LIENOR DEALING WITH “SHOW CAUSE” SUMMONS BY CONDOMINIUM UNIT OWNER

Posted on August 8, 2026August 8, 2026 by David Adelstein

One of the statutory vehicles to shorten a construction lienor’s statute of limitations to foreclose on a construction lien is through a “show cause” summons that essentially requires the lienor to foreclose on the lien within 20 days from receipt of the “show cause” summons. This is a statutory procedure under Florida’s Lien Law in Fla. Stat. s. 713.21(4). If a lienor receives a “show cause” summons and lawsuit, the lienor should, without delay, counterclaim or file a separate lien foreclosure lawsuit within the 20-day period without exception. This is provided the lienor wants to move forward with its lien. If a lienor does not, the lien will be discharged of record. If you are a lienor and receive a “show cause” summons, please immediately consult with construction counsel that can best advise you and perfect your lien rights.

A recent case, Stein v. Reynolds Ventures, Inc., 51 Fla.L.Weekly D1627a (Fla. 2d DCA 2026), discusses this “show cause” statutory procedure. However, the case contains a noteworthy takeaway which must be taken seriously. In this case, the construction lienor had a contract with a condominium association where it performed work on common elements and some units. The lienor was not paid and recorded a construction lien against the condominium which naturally attached to all of the unit owner’s pro rata interests. One of the unit owners decided to file a “show cause” lawsuit against the lienor. The lienor did NOT foreclose its lien within the 20-day statutory period and did not show cause why its lien should not be cancelled of record. One of the arguments that appears to be raised is that the lienor’s contract was with the association so the unit owner did not have standing. But the appellate court found that it did because the lien attached to its unit. As a result, the lienor’s lien was discharged:

Section 713.21(4) mandates where no good cause is shown as to “why [the] lien should not be enforced or” where the lienor fails “to commence such action before the return date of the summons the court shall order cancellation of the lien.” (Emphasis added.) The discharge of lien statute does not ‘leave the court with any discretion to excuse a failure to comply.’ ‘Because [the lienor] did not enforce its lien or make a showing of good cause as to why it could not enforce its lien, the trial court was required by statute to discharge the lien. We therefore grant the [unit owner’s] petition and direct the trial court to vacate and cancel the lien on the [unit owner’s] property.

Stein, supra (internal citations omitted).

Now, the case seems to suggest the lien is only discharged as to the unit owner’s interest. If it operates in this manner, that’s probably not a big deal since the lienor will have the rest of the condominium property that is subject to its lien. But how this works is a different story because the lienor needed to foreclose its lien against the entire condominium property. In other words, if there are 500 units in a condominium, there are not 500 separate lien foreclosures tied to the individual lien. So, in practice, if the lienor did foreclose, it would have to foreclose on the entire lien simply because one unit owner served it with a “show cause” lawsuit. No lienor should take the risk otherwise or that the discharge of the lien would only apply to an individual unit owner’s interest, as seemed to be the case here. That is too great a risk.

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.

CONSTRUCTION LIENS: LIENING FOR AMOUNTS NOT YET TECHNICALLY DUE DOES NOT MEAN LIEN IS FRAUDULENT

Posted on July 19, 2026July 19, 2026 by David Adelstein

A 2024 bankruptcy ruling, In re Edgewater Construction Group, Inc., 657 B.R. 668 (S.D.Fla. 2024), touched upon an interesting issue when it comes to construction liens. Is a construction lien fraudulent simply because the lien includes amounts not yet due? Not necessarily.

In this bankruptcy dispute, the subcontractor debtor (that filed for bankruptcy) recorded two construction liens on projects. The general contractor argued in the bankruptcy court that the subcontractor debtor’s liens were fraudulent.

As to the first lien, the general contractor argued that the lien was fraudulent because it included amounts that the debtor knew the general contractor had already paid to the debtor’s subcontractors/suppliers. The bankruptcy court disagreed: “The Court finds that, although the Debtor had been told that [the general contractor] had paid these subcontractors, in light of the ongoing dispute between Debtor and [the general contractor], it was reasonable for the Debtor to demand proof. Debtor’s subsequent filing of a partial satisfaction of lien once the Debtor received the requested proof of payment from [the general contractor] counters any claim of willful exaggeration.” In re Edgewater Construction Group, supra, at 672-673.

