QUICK NOTE: TIMELY RECORDING CONSTRUCTION LIEN

A construction lien needs to be recorded within 90 days from a lienor’s final furnishing date.  This date is exclusive of punchlist or warranty-type work (i.e., repairs to lienor’s own work).   A lienor’s final furnishing date will be included in the construction lien as the lienor’s last date on the job.

 

A lienor’s final furnishing date is a question of fact to be decided by the trier of fact.  In other words, if an owner (or party challenging the enforcement of the lien) argues that the lien was untimely recorded, the party will be arguing that the lienor failed to timely record its lien within 90 days of its final furnishing date.  The application of this fact-driven issue, as further discussed in this article, is: whether the work was: 1) performed in good faith; 2) performed within a reasonable time; 3) performed in pursuance of the lienor’s contract; and 4) necessary for a completed project.  Just remember, a final furnishing date will not include punchlist or warranty work a lienor is performing on the project.   If a lien is recorded outside of this 90-day window, the lien will be deemed unenforceable.  It is always a good practice to ensure a lien is recorded, at a minimum, weeks before the 90-day period expires to avoid any issue or argument with the lien being untimely recorded.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: A CONSTRUCTION LIEN IS NOT INTENDED TO LAST INDEFINITELY

A construction lien is not intended to last forever.  A construction lien must be recorded within one year from its recording date because a construction lien only lasts for one year by operation of law.   You will not be able to foreclose a construction lien after this one-year period expires.  This is why it is always good practice to calendar the expiration of this one-year period when a construction lien is recorded.   There is never a good reason to engage in a last minute scramble to file a foreclosure lawsuit on the expiration date (or shortly before).      While I always believe a lienor should work with counsel to record a construction lien, regardless, I would certainly recommend a lienor to work with counsel to ensure lien rights are properly perfected so that when it becomes necessary to foreclose the lien, the strategy is in place to file the foreclosure lawsuit.

 

Importantly, an owner can shorten the one-year period for a lienor to foreclose its construction lien by properly recording a Notice of Contest of Lien.  A Notice of Contest of Lien will shorten the period for a lienor to foreclose its construction lien to sixty days.   It is always beneficial to record the Notice of Contest of Lien sooner than later because it puts the onus on the lienor to either foreclose the construction lien or lose its lien and ability to foreclose its lien by operation of law.  That’s right – if the lienor does not foreclose its lien within the sixty-day window, it will have lost its lien rights.   There are times where an owner of real property records a Notice of Contest of Lien without the use of counsel.  I do not suggest this for a couple of reasons.  First, you want to ensure this is done right and, second, there may be other strategic decisions that may be better implemented based on the circumstances of the dispute.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: NOT IN CONTRACT WITH THE OWNER? SERVE A NOTICE TO OWNER.

A subcontractor or supplier not in direct contract with an owner must serve a Notice to Owner within 45 days of initial furnishing to preserve construction lien rights.  Of course, the notice of commencement should be reviewed to determine whether the subcontractor or supplier has construction lien or payment bond rights so that it knows how to best proceed in the event of nonpayment.   Serving a Notice to Owner should be done as a matter of course — a standard business operation; no exceptions.  

 

However, if a supplier specially manufactures or fabricates material for purposes of a construction project, it must serve the Notice to Owner within 45 days from the actual start of fabrication, and not from when the materials are delivered to the site.  A reason for this is that a supplier of specially fabricated material can lien for the unpaid material even if the material is NOT incorporated into the construction project.  This is different than a supplier liening for other material which does require the material to be incorporated into the project.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: DON’T FORGET TO SERVE THE CONTRACTOR FINAL PAYMENT AFFIDAVIT

If you are a contractor in DIRECT CONTRACT with an owner, serve a contractor final payment affidavit on the owner, as a matter of course, and without any undue delay, particularly if you are owed money and have recorded a construction lien.  In numerous circumstances, I like to serve the contractor final payment affidavit with the construction lien.

 

The contractor final payment affidavit is not a meaningless form.  It is a statutory form (set forth in Florida Statute s. 713.06) required to be filled out by a lienor in direct privity of contract with an owner and served on the owner at least 5 days prior to the lienor foreclosing its construction lien.  The contractor final payment affidavit serves as a condition precedent to foreclosing a construction lien.  Failure to timely serve a contractor final payment affidavit should result in a dismissal of the lien foreclosure lawsuit, presumably by the owner moving for a motion for summary judgment.  This should not occur.  

 

I always suggest working with a lawyer to finalize a contractor final payment affidavit (as well as the lien in order to utilize the advice of counsel defense) for two reasons.  First, you will ideally want the amount in the affidavit to be the same as the lien amount.  Second, you may want to include certain clarifications or exceptions in the final payment affidavit for amounts not included in the lien (e.g., delay-type damages or certain disputed change orders that you do not feel comfortable including in the lien).  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.