In this blog, presented by SunRay Construction Solutions and Alex Barthet, Principal, The Barthet Firm, we will provide you information on what you can do in case you miss your lien deadlines in the state of Florida. This blog will discuss in detail everything from the basics of lien rules to other bonds that you can pursue due to loss of lien rights, other means of recovery, and more.
Basic NTO/Lien Rules
In most construction cases in Florida, it is required to send a Notice to Owner. It is a written document prepared by the lienor to preserve their lien rights. This Notice to Owner should be received within 45 days of your first work or delivery of materials to the construction project. An exception to this rule is that if you provide this Notice to Owner to Sunray with enough time and they can bring it to the post office by the 40th day, then it is considered that the notice has been served to the owners, irrespective of whether it gets to the owner or not.
The Claim of Lien/Notice of Nonpayment which is a claim of bond for both public and private projects should be served no later than 90 days (about 3 months) from your last work or delivery of materials to the construction site. When you count your 45th/90th day, you need to count every single day, including holidays and weekends. Now, if the 90th days happens to fall on a Saturday, it will roll to Sunday, and then to Monday. If Monday again happens to be a federal holiday, then Tuesday will be considered as the 90th day.
Another basic rule to remember is that to enforce your lien, you must file a lawsuit no later than one year from the date of recording the claim of lien. In the case of filing a lawsuit on a claim against a payment bond, you have one year from the last day of furnishing work/materials to the job site.
Did You Really Miss the Deadline?
There are several exceptions to the above-listed rules, and many of these exceptions have exceptions which brings up the question of whether you really missed your deadline. Let us look at some of the most common exceptions.
- The first exception is that if you have a direct contract with the owner, then you are not required to send a Notice to Owner. For example, if you are a plumber hired by a homeowner to renovate their bathroom, you do not have to send a notice to owner to preserve your lien rights. Although this exception is in place, it is highly recommended that you do send the notice because it is a great collection tool.
- Another exception is that if you have a direct contract with the bonded contractor, then there is no need to send the notice to owner or the notice to the contractor as it is technically known. For example, you are working for a general contractor on a private project which has a bond. So, you are a subcontractor to the bonded general contractor and are not required to send a Notice to Owner or Contractor to preserve your bond claim rights. This exception works for both private as well as public bonds. The only requirement that you need to follow is that if you are working on a public project, then you must file your lawsuit within one year of the last day of work on the site.
- You also do not need to send a Notice of Nonpayment if you have a direct contract with the bonded general contractor on a public project. But again, it is recommended that you do send out the notice; however, it is not something that will affect your bond claim rights.
- Another major exception specific to bonded projects is that the 45 days (about 1 and a half months) on the Notice to Owner (technically the Notice to Contractor) does not start to run if you do not have actual or constructive knowledge about that bond.
For example, there is a public owner, a bonded general contractor, the subcontractor, the shell contractor, and then you the subcontractor. Now, the bonded contractor on a public job is required to record a copy of the bond in the public records so that everyone is aware of the bond. If they fail to do so, then it means that your 45-day deadline has not even started to run. So, you have enough time to serve your notice of nonpayment (which is required for a sub subcontractor) and then file your lawsuit.
This is why you must never assume that you missed a deadline and you have lost all your lien or bond claim rights. The bets course of action would be to reach out to a board-certified construction lawyer who can successfully guide you and ensure that you receive the money owed to you.
We also have a fantastic tool called the Lien-o-Matic. It is a handheld tool which provides information on the rules and many of the exceptions for private jobs, public jobs, FTO T jobs, Miller Act projects, etc. it is a free tool, so all you need to do is go to www.Lien-O-Matic.com, enter your details, you will receive a copy by mail for free.
Is There Another Bond to Go After?
There are some other avenues that you can pursue if you do blow your deadlines. One of the best options is to look for another bond on the job even if you otherwise have your lien rights. To use this option, you need to be further down the chain of contracts, which means it is ideal for use by subcontractors or material suppliers to subcontractors or subcontractors. So, what is this bond?
Let us say you are a general contractor working on either a private or a public project and you wish to have a little extra assurance that your shell contractor, plumber, or electrician, etc. will finish the job, or the project owner requires you to get a bond from your subs. In that case, you can ask your shell contractor to give you a bond.
