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 how to respond to a Sworn Statement of Account and how to send your own.
The following points will also be addressed:
What Is a Sworn Statement of Account?
A Sworn Statement of Account is a written request sent to a lienor for certain information. This document is prescribed by Florida’s lien law. It is sent for two reasons by the inquiring party – the first reason is to learn how much you have been paid and what you are owed. The second reason is in the hopes that you do not respond, because if you do not respond, you will lose your lien rights.
Below is what a request for a Sworn Statement of Account looks like.
The key to this request is the warning and the manner in which you respond.
What Happens if I Do Not Respond to a Sworn Statement of Account?
If you do not respond to a Sworn Statement of Account, you will lose your lien rights. So, you need to respond properly and timely to a “true” request for a sworn statement.
How Do I Respond to a Sworn Statement of Account?
The first thing you need to ask is if the request that you are getting is a true request for Sworn Statement of Account.
1. A Sworn Statement of Account must contain a warning
The first sign that it is, is if it has the following warning:
“WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT, SIGNED UNDER OATH WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR LIEN.”
If you receive something that looks like a request for a Sworn Statement of Account and it does not have this warning, if you do not respond, you will not lose your lien rights. This warning is only required to be given if the other side wants you to respond. Only then, failure will result in you losing your lien rights.
2. It must be sent via certified mail
The statement must be sent to you via certified mail to the address listed on your Notice to Owner. You may get these requests for a sworn statement via email and not via certified mail. Again, the fact that you receive it via email means that if you do not respond on time or do not respond at all, you will not lose your lien rights. Because the obligation is on the person sending it to you to send it via certified mail.
We suggest that you respond even if you get it only via email, or if it does not have the warning to avoid any issues in the future about whether or not your response was proper. Even if you have a legal right not to respond, it may become an issue in a legal case. And if so, it is just better to say that you responded than rely on them not complying with the obligations of the statute.
3. Asks for seven pieces of information
Now, assuming that the above two things have happened, you have the warning and you received it via certified mail, they are going to ask for seven very specific pieces of information:
- The nature of the labor or services performed – This is past tense and is only labor or services. So, if you are a plumber, you are going to answer this question with “plumbing services.” If you are a plumbing supply house, you will respond with “none” because you provided no services.
- The nature of labor or services to be performed, if any – This is in future tense and covers work that you are yet to do. Again, notice that it is only labor or services, so if you are a plumber and you have a contract to do all the work in a building and you have done half of it, then the nature of the labor or services to be performed would be plumbing services to complete the project.
- The materials furnished – If all you provide is labor, you will indicate that in this section by writing “none.” If you are a material supply house, you would put in the materials you supplied. So, if you are a roofing supply house you would write “roofing material.”
- The materials to be furnished, if known – This refers to any materials that you are yet to provide. So, if you have a large order and you have delivered half of it, you will indicate that the other half needs to be delivered. So, you will write “plumbing materials to finish the project.” But if you have no pending orders at this point, then you would write in “none” or “not applicable.” They may order more materials in the future, but if you do not know that at the time you respond to the request for the Sworn Statement of Account, then your answer is “none.”
- The amount to be paid on account to date – This means that as of the time when you are responding, how much have you been paid to date on your account?
- The amount due - This is the amount that is due to you.
- The amount to become due, if known, as of the date of the statement
We will now have a closer look at the last three points in more detail. The amount paid on the account is pretty straightforward. If you have been paid $100,000 to date on the account, that is what you will put there. The next amount due, for example if you are owed $50,000, would be the amount you put in as the amount due.
The amount to become due, is the amount that you have left to bill on the job. So, if you have a contract, it is worth $500,000, and you are owed $300,000 worth of the work, then the amount to become due, is the remaining $200,000 left to bill your contract.
If your contract or agreement is such that you only provide services and materials as they are ordered, and you have no obligation to keep working on this job, you would indicate “none” in the last section.
