There are three big Notice to Owner mistakes that you need to be aware of in order to keep your property lien rights. These include: Misunderstanding your specific Notice to Owner deadlines, Misidentifying the job address location and Not knowing where you are in the job payment chain. It is important to file a Florida NTO for every job on time, with the correct information, and sent to the right people.
The information in this article comes from a podcast that was presented by Ariela Wagner, M.B.A., founder of SunRay Construction Solutions, and board-certified Florida construction lawyer, Alex Barthet, Esq. In this article, we discuss three Notice to Owner mistakes that can cost you big:
1. Florida NTO mistake: Misunderstanding your specific Florida Notice to Owner deadline
Many people in the Florida construction industry think that you need to send your Notice to Owner 45 days from first furnishing labor or materials. But this is incorrect. The Notice to Owner has to be received by the proper parties on or before the 45th day from first furnishing labor or material.
If you use send your Florida NTOs using the proper US Postal Service manifest — and make sure that it is stamped by the post office by the 40th day — then your Notice to Owner is considered served. Note that you must send your Florida NTOs by the 40th day, with no exceptions. If you send your notice after that — day 41 or 42, for example — and it is not received on or before the 45th day, you will lose your lien rights. If, however, you make the 40th day deadline but the NTO is not actually received until after the 45th day, it will be deemed as timely served.
a. How do you count your NTO deadline?
Your 40-day count begins from the first day you furnish labor or materials to the specific job site. And then you count every day going forward, including weekends and holidays.
b. What happens if the 45th day falls on a weekend or holiday?
While you usually count weekends and holidays, if the 45th day falls on a weekend or legal holiday, it rolls to the next business day.
c. How does SunRay’s post office manifest work?
At SunRay, we have a mailroom manager who goes to the post office every single day. We have a US manifest and we make sure that a US postal worker stamps, dates, and signs that the notices were sent on a specific day.
As long as the manifest is stamped by the 40th day, the Florida NTO will be considered served, even if the recipient receives it past the 45th day or never receives it at all.
d. Developing a credit and collections process
If you want to create a fool-proof credit and collections process and follow the best practices in the Florida construction industry, you will want to send your Notices to Owner as soon as you have a verbal or written contract. This ensures that you do not find yourself in a situation where you miss important deadlines.
You will also want to notice every job. This is a relatively inexpensive way to make sure that you are protected on every job. Set a threshold amount — $500 or $5,000, it’s your choice based on your particular business — and then engage your NTO process for every job above that amount.
You can request that SunRay begin working on your notice as soon as you sign the contract or begin work. start work. But you should not wait until the end of the job or you will risk making a mistake and losing your right to lien the property to secure payment.
e. Dealing with specially fabricated materials
If you produce or supply specially fabricated materials, then you need to be aware of an exception to the general rule regarding when to start counting your days to send the Florida Notice to Owner. Unlike those providing labor and other types of materials, if you are providing specially fabricated materials, the clock for sending your NTOs starts ticking the day you begin fabricating the materials (not the day you deliver the materials to the job site).
Say, for example, that your company makes trusses for roofs. Once you start cutting the trusses for the house or the commercial building you are working on, you cannot use that wood for anything else. This is what makes your trusses fall into the specially fabricated materials category. You would begin counting your days to send the NTO from the day you begin fabricating those trusses in your shop, not the day you deliver them to the job site.
2. Florida NTO mistake: Misidentifying the job address location
You might be surprised to find out how many people put the wrong address location on their Florida Notices to Owner. This seems like a simple thing. You have a job and you know where you are furnishing labor and materials. At Sunray, we identify this error all the time. What often happens is a subcontractor or supplier has two separate departments — a credit and collections department and a sales department. The sales department, because they procured the job through the general contractor and that’s where they will send your bill — used the GC’s address, rather than the actual site address, on all your company’s internal paperwork. This can result in the credit and collections department mistakenly thinking the GC’s address is the job site address. Since you are liening the property you are working on, the failure to properly designate the job site address can result in your losing your lien rights.
3. Florida NTO mistake: Not knowing where you are in the payment chain
The third mistake we see people make is not knowing where they are on the payment chain and how that affects who they must send their NTO to.
First, it’s important to understand that the title ‘Notice to Owner’ is a misnomer. It would be more accurate to call the document a preliminary notice because it must be sent to more people than just the owner of the property. It goes to all required recipients that are on the recorded Notice of Commencement.
For example, if you are a supplier to a subcontractor to a general contractor, or a sub-subcontractor to a subcontractor to a general contractor, the money trickles down these layers from the owner to you. The Florida NTO must go to all relevant parties in the chain of payment. If you fail to send the NTO to even one of the required parties, you will lose your lien or bond claim rights.
For example, if you are a sub-sub-subcontractor or a materials supplier to a subcontractor, in order to have lien rights, your Notice to Owner needs to go to the owner, as well as to the general contractor. The rationale is that if the general contractor — the person controlling the money — does not get the notice, they might not know that you are on the job and that you will lien the property if you are not paid. So, in order to protect the contractor, as well as the owner, you need to let them know that you are asserting your lien or bond collection rights by sending them an NTO. The lower you are down the payment chain, the more NTOs you need to send to the parties up the chain from you all the way to the owner.
At SunRay, we do diligent research to find out who needs to receive a copy of the Notice to Owner. We pull the Notice of Commencement if there is one, and if there is not, we pull master permits and will research the property assessor’s office if necessary to find out the name of the owner.
We not only have incredible resources to find recorded information, but we also have a stellar team that follows up with customers and customer’s customers, if necessary.
Think you don’t need to notice your job? Think again!
Some people think that they do not need to protect their lien rights because they get paid every week or every month. They think they only need to hassle with an NTO if there is a non-payment issue. But that is wrong. Circumstances change. Sometimes payments start slowing down or dry up altogether. Sometimes a job that started out at $20,000 becomes much bigger than you expected, putting you in the hole for double or triple that amount. You need to preserve your right to place a lien on the property at the beginning of the job in the event you are not paid. If you don’t send the NTOs within the required timeframe, you are out of luck. You are barred from recording a lien or collecting under the bond.
This is why we tell people: Notice every job!
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.