As to the second lien, the general contractor argued the subcontractor was not entitled to be paid because the general contractor had not been paid and the subcontract included a pay-if-paid provision. The bankruptcy court also disagreed and found that this argument would lead to an absurd outcome: “[T]he Court finds that, notwithstanding the presence of a ‘pay-if-paid’ clause, a subcontractor or materialman who files a claim of lien for amounts not yet due under a pay-if-paid contract in order to satisfy the statutory deadline has not filed a fraudulent claim of lien.” In re Edgewater Construction Group, supra, at 673.

Here is why this is interesting and things that should be noted when it comes to liens:

Just because you’ve been told a lower tier has been paid, doesn’t mean you need to take that as faith without proof.
Once you get that proof, the smart thing is to record a partial satisfaction of lien for those amounts. It’s the right thing to do and presents well, as it presented well here.
A lien needs to be recorded within a statutory deadline (90 days from final furnishing). This means that even if amounts are not yet technically due, the smart thing is to still lien for them to preserve your lien rights.

If you are dealing with a lien or non-payment, make sure to work with construction counsel the preserve and maximize your rights.

INSUFFICIENT NOTICE OF COMMENCEMENT AND CONSTRUCTION LIEN RIGHTS

Posted on July 12, 2026July 12, 2026 by David Adelstein

When a party is preserving their construction lien rights, the party will look to the recorded Notice of Commencement. This is the recorded document that provides the lienor with the information for purposes of preserving construction lien rights. A Notice to Owner company will typically rely on the Notice of Commencement to serve Notices to Owners from lower tiers not in contract with the owner. However, when it comes to preparing the lien, a lienor should look beyond just the Notice of Commencement and also look to the property appraiser’s website as a backstop.

In a recent case, a window company had the homeowner sign the Notice of Commencement and then filled in the information. The company naturally did this for the convenience of the homeowner that probably was unfamiliar with the Notice of Commencement process. Regardless, information in the Notice of Commencement was inaccurate. It failed to include all the real property owners. Thus, when a payment dispute arose and a construction lien was prepared, it did not identify all of the real property owners. All of the real property owners were added later during the pendency of a lien foreclosure lawsuit. The trial court denied the lien because of the defective / insufficient Notice of Commencement — the lienor assumed the risk of error by filling out the information in the Notice of Commencement. The trial court further denied the lien holding that because the work did not commence within 90 days of the Notice of Commencement, the Notice of Commencement is void.

On appeal, the appellate court agreed that the lienor assumed the risk of errors in the Notice of Commencement by taking the lead in filling out the information in it. There was nothing to reflect the lienor even asked the homeowner when there were other real property owners.

However:

Even if the notice of commencement was insufficient, the trial court nonetheless erred, because the insufficient notice of commencement does not invalidate a properly recorded and served claim of lien, and [the window company] strictly complied with the conditions precedent to foreclose on the claim of lien as to [the homeowner that signed the contract], who was an owner in privity with [the [lienor]. Additionally, the defective notice of commencement merely affected the lien’s start date. Generally, all construction liens relate back to the recording of the notice of commencement. A defective notice of commencement does not invalidate the recorded claim of lien; instead, it simply means the effective date of the attachment of the lien is the date the claim of lien is recorded in the public records (a potential loss of priority of lien).

James B. Martin, Inc. v. Moore, 2026 WL 1884372 (Fla. 4^th DCA 2026) (internal citations omitted).

Finally, the appellate court sidestepped the argument regarding the Notice of Commencement being void because work did not commence within 90 days of its recording by finding that the lienor’s measurements of the windows and ordering windows was sufficient work to keep the Notice of Commencement active.

Here is why this opinion is noteworthy.

First, the risk of loss in errors with the Notice of Commencement is assumed by the person filling out the information. This makes sense, but if the owner was the one to make the errors, that shouldn’t impact a lienor’s priority. That’s unclear based on this opinion.

Second, if a property owner signs the contract and the property owner is owned by multiple people, shouldn’t the person that signed the contract be deemed the agent for the other owners? A Notice of Commencement shouldn’t need to be signed by every single property owner if the person signing the contract is representing that they have authority. In other words, it shouldn’t be a lienor’s responsibility to confirm that authority, or that the lienor needs to serve a Notice to Owner on the non-signing owners (as this was an issue in this case but not properly preserved for appeal when one of the owners got the lien dismissed and recovered attorney’s fees because she didn’t receive a Notice to Owner).

