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Lease Disputes Lien Law

Can You File a Lien on Lease Property?

When one works on leased property, they may only they be able to lien the leasehold interest in some circumstances. The mechanic's lien law, F.S. 713.10, allows a landlord to protect his property from liens from lessee's construction by following a two-step process: One, having a provision in his lease which prohibits liens from attaching; and Two, recording that lease in the county where the property is located. This puts all interested parties on "notice" and protects the property from liens unless the improvement constitutes the "pith" of the lease. Thus, even though a lessor follows the steps above, his property may still be subject to a lien if the improvements are considered the "pith" of the lease. In such cases in Broward County, it is advisable to retain a Fort Lauderdale lien lawyer to fight on your behalf. When considering an attorney, always choose someone who also specializes in resolving legal matters between landlords and tenants – also known as lease disputes.

Determining Factors in Broward Courts

There is no clear definition of when the construction is the "pith" of the lease; however, there are a number of factors. If the construction is an integral part of the lease, where the lease requires the construction, then this may make it the pith of the lease. If it is obvious that the lease would not have been entered into without the improvements contemplated, this may subject the property to liens. Another factor is the character of the property. When the lease refers to improvements to be made and the property is vacant or partially improved and not suitable for its intended use, this may make it subject to liens. The lessors conduct is also important if the lessor is actively involved in the construction process, his lien prohibition in the lease may be deemed a fraud on lienors and make the owners interest liable. The fact that the lessor knows or approves of the construction is not enough by itself, even if the lessor approves construction plans. These are just several of the factors considered by the courts.

If one can not lien the owners interest, what can one lien? The answer is the leasehold interest. This is not much security, especially if the tenant defaults on the lease. The point is that one must know who all the parties are, not just whether one's client is reputable. If one is going to work on leased property which is properly protected or seems to be, try to get a personal guarantee from one's client or the general contractor. This is a very complex area of the law, as such it would be advisable to consult with your Broward Mechanic's lien attorney prior to working on a big job which is leased and where the lessor is not the party who contracted for the improvements in Fort Lauderdale or Hollywood.

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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.

Categories
Lien Law

Public property and lien rights

If you're working on public property in Florida, you usually have no lien rights. As a substitute to lien rights a payment bond may be available. However, sometimes there are still rights where one thought there might be none. If the work on the public property is a result of the orders of a private owner who is improving the neighboring property your lien rights could be safeguarded on that neighboring Fort Lauderdale property.

Often, before allowing a property owner to make subdivision improvements, the public authority may require that the owner make certain improvements to the underground utilities in the area or possibly to the street itself as well as other examples of improvements to the public property. The public body wants to make sure that it is following a reasonable land use plan and that there is enough water and sewer for the residents in the area or they may want to make sure that the streets are properly designed for the amount of traffic they will carry. As such, if one is working on the street, either making improvements to the street or working on water and sewer beneath the street, he may have lien rights on the abutting land.

Florida Statute 713.04, Subdivision Improvements, specifically notes that "when the services or materials are placed on land dedicated to public use and are furnished under contract with the owner of the abutting land, the cost of the services and materials, if unpaid, may be the basis for a construction lien upon the abutting land." What this means in plain language is if the construction going on is the result of the orders of the property owner neighboring where the construction is taking place, that private property owner's real estate may be subject to construction liens, and your construction lawyer has a good chance of securing payment on your behalf. The key to this section of law is that the improvements which are being constructed actually touch the land sought to be liened in Fort Lauderdale.

If the improvements do not actually touch the land sought to be liened, there are no lien rights. In Davis Water & Waste Industries, Inc. v. Embry Development Corp., 603 So.2d 1357 (Fla. 1st DCA 1992), the Court held that the lienor had no lien rights on the owner's property. In this case, the lienor was required to make certain improvements to a public sewer and water system, specifically, to increase the water pressure to certain fire hydrants within the subdivision. In that case the public property wherein the services and materials were furnished was separated from the owner's land by intervening property. The public property in question did not touch or border or otherwise reach out or abut the landowner's property. The Court found that the Statute clearly requires that the public land upon which the improvements are constructed actually touch the land sought to be liened. It went on to note that the lien statute must be strictly construed, Davis at 1359. This requirement that the public property actually touch the landowner's property may be a rigid restraint on lien rights because the work might qualify in all other respects except for the fact that it does not actually touch the private owner's property. However, at least there are lien rights in those cases where the public works improvements do touch the private owner's property.

In conclusion, when it comes to construction liens in Fort Lauderdale, have your lawyer examine all the circumstances. This blog might be better entitled "Lien Rights From Heaven, a/k/a Gifts From Below" since this section of mechanic's lien laws often deals with underground work. When in doubt of lien rights, follow this simple rule: Don't automatically assume that you have them! Always check with a knowledgeable attorney to ensure that your best interests are protected.

Categories
Lien Law

Liens and the Proper Payment Act in Broward County

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.

IT'S A COMPLICATED PROCESS IN BROWARD COUNTY

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.

FLORIDA SUPREME COURT SIDES WITH THE OWNER

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.

CONCLUSION

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.