What are the steps that you need to follow in order to secure your Lien?
Step 1: Serve the Notice to Owner no later than 45 days from your first work or delivery of the materials to Site
In the state of Florida, you need to serve a statutory document called a Notice to Owner no later than 45 days from your first work or delivery of materials to the site. However, there are exceptions to this, and it is crucial to understand if you are required to send a Notice to Owner, and by when you should.
a. Who doesn’t need an NTO?
Now, if you have a contract directly with the owner, example if you are the commercial owner or the residential owner, then you don't need to serve a notice to owner. As a best business practise, advice, you should have process in your office to serve notices no matter what. Especially if your work requires you to be a subcontractor, or maybe sometimes a sub- subcontractor, or if you have a direct contract with an owner, instead of trying to figure out what document you need to serve when, it is advised to have a process in your office every time you sign a contract. And it's over this amount of money, you going to send a notice to owner.
b. Is it delivery of the Notice to Owner or receipt of the Notice to Owner?
The answer is that it's receipt of the Notice to Owner. So, the 45 days is when the owner and the contractor need to receive this document. So, if you put it in the mail on the 44th day, you're going to miss the deadline.
c. How to count the 45 days?
Counting the 45 days correctly to send your NTO is very important. Let us help you understand how you should count, and best practices in this section.
Suppose today is the day you deliver materials to the job site, considering it as day one would be incorrect. Technically the day you deliver materials, should be considered as day zero. Likewise, the day after you deliver materials, that is tomorrow, should be considered as day one. Post day one, you will need to count every day, including weekends and legal, hardly the holidays, all the way through the 45th day. Now, if the 45th day, lands on a weekend or holiday, then the last day would roll to the next business day.
**Please remember to include Saturdays and Sundays. So, if the 45th day is a Saturday, it goes to the Sunday and if Monday is a federal holiday and there's no mail, it would roll to the next Tuesday. However, as a best business practise, it is not recommended that you wait that long. If you want to know the legal way to count, the above mentioned way, is how you count the 45 days.
If you are looking for a free tool that will help you calculate when the 45 days is due for your NTO, you can visit calculien.com.
d. What is first work? When does the first work date start?
The first work is when you deliver the materials to the site. You have the ability to serve a notice to owner no later than 45 days after your first work and first delivery of materials. So, if you're wondering how early you can send it, you can send it as early as the day you have a contract.
For example, if you visit the owner to talk about selling him solar panels, and you gave him a quote, it would be too early to send a notice to the owner without first signing a contract. Also, if you send a notice to the owner just because you met the owner and he told you verbally that he'll go ahead and do a deal, but haven't signed your contract yet, it will be too soon as well.
Now, let's say you meet the owner, and you give him solar panels and he signs the contract on the spot. You have an eight-week lead time on the solar panels, so you're not going to be back for eight weeks. But that's OK. You can serve a notice to the owner once you have a formal contract between you and the other party. So, you could serve it then, even though you may not deliver materials for some time, or you may not start work for some time. So, the range of time to serve a notice to Owner is the same day, or after you have a contract, and no later than 45 days from your first work, or delivery of materials to the job site.
Step 2: Record Claim of Lien within 90 days of your last work or delivery of materials to Site
You need to record a claim of lien within 90 days of your last worker delivery of materials to the job site.
a. How to count 90 days?
You're going to count it just like you counted the notice to owner days. So, if today is the day that you delivered materials or did substantive work on the project, today is day zero and you're going to count 90 days including every day, weekends, and legal holidays. If day 90 lands on a weekend or legal holiday, it will roll to the next business day. If the 90th day was a Sunday, then it would roll to Monday and if Monday was a legal holiday, it would roll to Tuesday. Calculien.com can help you calculate both notice the owner deadlines and lean deadlines.
b. What is last work and what isn’t last work?
The easiest way to answer that is to talk about what isn't last work. And what isn't considered as last work are punch lists work, warranty work or repair work. So, if you are an electrician and you have done all the work, and passed all inspections, you’ve gotten the owner's final approval, the property is being used now, and all your work was done three weeks ago, then that is your last work.
