I Recorded a Lien, Now What? How do I Get Paid? - Florida - Webinar

In this blog, presented by SunRay Construction Solutions and Alex Barthet, Principal, The Barthet Firm, find out what construction professionals in Florida should do once their lien is filed and what steps should they take to ensure successful payment.

What is a Lien?

So, let’s begin by understanding the basics – what is a lien?  

• A lien is an encumbrance on real property. So, what it does is prevent the owner from selling or refinancing the property.  
• In most cases, when you put a lien on a property, it is a technical default under most mortgages. What this means is that when an owner signs a mortgage, they agree with the lender that they would not let anyone put a lien on the property. So, if someone does put a lien on the property, then it is an automatic technical default on their mortgage.
• Another scenario where a lien can cause problems for the owner or contractor is when a sub or a supplier puts a lien on the property. Typically, there are provisions in the prime construction contract, i.e., the contract between the owner and the contractor where the contractor agrees that they will not let anyone put a lien on the property. So, if a sub or supplier does put a lien, then it is default under the prime construction contract.

So, in short, a lien can create a series of problems for the owner or the prime contractor because the moment you put that lien, it will prevent the lender, owner, or contractor from funding. This is why a lien is considered as one of the most powerful tools for resolving payment disputes.

What Happens After I Lien?

You have recorded your lien – what happens now? Well, nothing really happens just by recording the lien. It will just be recorded and sit in the public record. Although it may create problems for some of the owners and contractors, the fact is that unless you actually do something about the lien or the act of filing the lien truly bothers someone, not much is going to happen on its own.

How Do I Get Paid?

So, how do you actually get paid? Many construction professionals who file a lien often wonder what the point of filing the lien if they are not getting paid. The key here is to make sure that you truly understand how the lien works and what its limitations are. If you comply with all the notice requirements on the job and the lien requirements, you will secure an interest in the property which will potentially put you ahead of other creditors. So, if you do have that lien, then you will be one of the first people to get paid.  

• The first point to understand is that the lien is just the beginning of the process.  
• Next, it is up to you to enforce your lien rights through a civil court action known as a ‘foreclosure’. A foreclosure is a lawsuit that you will have to bring where you will name the property owner and state that you have a lien on the property for an X amount. If you are not paid, then you will sell the property to recover the amount. Also, if there is any equity in the property, then you will get that equity first.
• You also need to understand that a foreclosure is like any other court action, which means that it will be costly and time-consuming.
• With regards to the deadline, you will have one year from the date of recording your lien to file a suit to foreclose on your lien. If you fail to file your lawsuit within this time period, then your lien is gone.
• The only way to extend this timeline is to make sure that you file the suit to foreclose as per the timelines.  
• Another key point to remember is that if you are close to the deadline and want to re-lien, then your second lien will be considered a fraudulent lien, and you may be liable for legal penalties.

Here are some tips that will help you in making your lien successful.

• The first tip is to practice the 60/60 rule. As per this rule, it is highly recommended that you start the process of recording your lien when you are on day 60 from your last day of work.
• As per the statute, you have 90 days from your last day on the job to record the lien. However, you don’t have to wait until the last moment; you can even record it while you are on the job.  
• Putting a lien together is a time-consuming process because it involves lot of paperwork which must be signed and notarized, then you need to record it in the clerk’s office, etc. All this can take time, and if you wait until last couple of days, then you are at a risk of missing the 90-day deadline.
• By following the 60/60 rule, you will ideally have about 30 days to put everything together and record your lien. If someone promises to pay you and asks you not to lien, you can always satisfy the lien after you have paid.
• The next 60 days in the 60/60 rule are the 60 days after you have recorded your lien. This is the time where you should do everything in your power to try to get paid – from hassling the customer to calling the owner to showing up at people’s office to sending texts, emails, making phone calls – everything.
• Once these 60 days are up and you are still not paid, that is when you reach out to a construction lawyer or a firm like SunRay for collection. Again, waiting until the last moment to reach out to professional services can reduce the ability to collect these debts when compared to beginning the collection process much sooner.
• Now, some people may have specific business reasons for not pursuing the lien and this is absolutely fine. However, you must recognize why you are deciding to wait instead of simply deciding to wait for the sake of waiting and hoping to get paid.

My Lien was Bonded Off? Now What?

There are three specific situations that you may run into once you record your lien. The first one is that your lien was bonded off. Now, if someone is suggesting that they are going to bond off your lien, you should ideally be happy about it! Here’s an example to explain why bonding off your lien is a good thing.

• Let’s assume there is a property worth a million dollars, and you have a lien of $100,000. You have won the lawsuit and they are now going to sell the property. In a best-case scenario, the property has no mortgages or any other liens or encumbrances.  
• Once the Court rule sin your favor, there will be a public sale of the property. The initial bid will be your lien amount, and someone ends up placing a bid of $110,000 or more. Whoever wins the bid will pay the amount to the clerk who in turn will give you your $100,000. The rest will be given to the property owner and then the property will have a new owner.
• Now, what if the million-dollar property has a $900,000 mortgage on it and the people who show up to bid are willing to only bid $500,000?
• As long as the bid amount is more than your lien amount, you can rest assured that you will be paid. However, if they don’t, then you end up becoming the owner of the property.  
• Although you can kick out the owner at some point, the mortgage company will come after you and foreclose your interest out of the property. So, now, not only have you done all the work and are not getting paid for it, but you are also not going to get the property because you are behind on the mortgage.

Here is why bonding off your lien works in your favor.

• Let’s take the same example. Instead of having to foreclose on the property, someone is bonding off your lien. What it means is that they are going to take cash or a surety bond for roughly 150% of the lien amount. So, as per our example, they will put up $150,000 in the clerk’s office either in cash or a surety bond.
• So, the property is now no longer subject to your foreclosure; however, there is a pot of money secured just for you which means that if you win the case, you don’t have to worry about selling the property.

One thing that you need to keep in mind is that if your lien is bonded off, then you must be prepared to fight. It is highly recommended that if you receive a certificate of transfer which is the legal device to transfer the lien to the bond, then you should immediately begin litigation. This is because once they have bonded off, it will not prevent them from selling or refinancing the property. So, the best practice is to start litigation as soon as your lien is bonded off.

Notice of Content of Lien

The next situation is where you receive the Notice of Contest of Lien. If you do receive it, then you must file your lawsuit to foreclose immediately.

• The rule typically states that you have to file your suit to foreclose within one year from the date of recording your lien.
• The exception to the above rule is if you receive the Notice of Contest of Lien, then you only have 60 days to f file the lawsuit. If you fail to do so within 60 days, then you automatically lose your lien rights.
• This notice is mailed to you by the Clerk, and it will have a stamp on it with the date when the clerk mailed it. So, it is 60 days from the date on the stamp when the Clerk mails it to you. Let’s say you receive it five days after it was mailed, then you have only 55 days to file the lawsuit. This is a hard and fast rule with no exceptions.

20 Day Summons

The third specific situation that you need to watch out for is the 20-day summons. Sometimes, 60 days is not enough for some owners and contractors who want to deal with your lien. So, what they do is they send you what is called a 20-day summons.

• As we mentioned earlier, the timeline to file a suit to foreclose is one year from the date of recording the lien. However, if you receive the 20-day summons, it drastically reduces the deadline to just 20 days from receiving this summons.
• So, what happens is you will receive a civil action summons, forcing you to file a lawsuit to foreclose. You can either file a separate action to foreclose on the lien or file a counterclaim in the same action to foreclose on your lien.
• The key point to remember is that you need to do this within 20 days because if you wait past the 20 days, then you will lose your lien rights and your lien will be considered extinguished.

Following the above-mentioned timelines and processes can help you successfully convert your lien into actual money.

At Sunray Construction Solutions, we also understand the importance of protecting your rights on a construction project. Learn how to use the Florida mechanics lien form and how to file a mechanics lien in Florida to ensure you're paid for your hard work.

Sunray Construction Solutions offers professional "Notice to Owner Florida" services to help you secure your mechanics lien florida rights in the construction industry. Looking for a free Notice to Owner form in Florida? Get your free, editable "Florida Notice to Owner Template" today for easy and accurate preparation.

FAQs

What happens if I wait until day 89 to file my lien in Florida?

