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Don’t assume you have lien rights

July 2, 2016

Today’s construction projects have become more treacherous, requiring suppliers and subcontractors performing on them to be more careful in determining what their position is in relation to the owner and general contractor. This elevated level of caution from their Fort Lauderdale attorneys helps them ensure that they protect their rights on construction and mechanic’s liens.

Florida law, Section 713.01 defines a ‘lienor’ as “(a) contractor; (b) subcontractor; (c) subsubcontractor (d) laborer; (e) materialman who contracts with the owner, contractor, subcontractor, subsubcontractor; or (f) professional lienor under Section 713.03; …”

This Section goes on to state that no person shall have a lien under Part 1, except those specified in this subsection. In order to determine whether or not your company is a “lienor” as defined by statute, it is necessary to know who the parties are and what their role is in the chain between your company and the owner.

The key to determining what your position may be in relation to the owner is determined by what role the person or company with whom you have a contract has. A company other than a material man or laborer, who finds itself performing a portion of a subsubcontractor’s contract will not have lien rights against the real property pursuant to Section 713. Likewise, if you work for a material man, someone supplying materials only, you have no lien rights.

The most obvious place to begin determining what your position may be in relation to the owner is with a Notice of Commencement. If such a Notice exists, it will indicate not only the owner, but the general contractor as defined in the statute as well. Once you determine what your position is with relation to the general contractor, you may find you don’t want to do the job because you have no lien rights. The next important place to look is at your customer. You need to know your customer’s position in the chain and what their role is. Confirm who their contract is with and establish what if any contracts and companies exist in the chain between them and the owner.

The important thing is to not assume you have lien rights. Know where you are in the chain in relation to the owner and know what role your customer is in. Know your rights under Florida’s Proper Payment Act. It is also important you always do a Notice to Owner on every project.

The Notice To Owner tells the Owner you are on the job and they need a Final Release before they pay the Contractor in full. Additionally, many Owners demand a Final Release from everyone who serves a Notice To Owner before they make their final payment. Often, Owners don’t want to have to figure out who has lien rights and who does not, so they require a Final Release from everyone they know about to play it safe. It is also important you serve your Notice to Owner as early as possible. Many lienors wait until they know they are having a payment problem before they do a Notice To Owner, when it’s too late. The sooner your construction litigation lawyer helps you with a Notice to Owner, the better the chance someone above you in the chain will make sure you get paid so you don’t lien the job.

Lien laws are not black and white on when you have to do a Notice To Owner, so the best option is use the earliest deadline and have your Notice to Owner served on the Owner within 40 days of your first day on the job.