Third, while Florida Statute s. 713.13(2) states that, “If the improvement described in the Notice of Commencement is not actually commenced within 90 days after the recording thereof, such notice is void and of no further effect,” this would not and should not impact the viability of a lien. It should impact the priority of a lien such that it would not relate back to the Notice of Commencement. But it should not mean there are no lien rights.

SETTLEMENT AGREEMENTS AND CONTRACTS REQUIRE A MEETING OF THE MINDS

Posted on June 28, 2026June 28, 2026 by David Adelstein

A settlement agreement does not need to be executed for it to be enforceable as long as there was a MEETING OF THE MINDS. The same rings true for any contract regardless of whether the contract is signed – THERE NEEDS TO BE A MEETING OF THE MINDS.

In a recent case dealing with the settlement agreement on a construction lien, the essential settlement terms (money and mutual release) were memorialized in an e-mail exchange between the parties (owner and subcontractor). The settlement required the owner to pay the principal amount plus some attorney’s fees and then a mutual general release would be prepared. In response to the confirmatory email, the owner sent a check, which the subcontractor deposited, but the owner refused to sign the release signed and sent by the subcontractor. The owner further claimed it doesn’t need to pay the attorney’s fees because the lien amount was paid in full. The subcontractor sued arguing the owner breached the terms of the settlement. The appellate court agreed.

The law of contracts governs settlements. “To form a binding contract there must be an offer and acceptance.” “[A]n acceptance must contain an assent — or meeting of the minds — to the essential terms contained in the offer.” “The making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs — not on the parties having meant the same thing but on their having said the same thing.” “There must therefore be an objective manifestation by both parties of assent to the same terms.”

We find that a valid and enforceable settlement exists between the parties because there was “an objective manifestation by both parties of assent to the same terms.” The parties “said the same thing” and agreed to all essential elements — which includes use of a mutual general release. The [owners] objectively demonstrated their assent in several ways: not objecting to the settlement confirmation email, sending the check in the negotiated amount, and replying “ok, thanks, will have to you tomorrow” to the email with the proposed release. [The owner’s] testimony on his subjective intent and state of mind does not overcome these objective, external signs.

Adonel Concrete Corp. v. Furshman, 51 Fla. L. Weekly D1292c (Fla. 3d DCA 2026) (internal citations omitted).

CONSTRUCTION LIENS AND THE “SUBSTANTIAL PERFORMANCE” DOCTRINE

Posted on March 14, 2026March 14, 2026 by David Adelstein

In a recent case dealing with a construction lien, the driving issue was whether the air conditioning contractor “substantially performed” before recording its construction lien against residential property. The importance here pertains to the substantial performance doctrine with respect to construction liens. The Third District Court of Appeal explained, with relevant citations, this doctrine as follows:

Under Florida law, a contractor is entitled to a mechanic’s lien if he complies with all provisions of Chapter 713, governing construction liens, and “has substantially performed the contract.” Grant v. Wester, 679 So. 2d 1301, 1307 (Fla. 1st DCA 1996) (quotation omitted); Langley v. Knowles, 958 So. 2d 1149, 1151 (Fla. 5th DCA 2007) (“The substantial performance doctrine recognizes that a contactor who complies with all of the provisions of the contactor’s lien statute is entitled to enforce a lien if he has substantially, but not completely, performed his contractual obligations.”). Substantial performance is performance “so nearly equivalent to what was bargained for that it would be unreasonable to deny the promisee the full contract price subject to the promisor’s right to recover whatever damages may have been occasioned him by the promisee’s failure to render full performance.” Ocean Ridge Dev. Corp. v. Quality Plastering, Inc., 247 So. 2d 72, 75 (Fla. 4th DCA 1971).

Importantly, substantial performance is ordinarily a question for the trier of fact to resolve based on the relevant evidence. See Nat’l Constructors, Inc. v. Ellenberg, 681 So. 2d 791, 794 (Fla. 3d DCA 1996) (“The question of whether there has been substantial performance, however, is normally a question of fact for the trier of fact to resolve based on all of the relevant evidence.”); CDI Contactor, LLC v. Allbrite Elec. Contractors, Inc., 780 So. 2d 963, 965 (Fla. 5th DCA 2001) (“[W]hether a subcontractor has substantially performed is a question of fact” and “should not be decided as a matter of law.”); Grant, 679 So. 2d at 1307 (“Substantial performance is a question of fact.”).

