RESIDENTIAL INTERIOR DECORATOR WAS ENTITLED TO LIEN AND WAS NOT ENGAGING IN UNLICENSED CONTRACTING

Residential construction disputes can sometimes take nasty turns.  This is not attributed to one specific reason, but a variety of factors.  Sometimes, there are not sophisticated contracts (or contracts at all).  Sometimes, relationships and roles get blurred.  Sometimes, parties try to skirt licensure requirements.  Sometimes, a party is just unreasonable as to their expectations.  And, sometimes, a party tries to leverage a construction lien to get what they want.  In all disputes, a party would certainly be best suited to work with construction counsel that has experience navigating construction disputes.

An example of a construction dispute that took a nasty turn involving an interior decorator is SG 2901, LLC v. Complimenti, Inc., 2021 WL 2672295 (Fla. 3d DCA 2021).  In this case, a condominium unit owner wanted to renovate his apartment. He hired an interior decorator to assist. As his renovation plans became more expansive, the interior decorator told him he would need to hire a licensed contractor and architect.  The interior decorator arranged a meeting with those professionals and, at that meeting, they were hired by the owner and told to deal directly with the interior decorator, almost in an owner’s representative capacity since the owner traveled a lot.  The interior decorator e-mailed the owner about status and requested certain authorizations, as one would expect an owner’s representative to do.  At the completion of the renovation job, the owner did not pay the interior decorator because he was unhappy with certain renovations. The interior decorator recorded a construction lien and sued the owner which included a lien foreclosure claim.  There was no discussion of the contracts in this case because, presumably, contracts were based on proposals, were bare-boned, or were oral.

The owner argued that the interior decorator should not be entitled to any monies because she was illegally acting as a general contractor, i.e., engaging in unlicensed contracting.  (The owner was arguing under Florida Statute s. 489.128 that states contracts entered into by unlicensed contractors are unenforceable as a matter of public policy.)   But there were problems with this argument, as found by the Court.  First, the evidence showed the owner did hire a general contractor who had met with the owner and was responsible for the work.  Second, the evidence showed that any person who performed a service in connection with the project was approved by and hired by the owner or the general contractor.  Third, the Court found the evidence showed the interior decorator’s scope was “specifically limited to providing design/decorating services and acting as the point of contact in a representative or agency capacity on [owner’s] behalf.” SG 2901, LLC, supra.  In other words, the evidence showed the interior decorator did not do anything wrong but acted like many interior decorators on renovation jobs by providing a service and assisting the owner with licensed professionals an owner would need to engage.

The owner also argued that the interior decorator was not entitled to a construction lien.  The trial Court disagreed because under Florida Statute s. 713.03(1), any person performing services as an interior designer are entitled to a lien for their services used in connection with improving the property or in supervising the work of improving the property.   The Court importantly noted that because the interior design services were for a residential property, an interior decorating license was NOT required.  See Florida Statute s. 481.229(6)(a) (discussing exemption for interior decorating for residential application).

The scenario discussed in this case is not an uncommon scenario on residential construction projects.  Had contracts been formalized or included certain sophistication, perhaps this dispute could have been avoided.  Possibly not. But importantly, despite the owner’s arguments to the contrary, the residential interior decorator did nothing improper.  She wasn’t required to obtain a license for residential interior decorating.  She was not acting as the general contractor.  And, she was entitled to a construction lien for unpaid services.

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.

 

CIRCUMSTANCES IN WHICH DESIGN PROFESSIONAL HAS CONSTRUCTION LIEN RIGHTS

If you are a design professional (architect, landscape architect, interior designer, engineer, surveyor, or mapper) you have construction lien rights in the event you are not paid.   This does not mean your lien rights are absolute so it is important to understand the circumstances which allow you to record a construction lien on a project.  These circumstances are contained in Florida Statute s. 713.03:

(1) Any person who performs services as architect, landscape architect, interior designer, engineer, or surveyor and mapper, subject to compliance with and the limitations imposed by this part, has a lien on the real property improved for any money that is owing to him or her for his or her services used in connection with improving the real property or for his or her services in supervising any portion of the work of improving the real property, rendered in accordance with his or her contract and with the direct contract.

(2) Any architect, landscape architect, interior designer, engineer, or surveyor and mapper who has a direct contract and who in the practice of his or her profession shall perform services, by himself or herself or others, in connection with a specific parcel of real property and subject to said compliances and limitations, shall have a lien upon such real property for the money owing to him or her for his or her professional services, regardless of whether such real property is actually improved.

The first circumstance pertains to design professionals that do NOT have a direct contract with the owner of the property.  In this circumstance, you have lien rights for your services “used in connection with improving the real property” or your services “in supervising any portion of the work of improving the real property” that you perform under your contract and with the direct contract, presumably between the owner and your client.  The important, operative word in this circumstance involves improving the real property.

