MAKE SURE TO PROPERLY PERFECT AND PRESERVE CONSTRUCTION LIEN RIGHTS

If you recording a construction lien (referred to as a claim of lien) and looking to perfect your construction lien foreclosure rights, it is imperative that you work with counsel to ensure your rights are properly preserved.  This is good practice!

A claim of lien must be served on an owner within 15 days after recording.   Florida Statute s. 713.08(4)(c) says: “The claim of lien shall be served on the owner. Failure to serve any claim of lien in the manner provided in s. 713.18 before recording or within 15 days after recording shall render the claim of lien voidable to the extent that the failure or delay is shown to have been prejudicial to any person entitled to rely on the service.

Florida Statute s. 713.18, hyperlinked for your review, includes the statutory ways to serve “notices, claims of lien, affidavits, assignments, and other instruments permitted or required under [Florida Statutes Chapter 713].”

Furthermore, a contractor in privity with the owner must serve a Contractor’s Final Payment Affidavit per Florida Statute 713.06(3)(c) “at least 5 days before instituting an action as a prerequisite to the institution of any action to enforce his or her lien.”  The Contractor’s Final Payment Affidavit must also be served per s. 713.18.

The reason this is important is demonstrated in the Fourth District Court of Appeal’s opinion in Fettig’s Construction, Inc. v. Paradise Properties & Interiors LLC, 2020 WL 6479580 (Fla. 4th DCA 2020) that involved a petition for writ of certiorari to the appellate court after the trial court entered partial judgment in favor of an owner dismissing a claim of lien and lien foreclosure due to the contractor’s failure to property serve a claim of lien and Contractor’s Final Payment Affidavit on the owner.

Of importance, a trial court discharging a lien (or even lis pendens) will give rise to a basis for an appeal (petition for writ of certiorari) because it would permit an owner to immediately sell or transfer that asset—the real property— without the encumbrance of the lien which could NOT be remedied on a post-final judgment appeal.  See Fettig’s Construction, Inc. at *1.

Without getting into the nitty gritty of this case, the contractor served the lien on the owner per its addresses registered with the Secretary of State and property appraiser but not the address located in the notice of commencement.  The lien was returned undeliverable to the contractor.   The owner claimed that the contractor didn’t properly comply with the service requirements in s. 713.18.   While the trial court, somewhat surprisingly, bought this argument, the appellate court did not and reversed the judgment.   Moreover, the appellate court noted that even if the contractor did not properly serve the lien, s. 713.08 provides the lien would be voidable “to the extent that the failure or delay is shown to have been prejudicial to any person entitled to rely on the service.”  This, however, is a question of fact.

As to the Contractor’s Final Payment Affidavit, the contractor seemed to serve the Affidavit to the address in the notice of commencement, but it was returned undeliverable too.  The appellate court found this was acceptable if there was proof the non-delivery was not caused by the contractor, which would require an evidentiary to address “whether the failure of delivery was not the fault of Contractor.”  Fettig’s Construction, Inc., supra, at *4.

What does this all mean?  It means to follow the advice in the very first paragraph – work with counsel to ensure your rights regarding recording a construction lien, serving a construction lien, and preserving your rights to foreclose a construction lien are properly perfected and preserved.

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.

 

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