{"id":901149,"date":"2023-05-09T15:26:58","date_gmt":"2023-05-09T21:26:58","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901149"},"modified":"2023-05-09T15:27:03","modified_gmt":"2023-05-09T21:27:03","slug":"construction-lien-relates-back-despite-notice-of-contest","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-lien-relates-back-despite-notice-of-contest\/","title":{"rendered":"Huh? Action on Construction Lien “Relates Back” Despite Notice of Contest of Lien"},"content":{"rendered":"\n

David Adelstein | Florida Construction Legal Updates<\/a><\/p>\n\n\n\n

Not every case law you read makes sense. This sentiment goes to the uncertainty and grey area of certain legal issues.  It is, what you call, \u201cthe nature of the beast.\u201d  You will read cases that make you say \u201cHUH?!?\u201d This is why you want to work with construction counsel to discuss procedures and pros \/ cons relative to construction liens.<\/p>\n\n\n\n

An example of a case that makes you say \u201cHUH\u201d can be found in Woolems, Inc. v. Catalina Capstone Creations, Inc<\/em>., 2023 WL 2777506 (Fla. 3d DCA 2023) dealing with a construction lien foreclosure dispute.<\/p>\n\n\n\n

Here, a contractor filed a lawsuit against a subcontractor with a\u00a0summons to show cause<\/strong>\u00a0why the subcontractor\u2019s construction lien should not be discharged.\u00a0 This is a specific complaint filed under\u00a0Florida Statute s. 713.21(4)<\/a>. This statute requires the lienor to essentially foreclose on its construction lien within 20 days after it was served with a \u201cshow cause\u201d summons.\u00a0 The subcontractor filed its answer and counterclaim but did NOT assert a claim to foreclose its construction lien.<\/p>\n\n\n\n

Around the time of subcontractor\u2019s answer and counterclaim, the contractor transferred the subcontractor\u2019s lien to an all-cash\u00a0lien transfer bond<\/strong>\u00a0in accordance with\u00a0Florida Statute s. 713.24<\/a>. Once the lien transfer bond was recorded, the owner recorded a\u00a0notice of contest of lien<\/strong>\u00a0under\u00a0Florida Statute s. 713.22<\/a>. The notice of contest of lien shortens the limitations period to foreclose on a lien to 60 days.<\/p>\n\n\n\n

The subcontractor did NOT timely foreclose its lien against the lien transfer bond and the general contractor moved to have its all-cash lien transfer bond returned, as it should do. The subcontractor filed its lien foreclosure against the lien transfer bond AFTER the 60-day window expired. The trial court, and affirmed by the appellate court, denied the general contractor\u2019s request to have the lien transfer bond returned and allowed the subcontractor to assert its (dilatory) claim against the lien transfer bond claiming it related back<\/em> in time to the subcontractor\u2019s initial counterclaim.  HUH?!?<\/p>\n\n\n\n

ISSUES GIVING RISE TO THE HUH<\/strong><\/h5>\n\n\n\n

Here are the issues with this ruling:<\/p>\n\n\n\n

  1. The subcontractor should have foreclosed its construction lien with the 20-day time period from receiving the summons to show cause. The case reflected the subcontractor asserted claims, but not the lien foreclosure claim subject to the summons to show cause. (The appeal did not discuss this point for reasons currently unknown.)<\/li>
  2. Regardless of (1), the lien was transferred to a bond and a notice of contest of lien was recorded shortening the time period to foreclose the lien (as to the bond) to 60 days. There is case law referencing this procedure. Yet, the subcontractor still did not timely assert its claim against the lien transfer bond.<\/li>
  3. The trial court applied the relation back doctrine which does nothing but completely water down the statutory purpose of a notice of contest of lien (not to mention the summons to show cause complaint).<\/li><\/ol>\n\n\n\n
    RECOMMENDATIONS IN LIGHT OF RULING<\/strong><\/h5>\n\n\n\n

    In light of this ruling, here are my recommendations:<\/p>\n\n\n\n

    1. If you are going to transfer a lien to a lien transfer bond, do it from the get-go. Then, record the notice of contest or pursue the summons to show cause complaint.<\/li>
    2. If filing the summons to show cause complaint, wait for the 20-day time period to expire. If the time period expires, move to have the lien discharged before making the decision to transfer the lien to a lien transfer bond.<\/li>
    3. If recording a notice of contest of lien, wait for the 60-day time period to expire before taking action.<\/li><\/ol>\n\n\n\n

      The reality is that the procedure implemented in this case should have been fine but for the application of the relation back doctrine that makes you say HUH?!?<\/p>\n\n\n\n

      As mentioned, if dealing with a lien, please make sure to discuss strategic considerations with a construction counsel that can help navigate the process and advise on the pros and cons.<\/p>\n\n\n\n

      \n\n\n\n

      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<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

      David Adelstein | Florida Construction Legal Updates Not every case law you read makes sense. This sentiment goes to the uncertainty and grey area of certain legal issues.  It is, what you call, \u201cthe nature of the beast.\u201d  You will read cases that make you say \u201cHUH?!?\u201d This is why you want to work with… Continue reading Huh? Action on Construction Lien “Relates Back” Despite Notice of Contest of Lien<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10772],"tags":[9895,279],"class_list":["post-901149","post","type-post","status-publish","format-standard","hentry","category-mechanics-lien-law","tag-advise-consult","tag-construction-lien","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nHuh? 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