lienors hired by the primary contractor. These laws also serve to prevent liens being recorded against the improved property.
One obligation imposed upon the owner is to properly record a Notice of Commencement. The Notice of Commencement provides lienors with the information they need to serve a Notice to Owner indicating they performed services or supplied materials to the jobsite, and are looking to the owner to make certain they are “properly paid”. Once an owner receives a “timely” Notice to Owner, the owner must make certain that a portion of each payment to the contractor is applied to pay amounts then due to the lienor serving the Notice to Owner. So how does an owner protect “lienors”, and in turn protect the improved property from construction liens, when a contractor goes out of business or otherwise abandons a project?
The first step is to discern applicable contractual rights and obligations. Next, send the contractor a written notice of default in accordance with the terms of the written contract which additionally (i) demands a contractor’s final payment affidavit reflecting the amount due to the contractor, if any, and the name, address, and amount due for each lienor who has not been paid in full, and (ii) provides the contractor with notice that the owner intends to pay directly certain specified lienors (those giving timely Notice to Owner, and those who filed valid liens), including the amount intended to be paid to each. Upon expiration of ten (10) days from such notice (certified mail or other verifiable form of delivery should be used), the owner may proceed with paying the listed lienors, as well as any listed in a contractor’s final payment affidavit. For those lienors who already filed liens, the owner should procure and record satisfaction of liens, as well as final release and waiver of lien rights. From those lienors who served a Notice to Owner but did not yet file a claim of lien, the owner should procure final release and waivers of liens. Payments to lienors under these procedures may be funded from the final (or remaining) payment installment(s) structured under the initial home improvement project. It is therefore recommended that home improvement project contracts provide for an adequate final payment installment to be held by the owner until the contractor successfully completes the project and furnishes the required contractor’s final payment affidavit.
If an abandoned project is intended to be recommenced with a new contractor, either a new notice of commencement, or a notice of recommencement, must be recorded. The owner should pay all existing lienors, per the procedures outlined above, before recommencing so all prior liens and lien rights are eliminated. If an entirely new project is commenced, as opposed to recommencing the prior project, an owner may terminate the initial Notice of Commencement by recording a notice of termination. An owner may not record a notice of termination after construction ceases prior to the initial project being completed until all lienors under the initial project have been paid, as discussed above. A new Notice of Commencement may then be necessary for the new project.
By properly and timely complying with Florida’s construction lien laws, completing a home improvement project abandoned by the initial contractor may be successfully navigated. If you need legal guidance to safely navigate a home improvement project, at Bob Bible Law, we have the knowledge and over 35 years of experience to guide you through these issues.
For more information, contact Robert W. Bible, Jr., Attorney At Law at 727/538-7739 (office), 727/710-5166 (cell) or by email at: b.bible@BobBibleLaw.com