Torres v. A&P Air Conditioning Corp., 2026 WL 602664 (Fla.3d DCA 2024).

In this case, an owner hired an air conditioning contractor to install two air conditioning units. After the units were installed, the owner claimed one of the units was installed incorrectly and refused to pay the contract balance. The contractor claimed the units passed final inspection and recorded a construction lien. Thereafter, the contractor replaced the unit claimed to be incorrectly installed. The owner argued the lien was premature because the contractor did not “substantially perform” at the time it recorded its construction lien because one of the units was not installed correctly. While the trial court granted summary judgment in favor of the contractor, this was reversed on appeal with a reason being that substantial performance is a question of fact.

If you are recording or defending against a construction lien, please work with construction counsel.

MAKE SURE YOU UNDERSTAND WHAT TO INCLUDE AND NOT INCLUDE IN A LIEN

Posted on February 21, 2026February 21, 2026 by David Adelstein

If you need a construction lien prepared, please work with a construction counsel in doing so. Don’t use a service that’s going to charge you less but isn’t going to analyze the information or ask you questions based on the information you provide them to include in the lien. You are selling yourself short if you prepare a lien “down and dirty” or “half-assed”. Also, using construction counsel can allow you to assert, if you wanted, an advice of counsel defense in furtherance of defending against the invariable fraudulent lien claim.

In a recent case, a truss fabricator was hired by an owner to design, manufacture, and deliver trusses. The contract required the owner to pay 50% upon completion of the shop drawings. The shop drawings were prepared but the owner did not make payment. The truss fabricator then liened for the non-payment. The problem was that the property was not improved, i.e., there was no permanent benefit to the property:

Section 713.01(15), Florida Statutes….defines “improvement” as “any building, structure, construction, demolition, excavation, solid-waste removal, landscaping, or any part thereof existing, built, erected, placed, made, or done on land or other real property for its permanent benefit.” Here, no permanent benefit occurred upon the property in this case because the trusses were never delivered. Thus, appellee was not entitled to a lien on the property.

JM Properties of W. Palm Beach, Inc. v. Fort Dallas Truss Company, LLC, 51 Fla.L.Weekly D325a (Fla. 4th DCA 2026).

Interestingly, there was no discussion as to whether the trusses were fabricated. Probably not because the shop drawings were not paid for. But if they were, then there would be an argument they are specially fabricated, in which case they should be lienable, and should be identified in the lien as specially fabricated. But since there was no discussion, this was apparently a non-issue in the case.

Bottom line: make sure you understand what to include and not include in a lien.

CAN FORECLOSURE SALE BE OVERTURNED BECAUSE SALE PRICE IS GROSSLY INADEQUATE?

Posted on November 22, 2025November 22, 2025 by David Adelstein

Foreclosure actions are equity actions. See Verzura Construction, Inc. v. Hotel La Petitite Muse, LLC, 50 Fla.L.Weekly D2500a (Fla. 3d DCA 2025). Can a sale price at a foreclosure auction sale be set aside because the foreclosed party believes the sale price is grossly inadequate? A recent case discusses this question and, as you will see, the argument that the sale price is grossly inadequate is not enough to overturn a sale.

In Verzura Construction, an owner hired a general contractor to renovate its hotel. A dispute arose and the contractor recorded a construction lien, filed a lien foreclosure lawsuit, and obtained a judgment of foreclosure. The contractor purchased the property in the foreclosure sale auction. The foreclosed hotel owner objected and move to set aside the sale arguing its attorneys failed to notify it of the sale and it was deprived of an opportunity to bid at the sale. However, the hotel’s attorney knew about the auction and attended the auction. Nevertheless, the trial court agreed to set aside the sale finding the sale price at the auction was grossly inadequate and the hotel owner was not notified of the sale by its counsel. The appellate court reversed and, in doing so, discussed the burden of overturning a foreclosure sale under a grossly inadequate sale price argument:

A court ruling on post-sale objections to judicial foreclosure sales must assure that “no wrong has been accomplished in and by the manner in which [the sale] was conducted.” But an inadequate sale price, even a grossly inadequate one, cannot alone justify setting aside an otherwise proper foreclosure sale. This is because the amount of the bid is “conclusively presumed to be sufficient consideration for the sale.” So an objecting party must raise an additional factor, like a “mistake, accident, surprise, fraud, misconduct, or irregularity” that impacted the sale and caused the price to be grossly inadequate. Only then may the sale be set aside.

