When is a Notice to Owner Required Under Florida Construction Lien Law?
Driving along I-95 in South Florida, locals can see that the state bird of Florida has once again returned to roost – the construction crane. High rise towers are sprouting up along the coast as well as in the downtown and urban cores from Brickell Avenue to West Palm Beach. But construction does not begin and end with these high end projects. Smaller in-fill projects continue throughout the region. And, many homeowners are making home improvements or doing major renovations to their homes. For everyone involved in construction, Florida’s Construction Lien Law, Chapter 713, comes into play. While owners, contractors, subcontractors and materialmen involved in the bigger, high rises are generally familiar with the requirements of Chapter 713, those working on smaller projects, particularly those working on home remodeling projects are less familiar with the requirements. As a result, we often see lien disputes arise that could have been avoided had both the owners and the contractors and their subs been a little more aware.
A complete discussion of Chapter 713 could take several blog posts. But one area that many people get confused about is whether a contractor, subcontractor or supplier is required to provide a Notice to Owner. The Act provides for different types of lienors and provides for certain exemptions to compliance in various sections of the Act. First, there are contractors who perform professional services, such as architects, landscape architects, interior designers, engineers, surveyors and mappers (F.S. 713.03). The lienors who perform services for property owners under a direct contract in connection with a specific parcel of land have the right to lien that property and are not required to provide a Notice to Owner. The lien is effective upon recording.
Next, contractors performing services or providing labor or materials for subdivision improvements under a direct contract with the owner are entitled to lien the property but do not need provide a Notice to Owner. These services include grading, excavating and filling land, paving streets, construction of ditches, installation of drainage improvements and utilities and otherwise making property suitable for construction of improvements. Again, the lien is effective upon recording.
Materialmen or laborers who are in privity with the owner or a contractor under direct contract with the owner and in compliance with Chapter 713 are entitled to lien the property but are not required to provide a Notice to Owner. However, subcontractors, materialmen and laborers who are not in privity with the owner but otherwise in compliance with Chapter 713, are entitled to a lien, and must provide Notice to Owner. This is the situation most owners are faced with. These owners contract with a general contractor who then contracts with different subcontractors to do much of the work. In order to ensure that these subs are paid, the subs must provide a Notice to Owner and a Notice to Contractor, as set forth on the Notice of Commencement not later than 45 days after commencing work or providing materials to the job site. If the Notice is provided, the Owner must make sure that the Contractor provides appropriate lien releases from that sub or the Owner could be faced with a lien from that sub.
The distinction as to when a Notice to Owner is required is whether the Owner entered into a direct contract with the contractor/subcontractor. If there is a direct contract, the Owner, in theory, will know who has worked on the site and therefore, who has lien rights. The Notice to Owner is designed to advise the Owner who has worked on the Property when the Owner has not contracted for specific services. This helps ensure that those workers are paid.
Section 713.015 contains a mandatory provision for all direct contracts over $2,500 for single or multi-family dwellings that sums up everything every Owner and Contractor needs to know about Florida Construction Lien Law. It says: “FLORIDA’S CONSTRUCTION LIEN LAW IS COMPLEX, AND IT IS RECOMMENDED THAT YOU CONSULT AN ATTORNEY.” This provision could not be truer.