Just like how you as a general contractor may have a performance and payment bond to give to the owner, there may be other bonds with the subs. So, now if you are a sub subcontractor to the shell contractor, and if the shell contractor has issued a payment bond, then you have rights against that payment bond. Even if you have lien rights, you can still make a claim on the subcontractor’s payment bond.
Now, how can you get your hands on this document? As per the statutory bond, there is no need to record it in the public records, so how do you get access to it? Ideally, the subcontractor is supposed to give you a copy of the bond. You need to make a written request using email or a formal statutory request. However, your best option to get this document, if it exists, is from the general contractor who will want to ensure that you do not leave the job, so they will ensure that you get a copy of the bond.
A key thing to remember with these bonds is that to preserve your rights on the subcontractor’s bond, you must follow whatever process is mentioned in the bond. So, if the bond states that you need to provide certain documents, you will need to provide them, or if they ask for a notice of nonpayment, you need to provide it. To summarize, if you are a sub subcontractor or a material supplier to the subcontractor or sub subcontractor, you must look for a copy of the subcontractor payment bond.
How to Sue for Breach of Contract?
In addition to your lien and bond rights, there are other ways to protect your payment rights. The first one is breach of contract. If you have a written agreement with another person or entity, it could also be a proposal, quote, or invoice, then you can sue them if they do not pay you. For example, if you are a plumber and your contractor signs your purchase order, you have completed all the work, but you failed to serve the required notices, and you have no lien or bond rights on the project. In such cases, you can sue the contractor for breach of contract.
This is because you have invoices or purchase orders which support the fact that money is owed to you and since the money is not paid, you can take the general contractor to court. However, you must pay close attention to a provision in the contract called pay when paid. Now, if this provision is specifically mentioned in the contract, and the contractor has not been paid by the owner or the general contractor, then you cannot sue them for breach of contract.
So, what do you do? Well, you can look for another claim which you can sue for unjust enrichment.
How to Sue for Unjust Enrichment?
If you have conferred a benefit (enrichment) and not been paid (unjust) for it, then you can take legal action against anyone who has received that benefit. The benefit was for the contractor who was paid but who in turn did not pay the bills, or it could be the owner for whom you have done the work, such as installing cabinets, but you were not paid for it.
Typically, this claim of suing for unjust enrichment is against a party that is higher up in the contract chain, such as the owner. So, let us say you are a subcontractor. If you have lien rights or bond rights, then your attorney will pursue that, but they may also sue the owner for unjust enrichment just to add them to the legal case. But you need to pay attention to one key factor.
If you are suing the owner for unjust enrichment and have not been paid; however, the owner has paid all the bills, it is just for them. The contractor has not paid you, so in such cases, you have no claim for unjust enrichment. Also, please be aware that you will not have the right to recover your legal fees in this situation because there is no legal right to recover legal fees for an unjust enrichment claim.
Now, if everything else fails, your last option would be to send a late Notice to Owner anyways because in many cases, the Notice to Owner has worked as a successful collection tool to get paid. You need to remember that a Notice to Owner is not an encumbrance on real property. So, if you record a lien which you know is no good, then that is a fraudulent lien; however, the Notice to Owner is just a document and not a lien.
For example, you are a material supplier to a subcontractor, and you have not been paid and you have also missed your deadlines. Now, if you send a Notice to Owner to the contractor, they will contact the subcontractor and inform them that they cannot pay them until they receive a release from you as the material supplier. Although your subcontractor may point out that the Notice to Owner is late, the general contractor or owner would overlook the delay and ask for the release, meaning the subcontractor will have to pay you.
So, remember that in some cases, even sending a late Notice to Owner can get you paid successfully.
Alright, so let us quickly recap the highlights of this webinar.
- Ensure that you are aware of all the basic notice/lien rules (check out the Lien-O-Matic tool).
- Exhaust all the available exceptions to the lien law. You can consult with a certified construction lawyer.
- Check whether the subcontractor is bonded and if you can make a claim on that subcontractor bond.
- Explore your legal avenues which include suing for breach of contract and suing for unjust enrichment.
So, there you have it – a detailed blog on what to do if you blew your lien and bond deadlines yet want to get paid successfully.