Here, the court ruled that the sale price was grossly inadequate. But the only additional factor that the court cited aside from the price was the fact that [the foreclosed owner] was “deprived of an opportunity to bid,” …. And the only reason it concluded that [the foreclosed owner] was “deprived of an opportunity to bid” is because [its] attorneys failed to “inform” it. … [A]s a matter of law: (1) [it] had notice of the sale, and (2) [it] was not “deprived of an opportunity to bid.” The trial court abused its discretion in concluding otherwise.

***

Although such notice would end the inquiry, the record here reflects more than constructive notice – [the foreclosed owner’s counsel] attended the sale. And “there is a presumption that an attorney, as an officer of the court, is duly authorized to act for a client whom he professes to represent. In the absence of some pleading questioning the attorney’s acts . . . the presumption is conclusive.”

Verzura Construction, Inc., supra (internal citations omitted).

DON’T ASSERT AS A COUNTERCLAIM TO A LIEN FORECLOSURE LAWSUIT AN ORDER TO SHOW CAUSE CLAIM

Posted on August 31, 2025August 31, 2025 by David Adelstein

If there is a construction lien on your property and you don’t like the lien, here are options to deal with the lien:

1. You negotiate a resolution a get a satisfaction of lien to record in the public records. Or, you can transfer the lien to the security of a lien transfer bond, but that just means the lienor would need to foreclose against the bond instead of the real property. In other words, the lien is collateralized by the lien transfer bond and not the real property so it does not resolve the lien.

2. You record a Notice of Contest of Lien to shorten the lienor’s statute of limitations to foreclose on the construction lien to 60 days. (See here.) If the lienor does not timely foreclose, then the lien is of no effect as a matter of law. However, this does force the issue, meaning the lienor may file a lien foreclosure lawsuit sooner than later. (But, if they file the lawsuit sooner, then the lienor was always going to file the lawsuit later.)

3. You can file a lawsuit for an Order to Show Cause under Fla. Stat. s. 713.21(4) and force the lienor to file a lien foreclosure counterclaim within 20 days from service of the show cause summons. (See here.) The only time you’d really do this is if you want to initiate a lawsuit that you’d probably initiate no matter what. Otherwise, the Notice of Contest of Lien is more cost effective and more efficient.

In a recent case, Custom Homes By Triumph, LLC v. Sverdlow, 50 Fla.L.Weekly D1946a (Fla. 2^nd DCA 2025), a lienor filed a lien foreclosure lawsuit. The owner asserted a counterclaim that included the Order to Show Cause. The lienor didn’t timely respond to the counterclaim as the lienor was the one that initiated the lawsuit by filing the lien foreclosure lawsuit. The trial court therefore dismissed the lien. Shocking outcome! The lienor appealed and prevailed for a couple of big reasons.

First, with the Order to Show Cause complaint, a lienor’s 20 days to respond is based on the receipt of a specifically worded show cause summons. Here, there was no summons because the owner asserted a counterclaim because, again, the lienor initiated the lawsuit. Without the service of the summons, there is nothing that starts the 20-day clock.

Second, the lienor had already foreclosed. There was nothing for it to do. In response to an Order to Show Cause Complaint, a lienor needs to foreclose on the construction lien within the 20 days. But, here, the lienor already did so. (“The lienor’s obligation is to show cause “why his or her lien should not be enforced by action or vacated and canceled of record,” and the lien must be discharged only “[u]pon failure of the lienor to show cause why his or her lien should not be enforced or the lienor’s failure to commence such action before the return date of the summons.” [The lienor’s] complaint included a cause of action to foreclose its lien. And by seeking to foreclose its lien, [the lienor] was necessarily seeking to enforce it. So even if the clerk had issued a show-cause summons, [the lienor] had already completed one of the two alternative actions — “show cause . . . why [the] lien should not be enforced [by action]” or “commence such action” — that the summons would have directed it to accomplish, that is, commence an action to enforce its lien.” See Custom Homes By Triumph, supra (internal citations omitted))

Look, if you are considering the Order to Show Cause Complaint to deal with a construction lien, there is nothing to consider if the lien is already being foreclosed and you are not the plaintiff. You don’t get a “gotcha” after the lien is already foreclosed because the foreclosing lienor doesn’t respond to a needless claim. This was an appeal over an issue that should have never been an issue.