The second circumstance pertains to design professionals hired directly by the owner.  In this circumstance, you have broader lien rights as you have lien rights for your services “regardless of whether such real property is actually improved.”  Hence, improving the real property is of no moment.

A design professional does not need to serve any preliminary notice (such as a notice to owner) in order to preserve their lien rights.  However, a design professional still needs to record a construction lien within 90 days from their final furnishing date.

A construction lien from a design professional is less common than a lien from a contractor, subcontractor, or supplier. Nonetheless, design professionals do have construction lien rights that an owner should be cognizant of and a design professional should understand in furtherance of best ensuring payment.

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.

 

LIEN RIGHTS FOR PROFESSIONAL (DESIGN) SERVICES

imagesDesign professionals  (e.g., architect, engineer, interior designer, surveyor, and mapper) have lien rights for professional services they perform under Florida’s Lien Law.

 

 

Florida Statute s. 713.03 governs liens for professional services and provides:

 

(1) Any person who performs services as architect, landscape architect, interior designer, engineer, or surveyor and mapper, subject to compliance with and the limitations imposed by this part, has a lien on the real property improved for any money that is owing to him or her for his or her services used in connection with improving the real property or for his or her services in supervising any portion of the work of improving the real property, rendered in accordance with his or her contract and with the direct contract.

 

(2) Any architect, landscape architect, interior designer, engineer, or surveyor and mapper who has a direct contract and who in the practice of his or her profession shall perform services, by himself or herself or others, in connection with a specific parcel of real property and subject to said compliances and limitations, shall have a lien upon such real property for the money owing to him or her for his or her professional services, regardless of whether such real property is actually improved.

 

 

This statutory language is important to the design professional.  Paragraph 1 says that a design professional shall have lien rights for their professional services rendered pursuant to their contract and the direct contract (or contract with the owner of the real property, typically the owner-architect contract in the design-bid-build scenario) in connection with improving the real property.  This would be the paragraph relied on by design professionals NOT in privity of contract with the owner.  On the other hand, Paragraph 2 would apply to design professionals that enter into a direct contract with the owner of the real property for professional services (such as the architect in the design-bid-build scenario).  Under this paragraph, the design professional has lien rights for their professional services regardless of whether the real property is even improved.  This means that the owner can decide not to use the professional services (the design) or abandon the project and the design professional in direct contract with the owner has lien rights even though the real property has not been improved.   Now, if a design professional enters into a contract with a developer or person that never had an interest in the real property, the design professional is not going to be able to use this statute to create lien rights because it never entered into a contract with the actual owner of the real property.  See Grossman v.  Pollack, 100 So.2d 660 (Fla. 3d DCA 1958) (finding that architect could not enforce lien for leasehold interest that never came into being because there was no privity between architect or anyone with interest in the real property).

 

Design professionals have flexibility preserving lien rights since they do not have to comply with all of the technical requirements that a general contractor, subcontractor, or supplier must comply with.  Design professionals do NOT need to serve a Notice to Owner (within 45 days of initial furnishing) unlike the supplier or subcontractor not in privity of contract with the owner.  And, the design professional in privity of contract with the owner does NOT need to serve a contractor’s final payment affidavit (at least 5 days before filing a lawsuit) unlike the contractor hired directly by the owner.   The ONLY thing the design professional needs to do to secure its lien rights is to record a lien within 90 days of its final furnishing of professional services (and serving a copy of the lien on the owner).

 

 

images-1The downside, however, is that a design professional’s lien maintains a priority standpoint from the date the lien is recorded.  So, anything that is recorded before the design professional’s lien will be superior to the lien.  This is different than a lien recorded by a general contractor, subcontractor, or supplier in that their lien relates back to an effective notice of commencement, which is important from a lien priority standpoint.

 

For example, let’s assume there is a new construction project.  The owner obtains financing and a mortgage securing the construction loan is recorded.  This mortgage should have superior priority to any other encumbrance on the property (if not, lenders would never lend money!).  After the mortgage is recorded, and before construction commences, a notice of commencement is recorded (which lasts for 1 year unless a different expiration date is specified; although, the notice of commencement can be amended).  Within the effective period of the notice of commencement, the structural engineer records a lien; the next day the architect records a lien.  Months later, and within the effective period of the notice of commencement, the framing subcontractor records a lien.  What is the priority of these liens? The framing subcontractor’s lien will have priority because it will relate back to the notice of commencement.  Then, the structural engineer’s lien will have priority over the architect’s lien because it was recorded the day before the architect’s lien.  Remember, design professional’s liens do not relate back to the notice of commencement and their priority is dictated as of the date/time they are recorded. Any other contractor or supplier that records a lien within the effective notice of commencement will have priority over the design professional’s lien since these liens will relate back to the earlier recorded notice of commencement.

 

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.