Understand what a Notice to Owner is, who is required to send one, how it secures your lien rights, as a subcontractor when you are required to send an NTO, what 40 and 45 days mean, what happens if the owner pays the general contractor before you can send your Notice to Owner, and best business practices.
This blog was taken from a webinar that was presented by SunRay Construction Solutions and Alex Barthet. Alex is a board-certified construction lawyer who serves clients in Florida. In this blog, we will discuss what you should do when you have only 40 days left to send your Notice to Owner.
We will be discussing the following points:
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. A lot of people understand the term Notice to Owner, but this might be new to some readers.
The Notice to Owner and Notice to Contractor are a combined form. The Notice to Contractor is for projects that are bonded.
The SunRay system has the statutory language in every form for the state of Florida.
Who is Required to Send a Notice to Owner/Notice to Contractor?
If you are not contracted directly with the owner of a property, you must send a Notice to Owner to secure your lien rights.
If you are working directly for the general contractor and despite the fact that everyone knows your name, or you have a huge truck on the property, if you are not contracted directly with the owner of the property, you must send a Notice to Owner.
So, 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.
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 who is hired directly by the general contractor, you are not required for public projects to send a Notice to Owner. But if you 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.
So let us 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 materials to the project. They key word here is “received.”
To count the 45 days, you need to count every day including all weekends and legal holidays. So, if the 45th day is a Sunday, it will roll into a Monday. If Monday is a legal holiday, it will roll into Tuesday.
An exception to the 45-day rule is specially fabricated materials. 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?
Subcontractors or suppliers should send a Notice to Owner no later than the 40th day from first furnishing labor or materials. Most importantly, they should keep a mail log that is stamped by the United States Postal Service.
So now what is all this confusion between 40 days and 45 days? The Notice to Owner needs to be received by the 45th day. The Notice to Owner needs to be stamped by the 40th day from first furnishing labor or materials.
What happens if the owner or general contractor does not receive the notice by the 45th day based on this? This is why it is essential to send your Notices to Owner by the 40th day. And you need to have the manifest by the US Postal Service saying that it was served by the 40th day.
By keeping a mail log, you do not have to worry whether the owner and required recipients receive the NTO on the 45th day, as long as the mail log was stamped by the 40th day from first furnishing labor or materials, unless it is specially fabricated material.
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 Business Practice for Notice to Owner
The best business practice is to send your Notice to Owner as soon as you sign your contract. It is the best practice to have because you 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.