But suppose today, you were called in to replace or trim pieces that were damaged, or to fix a switch that you put in that no longer works, you must take it out and replace it under warranty. But according to the Florida lien law, your last day of work was three weeks ago, not when you go in today to replace the covers or the switches.
** Please note "last work" is not the mere act of passing an inspection. So, if you did lots of work three weeks ago to get ready to pass an inspection, and today is the day that the inspector comes in and walks around, your last day of work was three weeks ago, not today when you go in and replace the covers or switches. According to the lien law, your last day of work is, in the example, was three weeks ago, it's not when, you go in and do some touch-ups.
Step 3: Serve a Contractor's Final Affidavit?
If in privity with the owner, serve Contractor's Final Affidavit no later than 5 days before you file suit to foreclose on Claim of the Lien - For those of you who have direct contracts with the homeowner and are using SunRay services, we also recommend that you ask them to prepare a contractor's final affidavit at the same time. Doing both at once will save you time and energy in the long run if you're in direct contact with the homeowner.
Step 4: File Suit to enforce Lien within 1 year of Recording
The contractor's final affidavit doesn't just get recorded; it gets served on the owner too. It's a document that effectively says, "I'm the contractor and you're the owner. These are the people that remain unpaid, and you'll list them. Then the last day is you need to file a lawsuit no later than one year from the recording date of the lien."
a. Can you just re-record the Lien?
That's illegal. You can't commit fraud by doing that. The clerk may accept it, but it will be fraudulent. So, no, you can't do that. You must file the lawsuit within the year to secure your lien on the property.
We have another tool that can help you with liens. It's called the Lean O Matic. You can go to Lean O Matic dot com and get a free desk tool that will tell you everything you need to know about filing liens. Depending on your job and what type of job it is, you can get the right information for free at thelienomatic.com. So, if you have a lien on a piece of property, be sure to check out the Lean O Matic.
What about when you have a Claim on a Payment Bond, whether it's public or private?
If there is a payment bond that was issued by the contractor, the steps you need to follow are very similar to the ones that have already been explained, with some slight differences.
Step 1: Serve notice to Contractor no later than 45 days from your first work or delivery of materials to site
A notice to contractor is similar to a notice to Owner, and when you use SunRay, they use what's called a combined form. If you ever look at it, it's called a notice to owner slash, notice the contractor. It takes both forms and puts them into one document. So whether it's a public job, a private job bonded non bonded, that one document covers them all if you're doing them yourself. Just know that the notice to owner form is technically a separate form in the statute than the notice to contractor form.
We strongly recommend that you use SunRay to take care of your notices, because we are the experts, and we'll do it right.
a. Who doesn't need to get this Notice to Contractors?
So, if you're a subcontractor working on a bonded project - like a condo tower or a school board project that's bonded by the contractor - you don't technically need to survey or send a notice to the contractor to preserve your rights. The person who does need to do that would be the sub-subcontractor. So, if I'm the electrician and I hire out some labor or my material supplier, they would be a vendor to me, the subcontractor, or they would be a sub-subcontractor. They need to serve this notice to the contractor.
Our advice is to always serve, notice the contractor no matter what so that there is a process in place.
b. Is it delivery of receipt of the notice?
If you're sending the notice to the contractor on the 44th day by certified mail, it will unfortunately be late. In order to avoid this, you need to send the notice early - just like with the Notice to Owner. The way you count the days is the same for both. And, if you need some help counting, there's a free calculator tool that can do it for you, so you don't have to count on your fingers. You can use SunRay’s deadline calculator to never miss a deadline again.
Step 2: Serve a Notice to Non-payment within 90 days of your last work or delivery on materials to the Site
Like the claim of lien, there's a document called a Notice of non-payment. It's a sworn document and has very similar information to the claim of lien, but it's not the exact same document. This needs to be served no later than 90 days from your last work or delivery of materials to the job site.
a. How to count 90 days?
The first day of work is counted as day zero. You then count every day after that, including weekends and legal holidays, until you reach the 90th day. If the 90th day falls on a weekend or legal holiday, then it rolls to the next business day. The calculator tool on our website will help you calculate those days.