OWNER CAN’T PURSUE STATUTORY SHOW CAUSE COMPLAINT TO CANCEL LIEN… FAIR OUTCOME?

Posted on May 18, 2024May 18, 2024 by David Adelstein

If there is a payment dispute with a construction lienor — could be a contractor, a subcontractor, or supplier – it is possible, and more than likely, a construction lien may get recorded against real property. This scenario is not uncommon as the lien is the mechanism for the lienor to collateralize their claimed nonpayment. Now, in reality, it does not take much money to record a lien. A lienor should utilize a lawyer to prepare their liens, but maybe they prepare liens in-house. Regardless, the recording of the lien is a nominal cost and the clerk that dockets and records the lien does NOT analyze the merits of the lien. That is not what the clerk is there to do; nor do you really want them the delve into the factual merits.

Well, what if a lien is facially invalid, meaning that the lien, on its face, includes information that demonstrates it is NOT properly perfected. Or what if the lienor failed to properly preserve or perfect its lien rights before recording the lien. This happens! Naturally, an owner of the real property wants the lien removed from the property. The owner does not want the encumbrance.

The owner could transfer the lien to a lien transfer bond under Florida’s Lien Law, but that is easier said than done. And this does not discharge the lien; it just removes the lien from the property to the security of the bond.

The owner could pay the lienor to record a satisfaction of lien but then the lienor wins by improperly leveraging its payment dispute with an invalid lien. (Frankly, sometimes this makes sense irrespective of the perceived “win.”)

The owner could record a notice of contest of lien under Florida’s Lien Law to shorten the lienor’s time period to foreclose on the lien from one year to sixty days. This is generally the approach I suggest because if the lienor does foreclose within the sixty days there is the strong chance the lienor was always going to foreclose on the lien so why not bring the dispute to the head sooner than later.

Then, there is a statutory procedure under Florida’s Lien Law (Florida Statute s. 713.21(4)) oftentimes referred to as the “order to show cause” complaint where the lienor is given 20 days to show cause why its lien should not be enforced or cancelled of record (which is done by timely foreclosing the lien within 20 days after service of the summons):

By an order of the circuit court of the county where the property is located, as provided in this subsection. Upon filing a complaint by any interested party the clerk shall issue a summons to the lienor to show cause within 20 days after service of the summons why his or her lien should not be enforced by action or vacated and canceled of record. Upon failure of the lienor to show cause why his or her lien should not be enforced or the lienor’s failure to commence such action before the return date of the summons the court shall order cancellation of the lien.

An owner may do this because the owner has its own claims against the lienor. Or the owner may want to force the lienor to “make a move” or else lose the lien if the lienor does not timely foreclose. Strategically, it is an approach owners do pursue in certain contexts.

Unfortunately, a recent case adds uncertainty to the strategic value of this approach, or at least how the order to show cause complaint is pled.

In Calixte v. Coastal Building Contractors, LLC, 2024 WL 1896114 (Fla. 4^th DCA 2024), an owner filed an order to show cause complaint against a lienor under Florida Statute s. 713.21. The owner alleged the lienor was required to serve a notice to owner, and did not, and therefore its lien should be cancelled for being invalid. The lienor, which was required to file its lien foreclosure counterclaim within 20 days, did not. That should have been it. But it was not. The lienor argued that s. 713.21 does not apply because the owner alleged that the lien was not properly perfected when it alleged the lienor failed to serve its notice to owner. The lienor made this argument because s. 713.21 is prefaced, “A lien properly perfected under this chapter may be discharged, or released in whole or in part, by and of the following methods…[(4) through the order to show cause complaint].” In other words, because the owner alleged the lien was not properly perfected, the order to show cause complaint was not an option. Sadly, the appellate court agreed: “As the complaint in this case specifically alleged [the lienor] had failed to perfect its lien by serving a “notice to owner” and therefore had no lien rights, [owners] could not avail themselves of this special statutory procedure authorized by section 713.21.” Calixte, supra, at *2.

