Corey Etcheverry | Saul Ewing
Florida’s lien law is once again under construction with significant changes which went into effect on October 1, 2023. The amendments impact various aspects of lien rights, notice requirements, bond amounts, and attorney fee recovery.
Key Provisions and Implications
- Lien Rights Extended to Construction Managers. The definition of “Contractor” is being expanded to include “a licensed general contractor or building contractor who provides construction management services or program management services.”
- Lien Rights for Unpaid Finance Charges Clarified. In the past, Florida law has allowed certain persons to record a lien “for unpaid finance charges due under the lienor’s contract.” However, the term “finance charge” has not previously been defined, which has led to disputes as to what amounts could properly be included in a lien claim. As of October 1, 2023, finance charge is defined as a “contractually specified additional amount to be paid by the obligor on any balance that remains unpaid by the due date set forth in the credit agreement or other contract.”
- New Notice of Termination Requirements. Florida law requires that property owners record a notice of commencement prior to beginning most construction projects. Florida lien law permits an owner to terminate the notice of commencement under certain circumstances, but as of October 1, 2023, the effective date of the termination differs between those lienors in privity with the property owner and those without contractual privity. Generally, if the contractor had a direct contract with the owner and the owner timely served a notice of termination to the contractor, the notice of termination will terminate a notice of commencement thirty (30) days after being recorded in the public record. However, if the contractor did not have a direct contract with the owner but began work before the owner recorded a notice of termination, the notice of termination will terminate a notice of commencement thirty (30) days after the contractor is served with the notice of termination.
- Expanded and Simplified Service Requirements. Service of lien claims has traditionally been by few strictly defined methods. The new amendments expand the number of allowable service methods, which will include: (1) hand delivery; (2) common carrier delivery service or by registered, Global Express Guaranteed, or certified mail, to the person or entity being served with postage or shipping paid by the sender and with evidence of delivery; and (3) posting on the construction site if service cannot be performed by the other two methods. In the case of hand delivery, it may be made to the individual against whom the claim is made, to any partner of a partnership, to any officer or director of a corporation, to a member or manager of a limited liability company, or to an employee or agent authorized by a partnership, corporation or limited liability company.
- Clarity in Computing Deadlines. The amendments clarify that if the last day of a time period falls on a weekend, legal holiday, or a day observed as a holiday by the clerk’s office or designated by the chief judge of the circuit, then the time period shall extend until the end of the next business day. Additionally, in the event of a clerk’s office closure due to an emergency, the time period for recording is tolled for the duration of the closure.
- Clarity in Attorney Fee Provision. The amendments clarify that attorney’s fees are awarded to the prevailing party in an action to enforce a lien that has been transferred to another security.
- Increased Bond Amounts. The amended law increases the amount of the bond required to be deposited or filed with the clerk’s office to transfer a lien to a security. Cash deposited or a bond filed to transfer a lien must be an amount equal to that demanded in the lien, plus three years of interest at the legal rate, plus the greater of either $5,000 (as opposed to $1,000) or 25 percent of the amount demanded in the lien. Further the clerk’s office is required to serve on the lienor a copy of the transfer certificate and a copy of the deposit or bond supporting the transfer.
These amendments make critical changes to Florida’s lien laws and will impact contractors, owners, lienors, and other parties involved in the construction industry.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.