All too often entities prepare their own construction liens. Sure, it is an effective way to save a few bucks. No doubt about it. But, by doing so, you are (i) not relying on advice of counsel that is important when it comes to lien preparation and (ii) not relying on strategy that goes along with the preparation of a lien. When you are liening, the reason you are doing so is because you have not been paid. You therefore want to collateralize your nonpayment against the real property—the leverage of a construction lien. This is a very beneficial statutory tool if implemented correctly, so it only makes sense to do it “strategically” right.
A construction lien is a statutory form. So, how hard can it be? Filling out the “form” is not hard, however, there is legal significance to the information and amounts included in a lien. For instance:
- There is significance to the amount you are liening. Are you liening for disputed change order work? Are you liening for amounts unrelated to base contract work?
- There is significance to the final furnishing date. Are you liening within 90 days of performing base contract work unrelated to punchlist or warranty work?
- There is significance to date the Notice to Owner was served (if you are not in privity with the owner). Was the Notice to Owner served within 45 days of initial furnishing?
- There is significance to the legal description identified in the lien. Are you liening the right property based on the type of project you are working on?
- There can even be significance to the initial furnishing date. Assuming you are the general contractor, what was your initial furnishing date in comparison with when the Notice of Commencement was recorded? If you are not a general contractor, when was the initial furnishing date in comparison with when you served the Notice to Owner?
And, there is legal significance to extraneous issues unrelated to the information in the lien. For instance:
- There is legal significance to when the lien is served on the owner and others identified in the Notice of Commencement. Did you look at the Notice of Commencement to ensure the lien is served on those identified therein? Did you serve your lien within 15 days of recording?
- There is legal significance to the timing of the recordation of the lien. Is the Notice of Commencement still in effect at the time the lien is recorded? Has there been an amended Notice of Commencement?
All of these are important considerations when dealing with a construction lien. There is value, however, consulting with counsel relating to all of the pertinent facts that surround the lien and having counsel prepare the lien for you. There is authority that consulting with and providing counsel all pertinent facts and relying on counsel in the preparation of the lien can serve as a lienor’s evidence of good faith to otherwise refute an owner’s fraudulent lien defense/claim. See Iberiabank v. Coconut 41, LLC, 984 F.Supp.2d 1283, 1302 (M.D.Fla. 2013).
Further, there is strategy that goes along with preparing a lien. Sometimes, there is value, in the case of a contractor in privity with the owner, with a lienor serving a Final Contractor’s Payment Affidavit along with the construction lien. Also, sometimes there is value serving a Request for a Sworn Statement of Account along with a lien.
Too many times, all of the issues and strategy that goes hand-in-hand with the preparation of a lien is lost when a lienor prepares its own lien. This is why there is value consulting with counsel in the preparation of construction liens.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.