Categories
Lien Law

Changes: 2013 Lien & Foreclosure Laws

As the state with the largest inventory of backlogged foreclosures, Florida also has one of the longest foreclosure timelines in the country. In 2013, the State Legislature took steps to remedy the slow pace and mounting backlog by passing House Bill 87, also known as the Florida Fair Foreclosure Act (FFFA). The bill expanded the foreclosure process, thereby making it impossible for Fort Lauderdale and Hollywood homeowners to recover their property after a judgment lien in certain instances. The law also requires lenders to produce the mortgage note when filing their mechanic's lien and places new limits on deficiency judgments in Broward County.

About Foreclosures in Florida

In the Sunshine State, foreclosures are handled judicially; therefore, the lender who wishes to begins the process must file a mechanic's lien in state court. After a complaint is file with the court, the complaint and a summons are served to the borrower. If the lender wins the court case, the judge will enter a judgment of foreclosure, and the property can be sold to satisfy the borrower's debt.

Criticisms of the FFFA

Florida's Fair Foreclosure Act has been criticized by many as being unfair to distressed homeowners. The law's expansions allow third-party lien holders such as homeowner associations to expedite the foreclosure process. As a result, the homeowner may have less time to seek a loan modification. The law also states that foreclosure judgments are final. Legal remedy, limited to monetary compensation, may be sought if the homeowner was not properly served in the foreclosure action, a final judgment was entered, the appeals period has been exhausted, and the home has been purchased by a party who is unaffiliated with the lender and previous owner.

Ways FFFA May Help Homeowner

Legislators who favored Florida's Fair Foreclosure Act argued the law would offer consumers protection by requiring banks and lenders to prove they own a mortgage before filing a foreclosure action. Before the 2013 law was enacted, lenders could simply file a foreclosure action without proving they actually owned the note on the property. The absence of requiring proof led to many wrongful foreclosures against homeowners. Today, lenders must produce a promissory note or other document as evidence of current ownership of the note. While courts may accept the documents on their face as true, homeowners may offer contrary proof that the mortgage does not belong the lender whose Fort Lauderdale mechanic's lien attorney has filed action in Broward County court.

The 2013 foreclosure act also reduces the statute of limitations on deficiency judgments. A lender may pursue a personal judgment against the homeowner for the difference between the amount the house is actually worth and the amount the homeowner owes on the mortgage. This type of award is known as a deficiency judgment. Prior to enactment of FFFA, the statute of limitations for filing a deficiency action was five years. The new law reduced the time frame to one year. Moreover, deficiency judgments may not exceed the difference between the foreclosure judgment and the fair market value of the house on the day it was sold.

The Florida Fair Foreclosure Act made changes that impact the overall timeline of a foreclosure as well as who may file a claim against a homeowner. Therefore, distressed homeowners should contact a knowledgeable Broward County construction lien lawyer very early in the foreclosure process to increase the likelihood of remaining in their home and to ensure their rights are protected from the beginning.

Categories
Lien Law

What is a Notice of Commencement?

Chapter 713 of the Florida Statutes covers construction liens, or mechanic's liens. This law has certain requirements specified that protect contractors, subcontractors, sub-subcontractors and suppliers with provisions for timely payment and for enforcing liens on property in the event of non-payment. There are also safeguards for property owners from having to pay more than once for work or supplies. A crucial document found in this statute is the Notice of Commencement.

What is the Purpose?

The purposes of the Notice of Commencement are to signify the start of project and to provide basic contact information for the property owner, contractor, lender and about the surety. A Notice of Commencement is often a necessary document in order to obtain a building permit in Broward County.

It acts as notification to all contractors, subcontractors, sub-subcontractors, laborers and materialmen that the work will start on the project. A Notice of Commencement is an important tool that helps to prevent the owner from being required to pay more than once for work and helps to ensure suppliers and subcontractors are paid.

At the beginning of a project, owners must sign a Notice of Commencement, stating that they are the owner; list their contact information, give the legal description of the property, state the contractor's name and address, state surety information, identify the lender, describe the work being done and provide an expiration date of the Notice of Commencement. The document also allows the owner to appoint a designee who receives lien-related documents and notices.

The Notice of Commencement is recorded in public records and must be posted at the job site. It lists all the information necessary for workers needing to complete a Notice to Owner. Any potential lienor should serve a Notice to Owner to secure their right to enforce a lien. Correspondingly, property owners are advised to get a written lien release waiver each time a payment is made to the contractor.

If there is no Notice of Commencement posted or recorded, subcontractors or sub-subcontractors, who have not received full payment, can face challenges getting the appropriate information needed to file a mechanic's lien. Florida's mechanic's lien law allows certain individuals involved with the project to enforce their claim against the owner if they do not receive payment for services or materials. The potential result is the sale of the property, against the wishes of the owner, to pay the lienors.

Is a Notice Required?

The property owner or property owner's agent is the one who must file the Notice of Commencement. Florida law states that a Notice of Commencement must be submitted to the clerk's office in order to apply for a building permit with contracts having a value greater than $2,500. The exception is for permits related to the repair or replacement of heating and air-conditioning systems. In this case, the document is needed if the contract value is greater than $7,500. The Notice of Commencement is recorded in the county's property records prior to any permit inspections.

A Notice of Commencement is a key document involved with construction projects. Not only is it beneficial to those participating in the project, in many situations, it is often required. The Notice of Commencement is especially helpful to contractors, subcontractors, sub-subcontractors and material suppliers who may need the information on this document to complete a Notice to Owner to ensure they receive payment.

In Broward County, A Hollywood or Fort Lauderdale mechanic's lien attorney can answer all of your questions about Florida's construction lien laws and the Notice of Commencement.