Now you know what you need to provide, but how do you provide it?
a. Must provide answers under oath
You need to sign this document and notarize it before a notary and under oath, which is why it is called a “sworn” statement.
b. Send it back to the person requesting it
You need to send back the document to the person requesting it. It has to go back via certified mail. You should also ensure that it is sent by at least one other way, whether by fax or email. So, if the person who requested it, sends it via certified mail and it has the warning, your response needs to go back via certified mail.
c. Must respond within 30 days
The document needs to be received within 30 days so you should not delay with your response to requests for the Sworn Statement of Account. If you get a request for one, it should go to the top of your to-do list, so that it can be done right away.
d. You can provide more information, but not less
You can always provide more information; you just cannot provide less. So, if you want to expound upon the work you have done or the work you still need to do, maybe you have a complicated scope of work, or detailed accounting, and you feel compelled to provide that, you can. But only as long as you provide at least the information that needs to be provided under oath.
How Can I Send My Own Sworn Statement of Account?
Now we come to what happens if you need to respond to a request for a Sworn Statement of Account. Can you send your own request to the owner for a Sworn Statement of Request? The answer is yes. If you are a lienor, you can send a written request for certain information to the owner of the project. There are some other points that you should remember though.
1. You can do so only after you record your lien
You can only do so if you want to invoke the “penalty.” Just like there is a penalty for you if you do not respond, there is a penalty for the owner if they do not respond. You can only get that penalty if you send this Sworn Statement of Account to owner after you record your lien.
2. You can send before you lien, but might not be a “penalty”
You can still send this request before you record a lien, but just know that if they do not respond, then there is no penalty associated with their failure to respond.
3. Failure to respond, will result in penalty to the owner
Any owner who does not provide the Statement of Account within 30 days after demand, or who provides a false or fraudulent statement, is not a prevailing party for purposes of an award of attorney fees under s. 713.29. This is the penalty that the owner will suffer if they fail to respond to a proper request by you to them.
So, that means that if you send them a request, they fail to respond, they respond late, the response is not under oath or it includes false or fraudulent statements, then their failure to respond means that if you file a lawsuit on your lien and you do not prevail, but they are entitled to legal fees from you, they lose that right. This is because they failed to timely or properly respond to your request.
It is a far less significant penalty for the owner if they do not respond, than it is for you as a lienor if you do not respond. But that is what the statute provides for.
4. Your written demand must include a few elements
Your demand letter must include the following warning in conspicuous type in substantially the following form:
“WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR RIGHT TO RECOVER ATTORNEY FEES IN ANY ACTION ENFORCE THE CLAIM OF LIEN OF THE PERSON REQUESTING THE STATEMENT.”
5. Your request must include a description of the property
Your request must also include a description of the property, the name of the contractor, and the name of your customer (if you are the lienor) as set forth in the lienor’s Notice to Owner.
For example, if you are a sub-subcontractor on a project, you will include the warning, a description of the property, the name of the general contractor, and the name of your customer who is the subcontractor. All of that has to be in your request for it to be valid.
6. The request can ask for a few things, under oath
You can request the following, under oath:
- The direct contract under which the lien was recorded. When it says direct contract, that means the contract between the owner and contractor. So, if your contract was $500,000 you can request the value of the contract between those two parties;
- The dates and amounts paid or to be paid by or on behalf of the owner for all improvements described in the direct contract. One of the reasons you may want to request this information is because you may record a lien and the contract says that they have not been paid. You want to verify that statement by sending this request for the Sworn Statement of Account to the owner because the owner will then have to tell you all the amounts that they paid, or are yet to pay the contractor for all of the improvements on the direct contract;
- The reasonable estimated costs of completing the direct contract under which the lien was claimed pursuant to the scope of the direct contract. This means that any additional cost from this point forward will be listed in their response to the Sworn Statement of Account; and
- If known, the actual cost of completion.
Now this is what the Request for Sworn Statement of Account looks like: