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Despite the myriad of pitfalls and obstacles created by Florida’s Legislature designed to protect Broward County lienors in their claims against the owners and their right to attorney’s fees should they prevail on a lien foreclosure action, there remains a bastion or safe haven for the owner in the rubric of the “proper payment” defense. If you’re a property owner facing a lawsuit against a construction company, contractor or subcontractor, a lawyer specializing in construction liens can assess the unique circumstances of your suit, then suggest the option that gives best chance of winning your case in Fort Lauderdale and Hollywood.
The fear that all mechanic’s liens are ultimately proper and enforceable when placed by an innocent subcontractor, sub-subcontractor or supplier who has legitimately not been paid by its direct contractor, may be assuaged by what is referred to in Florida §713.06 as a “proper payment” defense. Florida courts and legislatures through the enactment of Florida §713 entitled “Construction Liens,” have provided the owner this viable means for protection from liens placed on their property and actions to foreclose thereon.
The Florida legislature has, through a very intricate process, set forth a cumbersome and tricky path for the owner to follow throughout the project in question to ensure that all payments and parties are properly paid. When all the proverbial “t’s” are crossed and “i’s” dotted, the owner very likely will be spared the additional burden of paying out twice to a lienholder, where the owner has already paid this money once to the general contractor with whom they have a direct contract.
The overall framework with which the owner needs to be aware, in a very general sense, is that all payments are to be made to the general contractor under the terms of their direct contract including change orders, while each and every potential lienor who has properly and timely given Notices to Owner must provide releases of lien in exchange for each payment made by the owner to the general contractor. Additionally, and most importantly, when the “final payment” becomes due, the owner must have received from the direct contractor an “affidavit” setting forth the fact that “all lienors under his direct contract have been paid in full or, if the fact be otherwise, showing the name of each lienor who has not been paid in full and the amount due each for labor, services or materials furnished.” The responsibility lies with the general contractor to provide the affidavit, and the owner has a right to rely on its contents. The owner may also pay directly to those lienors who have given notice whether or not listed in the contractors affidavit. However, the owner has the choice to pay either general contractor or the lienor.
Ultimately, the owner will be absolved of any responsibility beyond the limits of his direct contract, where all of the foregoing have occurred and all monies due under the owner’s contract have been paid. There are considerable details regarding time limitations and other procedural requirements beyond the scope of this article which must be followed by lienors, contractors and owners concerning Notices to Owner, filing Claims of Lien, proper forms of affidavits and so forth. To that end anyone involving themselves in the construction litigation process should become thoroughly familiar with any and all such requirements with the help and advice of licensed mechanic’s law attorney in Hollywood or Fort Lauderdale, as this article alone provides merely a general overview.
The “proper payment” defense has been addressed by the Supreme Court of Florida in Richard Store Company vs Florida Bridge & Iron, Inc., 77 So.2d 632 (Fla. 1954). The facts of that case were that a sub-subcontractor was not paid by his subcontractor, consequently the sub-subcontractor recorded a lien and attempted to foreclose on the owner’s property. However, the owner had paid out the full amount of its contract with the general contractor. In citing other Florida case law as authority, the Supreme Court stated that by properly paying the money due on the direct contract, the owner can avoid having any mechanic’s lien enforced against his property in Fort Lauderdale. The rationale of the court was one of logic, wherein they claimed that the law would have an illogical outcome were it to impose such a burden on the owner, to in effect require the owner pay twice for a sub-subcontractor with whom the owner was not in privity.
The Supreme Court again revisited the issue in. Alton Towers, Inc. vs Coplan Pipe & Supply Co., Inc., 262 So.2d 671 (Fla. 1972), wherein they explained that it was the legislative intent that the owner be protected from requiring him to pay more for his improvements than called for in his contract. The lienor is equally protected by Florida 713, however, only insofar as funds under the contract are properly available for that purpose. Further, the court provided its reasoning by quoting C. Bryan vs Owsley Lumber Company, 201 So.2d 246 (Fla 1st DCA 1967), which held that such a concept is premised on the equitable maxim that where one of two innocent persons must suffer as a result of the default of the other, the loss shall fall on him whose act made the loss possible, in that case the sub-subcontractor.
One important caveat of which the owner must be aware, is that where there is no agreed total contract price between the general contractor and the owner, then there is no limit, except for actual value, to the amount of liens that are properly acquired pursuant to the general contract to impose the realty.
Ultimately, the owner may not be responsible under a lien theory, however, there may still remain liability under other theories such as unjust enrichment, although attorney’s fees would not be awardable under that cause of action. Of course, there are remedies available to the lienor who has not been paid, but such remedies may be for such actions as breach of contract, open account or account stated against the party with whom they are in direct privity, not the owner.
As an owner, you should always be cognizant of following the “proper payment” steps prior to the completion of a project. Be sure to preserve this defense when and if the unfortunate, but often too common experience arises when a lienholder from whom you have never heard, suddenly files a suit to foreclose when you were otherwise confidently off to commence your next project, thinking you have paid all that is required under your construction contract. Always consult with a skilled Broward construction lien lawyer before taking any action. Attorney David S. Tupler offers free consultations over the phone or at his Hollywood or Fort Lauderdale offices.