Learn the basics of sending out NTOs - what a Notice to Owner is, who is required to send one, how it secures your lien rights, and when you are required to send an NTO - and what happens if the property owner pays the general contractor before you send your Notice to Owner.
This information was taken from a webinar presented by SunRay Construction Solutions and Alex Barthet. Alex is a board-certified construction lawyer who serves clients in Florida. In this article, we discuss what you should do when you have only 40 days left to send your Notice to Owner.
We will be exploring answers to the following questions:
What is a Notice to Owner/Notice to Contractor in the state of Florida?
Very simply, a Notice to Owner secures your lien and your bond claim rights in the event of non-payment. While the Notice to Owner and Notice to Contractor are a combined form, the Notice to Contractor is for projects that are bonded, while the Notice to Owner is for private projects that are subject to lien
It is important to use the correct statutory language — such as that provided by the SunRay system — in every form for the state of Florida.
Who is Required to Send a Notice to Owner on private projects?
If you are a general contractor and you are hired directly by the owner of the property, you are not required to send a Notice to Owner in the state of Florida.
However, if you are not contracted directly with the owner of a property, you must send a Notice to Owner to secure your lien rights.
For example, if you are working directly for the general contractor and not contracted directly with the owner of the property, you must send a Notice to Owner, even if everyone knows your name or you have a huge truck or other equipment on the property.
Who is Required to send a Notice to Owner on public projects?
The chain of command for public projects is a little bit different. If you are a subcontractor on a public project who is hired directly by the general contractor, you are not required to send a Notice to Owner. But if you are working on a public project and are hired by a subcontractor to the general contractor, you are required to send a Notice to Owner.
Think of it as working with the owner of the property. The owner knows who you are on a public project that is bonded. The general contractor hired you directly, so if you are looking to get paid, and the general contractor holds the bond, then you go after that bond.
Let’s say that your city hires a general contractor who hires a subcontractor, who then hires you. In this situation, you would be required to send a Notice to Owner.
What does “45 days” mean?
A Notice to Owner needs to be received - not sent - by the 45th day from first furnishing labor and/or materials to the project. They key term here is “received.”
To count the 45 days, you need to count every day including all weekends and legal holidays. The exception to this rule is if the 45th day falls on a weekend, it will roll into a Monday. Similarly, if that Monday is a legal holiday, the 45th day will be considered to fall on -Tuesday.
Another exception to the 45-day rule concerns specially fabricated materials. As an example, if you are working on a special window that can only be installed into a specific residential or commercial property, the clock starts ticking as soon as you start fabricating the material.
What does “40 days” mean?
Because the NTO must be received by the 45th day from the time labor or materials were first furnished (or started to be fabricated for specialty items) - keeping in mind the timing extensions when the last day falls on a Sunday or holiday - subcontractors or suppliers need to make sure that their NTOs are sent via certified mail on or before the 40th day from when the days start to be counted. As long as you can prove service via a mail log stamped by the United States Postal Service, sending by the 40th day will meet the 45-day service requirement.
It is important to keep this mail log because it will prove that you have met the 45-day receipt requirement by sending the NTO at least 40 days before the due date.
What if the owner pays the general contractor before I send my Notice to Owner?
This is not an uncommon scenario, and you have to be very careful. Because if you wait, you can actually lose your lien rights. If the owner pays the general contractor before you send your Notice to Owner, and the owner has received a Contractor’s Final Affidavit, you can lose your lien rights.
So, you want to be very careful with sending your Notice to Owner on time. A lot of people wait until the last minute. Don’t do this!
Best Notice to Owner business practice
The best business practice is to send your Notice to Owner as soon as you sign your contract. This way, you will know that you are within your 40 days and you do not have to worry about whether the owner receives it by the 45th day.
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.