Step 3: File suit to enforce your Bond Claim within 1 year of Last Work (Compare with Lien Deadline)
The last step is to file a lawsuit on the bond claim within one year of your last date of work. Remember when we were talking about the Lean deadline - it was one year from the recording date of the claim of lien. Here, it's a little sooner - it's one year from your last date of work. So, the dates between filing a lawsuit to secure your rights on a bond are shorter than on a claim lien. You can use the LienOMatic tool to help you understand what to file and when.
What are the best Collection Tips and Tricks?
So, let's talk about some collection tips and tricks, and what works best and what doesn't.
Tip 1 - Have a written contract
Having a written contract should be at the top of your list as it is the best way to protect yourself when someone asks you to sign on the dotted line. A contract that is well written and reviewed by a lawyer will help ensure that you are in good standing as opposed to an invoice or proposal that might leave you vulnerable. Good terms and conditions within the contract will help shield you from any potential legal issues.
Tip 2 - Exception – No Contract maybe better than Other Side’s Contract
The exception to the rule of always having a written contract is when the other party's contract would put you at a disadvantage. In most cases, it's better to have no contract than to sign a contract that's not in your best interests. But sometimes you must sign the other person's contract, so it's important to carefully review it before you commit.
Tip 3 - Right to recover legal fees and right to stop work if not paid
Suing to get paid, defending oneself from a lawsuit, or being sued all have one thing in common - the need for legal representation. And as we all know, legal fees can be quite expensive. This is why it is important to have a clause in your contract that states you have the right to recover legal fees should the need arise. Additionally, you will want to include a clause that allows you to stop work if you are not being paid. This way, you can avoid working for free and putting yourself in a difficult financial situation.
Tip 4 – Include your Customary Exclusions
Number three on our list is to have a ready list of exclusions in your contract that relate to your scope of work. There are always going to be things that you know you can't or don't do, and it's important to have that list ready so that there's no confusion about what is or isn't included in your price or schedule. Having this list ready to go will help avoid any potential issues later down the road.
There is another free tool to help you called the contractdetective.com. It's an artificial intelligence scanning tool that will scan your contracts and upload a PDF copy of it, highlighting and annotating any areas of concern like indemnity, hold harmless, limitations on liability, liquidated damages, pay when paid, and many others. You can use this helpful tool completely free of charge - in just 60 seconds, you'll have a clearer understanding of what needs to be changed or improved in your contract!
So, if you're questioning yourself about how to go about reviewing and understanding the meaning of your contract, the free Contract Detective tool can be of great help. It will scan your contract and include links to explanations for each section in layman's terms. For example, if you want to know more about liquidated damages, you can click on the provided link which will take you to a short video (roughly three minutes in length) that goes over what liquidated damages are in detail.
Tip 5 – Secure your Lien and Bond Claim Rights
Tip 6 – Don't wait to send your NTO until you are Unpaid
Sending a notice to your owner informing them that you have not been paid yet is not something you should procrastinate on. Do not wait to send your notice to owner, send it within the deadline.
Tip 7 – Be Cautious of those that tell you not to send an NTO or not to Lien
It's best to send the notice to the owner as soon as you sign the contract. Be very wary of anyone who tells you not to send a notice to owner or not to leave the job - this is technically illegal in the State of Florida. No one can stop you from sending a notice or recording a lien.
We often hear from clients who tell us about how somebody else in their position didn't get paid because they recordings or served a notice past the deadline. If you don't get paid, recording a lien or serving a notice to the owner won't give you your rights back. So be careful of missing the 45-day or 90-day deadline because once that time has passed, there's nothing that can be done to help you.
Tip 8 - Don't sign Unconditional Releases
It's important to be aware that if someone gives you a cheque in exchange for a release, there's always the possibility that the cheque is no good or that there are insufficient funds. They might also put a stop payment on it. Or, even worse, you might never get the check if you send them a release based on the promise of one. If your release is unconditional, then you will have given up those rights. So, our advice is to make every release conditional.
The SunRay system comes with built-in conditional releases, but if you have another release that you need to sign, you can go to makemeconditionalstamp.com. We'll send you a stamp for free that you can use to stamp any release, and it will make the release conditional on receiving the payment.