While you technically still have one day left, this is extremely risky. The lien filing process involves multiple steps including paperwork preparation, notarization, and recording at the clerk's office, which can take several days. We recommend following the 60/60 rule: start your lien process by day 60 from your last day of work to ensure you have adequate time to complete all requirements.

I've filed my lien but still haven't been paid after 6 months. What should I do?

Simply filing a lien doesn't automatically result in payment. You must take action to enforce it. If you've already spent 60 days after filing trying to collect (following the 60/60 rule), it's time to consult with a construction attorney about foreclosure proceedings. Remember, you only have one year from the lien recording date to file a foreclosure lawsuit.

The property owner says they'll pay me if I release the lien first. Should I do this?

Never release a lien before receiving payment. This is a common tactic that leaves you without leverage. Instead, you can prepare a conditional lien release that becomes effective only upon actual payment, not just a promise to pay.

What's the difference between a Notice of Contest of Lien and a 20-day summons in Florida?

Both dramatically shorten your foreclosure deadline, but they work differently:

• Notice of Contest of Lien: Reduces your foreclosure deadline from one year to just 60 days from when the clerk mails the notice.

• 20-day summons: Reduces your deadline to 20 days and requires you to either file a separate foreclosure action or file a counterclaim in the same action.

How does bonding off a lien actually protect my payment rights?

When someone bonds off your lien, they deposit approximately 150% of your lien amount (cash or surety bond) with the court clerk. This creates a dedicated fund for your claim, eliminating the risks of property foreclosure sales where insufficient bids or senior mortgages could leave you unpaid. The bond essentially guarantees payment if you win your case.

Can I file a second lien if my first one expires in Florida?

No. Filing a second lien for the same work after your first lien expires is considered fraudulent and can result in legal penalties. The one-year foreclosure deadline is absolute. You must either enforce your lien within this timeframe or lose your lien rights permanently.

What makes a lien "technically default" under most mortgages?

Most mortgage agreements include covenants where borrowers agree not to allow liens on the property. When a construction lien is recorded, it typically violates this covenant, creating an automatic technical default under the mortgage terms, regardless of whether mortgage payments are current.

Are there any exceptions to Florida's lien deadlines?

Florida's lien deadlines are generally strict with limited exceptions:

• 90-day recording deadline: Must be met from your last day of work with no extensions.

• One-year foreclosure deadline: No extensions unless you receive a Notice of Contest (60 days) or 20-day summons (20 days), which actually shorten the deadline.

• Notice requirements: Must be properly served according to statutory requirements.

What constitutes "last day of work" for lien deadline purposes in Florida?

Your "last day of work" is the final day you provided labor, materials, or services to the project. This includes warranty work, punch list items, or any other work performed. It's not the day you were supposed to be paid or when your contract ended, but the actual last day of your contribution to the project.

How much does it cost to foreclose on a lien in Florida, and is it worth it?

Foreclosure costs vary but typically include attorney fees, court costs, and time investment. The decision depends on your lien amount, the property's equity, and existing encumbrances. For smaller liens, the cost-benefit analysis may not favor foreclosure. This is why early collection efforts and professional guidance are crucial.

What if I discover the property has more debt than it's worth after I file my lien?

This is why bonding off a lien can be advantageous. It removes the property foreclosure risk. In a foreclosure sale, if bids don't exceed senior mortgages and your lien amount, you could end up owning a property with more debt than value. Always research the property's encumbrances before deciding whether to pursue foreclosure.

Can a property owner or general contractor prevent me from filing a lien?

No one can legally prevent you from filing a valid lien if you've met all statutory requirements. However, contracts sometimes include provisions requiring dispute resolution before lien filing. While these provisions exist, they generally don't override your statutory lien rights under Florida law.

How can I verify my Notice to Owner was properly served?

Proper service is critical for lien validity. Keep detailed records including:

• Certified mail receipts with return signatures

• Hand-delivery acknowledgments

• Email delivery confirmations (if permitted)

• Dates and methods of service

• Copies of all notices served

What should I do if I receive conflicting advice about my lien rights?

Construction lien law is complex and fact-specific. When in doubt, consult with a qualified construction attorney familiar with Florida lien law. Don't rely on general contractors, property owners, or non-legal professionals for legal advice about your lien rights and deadlines.