This ruling, quite frankly, is unjust and somewhat ridiculous. Here is why. The lienor is still foreclosing the lien. Thus, the lienor does not agree its lien is not properly perfected. The lienor believes it is properly perfected because it is still pursuing its lien foreclosure. Next, if you read s. 713.21, it talks about other procedures to discharge a lien including a satisfaction of lien, by a judgment, or by the lienor failing to timely foreclose the lien. These options are subject to the exact same prefatory language, “A lien properly perfected under this chapter may be discharged, or released…” If the show cause complaint is not an option because of this prefatory language, what about these other standard options? And lastly, this leaves the owner that disputes the merits of a lien with really only two options if it believes a lien is not properly perfected: (1) the notice of contest of lien (my preferred option), and (2) transferring a lien to a lien transfer bond, which does not discharge the lien but simply transfers the lien from the real property to the security of the bond. Meanwhile, the encumbrance created by the lien still exists simply because the owner implemented a statutory procedure on a lien the owner did not think was properly perfected, yet the lienor disagreed. And here is what the case does not discuss. What if the owner did not allege the lien was not properly perfected? But in reality it was not. In that context would the statutory procedure apply because if pursuing this option there is no value to allege the lien is not properly perfected in light of this ruling.

FILING MOTION TO INCREASE LIEN TRANSFER BOND (BEFORE TRIAL COURT LOSES JURISDICTION OVER FINAL JUDGMENT)

Posted on May 7, 2023May 7, 2023 by David Adelstein

If a construction lien is recorded against real property, the lien can be transferred to a lien transfer bond. This transfers the security or collateral of the construction lien from the real property to the lien transfer bond. The lien transfer bond can be a bond posted by a surety company or it can be cash. This is governed by Florida Statute s. 713.24. The amount of the lien does not dictate the amount of the lien transfer bond. Rather, the lien transfer bond needs to be in the amount of the lien, plus interest on that amount for three years, plus $1,000 or 25% of the amount of the lien (whichever is greater so factor in the 25%) to cover attorney’s fees. Fla. Stat. 713.24(1).

If you are looking to transfer a construction lien to a lien transfer bond, make sure to consult with counsel.

Keep in mind there is a statutory mechanism for a lienor to increase the lien transfer bond to cover attorney’s fees and costs and notice the word “must” in the statute below. Pursuant to Florida Statute s. 713.24(3):

Any party having an interest in such security or the property from which the lien was transferred may at any time, and any number of times, file a complaint in chancery in the circuit court of the county where such security is deposited, or file a motion in a pending action to enforce a lien, for an order to require additional security, reduction of security, change or substitution of sureties, payment of discharge thereof, or any other matter affecting said security. If the court finds that the amount of the deposit or bond in excess of the amount claimed in the claim of lien is insufficient to pay the lienor’s attorney’s fees and court costs incurred in the action to enforce the lien, the court must increase the amount of the cash deposit or lien transfer bond. Nothing in this section shall be construed to vest exclusive jurisdiction in the circuit courts over transfer bond claims for nonpayment of an amount within the monetary jurisdiction of the county courts.

In a recent case, Edmondson v. Tri-County Electrical Services, Inc., 2023 WL 2995420 (Fla. 4^th DCA 2023), a lien was transferred to a cash bond by the real property owner. The contractor-lienor moved to have the court increase the amount of the cash security to better cover attorney’s fees and costs accrued in the litigation. The court deferred ruling on the motion. Subsequently, the court had a bench trial and the contractor prevailed. The court entered final judgment in favor of the contractor and reserved ruling on attorney’s fees, interest, and court costs. The court thereafter entered an amended final judgment that included attorney’s fees, interest, and court costs. The court then conducted a hearing to increase the cash bond and granted the contractor’s motion for the cash bond to be increased. The issue was that the court no longer had jurisdiction to require the owner to increase the cash bond:

The action here was not ‘pending’ under section 713.24(3). The general rule is that an action remains pending in the trial court until after a final judgment and such time as an appeal is taken or time for an appeal expires. By the time the trial court had ruled on the motion to increase the bond, the time for an appeal had passed. Therefore, because the matter was no longer pending, the trial court lacked authority to consider the motion.

The trial court was without jurisdiction to grant Contractor’s motion to increase the bond.

Edmondson, supra, at *2 (internal citations omitted).

Here, the contractor should have requested the trial court rule on the deferred motion to increase the cash bond BEFORE the amended final judgment was entered. Or, at a minimum, the contractor should have timely filed a motion for rehearing as to the amended final judgment to address this deferred motion to increase the cash bond. Once the rehearing period expired, “the trial court no longer has jurisdiction over a final judgment.” Edmondson, supra, at *1 (“Contractor did not file a timely motion for rehearing, which would have been the time to raise the bond increase issue.”). Id.