Tip 9 - Use the 6060 rule
It's important that you start the lien or bond claim process within 60 days of your last workday. Don't wait until the 85th day, as it will only take longer.
60 days from last work to lien bond claim (don’t waste time past this) - If you're thinking about trying to do everything yourself to save time and money, think again. Although it might be tempting to go the DIY route, it's important to remember that things like this usually take much longer than anticipated - especially when you factor in things like gathering all the necessary information and making sure everything is accurate and up to date. And if someone on your team is out of the office on vacation or taking a sick day, it can really set you back. So, our best advice is to not wait until the last minute to get started on something like this. If you haven't been paid for your work and it's been more than 60 days since your last day on the job, that's when you need to start taking action to protect yourself. This means putting together the process to file a lien or bond claim so that you can get paid what you're owed. So, remember, the sooner you start acting, the better off you'll be.
60 days to aggressively collect yourself (calls, emails, text messages...) - The next 60 days are crucial when it comes to collections. You want to make sure that you're recording everything and that you serve your bond claim in a timely manner. Then, internally, you should start making collection calls, sending emails and text messages, and visiting people in their office. Whatever it takes, the next 60 days should be focused on trying to collect the debt.
Don’t Delay, pursue legal help thereafter - If these two methods don't work, it's important to seek legal help as soon as possible. The longer a debt is past due, the harder it is to collect. So, the sooner you start the collection process, the better off you'll be.
What are the best Free Tools to use?
So, let's recap these free tools that we talked about.
www.CalcULien.com - Have trouble figuring out when your Notice to Owner (NTO), Claim of Lien or Payment Bond/Notice of Nonpayment is due? Use the Calc-U-Lien to help calculate Florida state Notice to Owner (NTO), Claim of Lien or Notice of Nonpayment (payment bond claim) dates.
www.LienOMatic.com - The Lien-O-Matic helps you understand what and when to file, depending on your role and type of construction project.
www.contractdetective.com - The Contract Detective tool, which will scan your contracts for certain dangerous provisions. This artificial intelligence tool looks for specific construction contract provisions and explains their significance under Florida law. These include consequential damages, pay when paid, hidden conditions, and indemnity, just to name a few.
www.makemeconditionalstamp.com - Let’s say you have a partial or final release that someone has given to you, and it’s not conditional (or you may not be certain it is conditional). With this free stamp, you can make any release conditional upon payment. So go ahead, fill out the form, and we’ll send you the stamp.
www.deadlinecalculator.SunRaynotice.com - Use SunRay’s easy to use deadline calculator to calculate your due dates for your preliminary notices, mechanic liens and bond claims in all 50 states in the US.
www.SunRaynotice.com/resources - If you need more information on what to file and when in Florida, or any other state for that matter, we have a ton of resources available right on their resources page. Just go to SunRayNotice.com/resources and you'll be set.
1. Can you explain why you need to send a notice to the contractor again? If you are a subcontractor, you do not need to, but if you are a subset, you do?
Right, so on a bonded project, where the general contractor has a payment bond, if you have a direct contractual relationship with that bonded contractor, you do not need to serve a notice to contractor in order to have rights, to make a claim on that payment bond. So, again, we will take my example. Let's say it's the school board has a contract with ABC contractor, and I'm the electrician. And that contractor is bonded to preserve my claim against that.
Bonding contractor, I do not need to serve as a sub to the bonded contractor A Notice the contractor. My advice is that you should, you should just have a process in your office that you serve. Notice the owners and notice to contractors no matter what. If you choose not to, or maybe you forgot, you don't need to.
Now, my supplier, in my example, so I'm the electrician, if my supplier or my sub-contractor, so that would make them a sub subcontract or wants to make a claim on that payment bond, they do need to send that notice to contract. Remember, the contractor knows that I'm on the project because I signed a contract with them, but the contractor doesn't know who I'm buying materials from, or who I subcontract work to.
So, for those people to have lean or claims to have rights against the payment bond, they need to give the contractor. Notice, that's the purpose of giving that notice.