A construction lien, also known as a mechanic’s lien is the most powerful tool for getting paid in the construction industry. But filing it can be tricky and you need to file a few pre-lien documents before you can file your lien and get paid. Here we break it all down for you.
What Does a Construction Lien Do?
When you lien a property, the property cannot be sold, as the title’s name will be clouded. If there is a lender, the lien will stop all funding. The Florida construction lien law also informs all required parties that you are working on the project and have not been paid for providing labor or materials.
What Are the Steps to Liening a Project?
Step 1 – Send your Notice to Owner
If you have a direct contract with the owner of the property you do not need to send a Notice to Owner (NTO).
If you do not send an NTO you will not be able to file a lien later. Or if your NTO is received late, then you will not be able to file a lien later either.
The day you first furnish labor or supplied materials to a project is considered Day 1. You need to send your lien by Day 40 for the stamped USPS manifest to be considered served. If your Notice to Owner Florida Form is not received by the 45th day it is considered invalid.
An important note to remember is that with specially fabricated materials, the 45-day clock starts ticking as soon fabrication begins.
Step 2 – Prepare your lien using the correct form
Step 3 – Determine the last day on the job
You have only 90 days from the last day you are on the property to record a lien. If you go to record your lien and wait until the final hour you may not be able to get the lien recorded in time. Best business practice is to lien the property within 60 days from last furnishing labor and/or materials.
Step 4 - How do I know where to record the lien?
A lien is recorded in the county where you are making the improvements. So, if you are working in Miami Beach, Florida you will record your lien in Miami-Dade county.
Step 5 – Mailing your lien
You have to mail your lien by certified mail to all parties within 15 days of recording the lien. If you do not mail your lien, it is considered invalid.
Foreclosure – Enforcing a Construction Lien
Once you have sent your NTO, most general contractors make it a priority to pay you. If you do go ahead and file a construction lien then they should pay you after that.
What happens if they don’t though?
Then you have to file a lawsuit to enforce the lien. This is the last step in the construction lien process. Ordinarily, you have one year from the day your lien is recoded to foreclose.
Foreclosure – Shifting Deadlines
You normally have one year to foreclose on a property. But there are 3 exceptions to that rule:
- If a lien is contested it shortens its life. A Notice of Contest of Lien reduces the time to file suit from one year to 60 days (§ 713.22(2), Fla. Stat. (2019)).
- A 20-day summons to show cause reduces the time to file suit from 1 year to 20 days (§ 713.21, Fla. Stat. (2019)).
- If the Notice of Commencement is terminated the lien must be recorded within 30 days of the recording of termination and a new Notice to Owner form must be served (§ 713.132(c), Fla. Stat. (2019)).
Don’t slip up at the last mile! Make sure you comply with the extra bits of paperwork you will have to go through to get your money.
Contractor’s Final Payment Affidavit
A Contractor’s Final Payment Affidavit is a critical document. Without it, anyone doing business directly with the property owner will not be able to enforce their lien rights.
The affidavit has to list all lienholders under the contractor’s control and note whether those lienholders have been paid in full, and if not, the amount still due.
It is very important to be thorough when drafting this document and list everything yet to be paid. If you fail to include a debt, it is likely you will not be paid for the forgotten work or materials.
Tasks After Project Completion
After completion of the project, a contractor must respond to a Sworn Statement of Account.
The Sworn Statement of Account describes services or material furnished, the amount paid, the amount due, and the amount to become due if that is known.
If you fail to respond within 30 days or you submit the wrong information then you will lose your lien rights.
Many contractors confuse getting paid on a public construction project with a lien. In the state of Florida, you cannot file a lien against funds, nor can you file a lien on city, county, or state construction work.
The government has sovereign immunity. You cannot foreclose on the property. Instead of liening the project, you would put a claim against the bond. If public projects were secured by a lien then people would be able to foreclose and acquire ownership of government property.
An Easier Filing Process with SunRay
Your lien can be rejected altogether if the information is wrong. SunRay Construction Solutions can help make sure that you meet every deadline and that every detail is perfect.
THE INFORMATION ON THIS WEBPAGE IS NOT THE SAME AS LEGAL ADVICE. SUNRAY CONSTRUCTION SOLUTIONS, LLC IS NOT AN ATTORNEY OR A LAW FIRM. WE RECOMMEND THAT YOU CONSULT WITH AN ATTORNEY.