MECHANICS LIENS & HOW TO AVOID THEM

Winter Park Home, Summer, 2005

As a Winter Park homeowner, you are undoubtedly going to be contracting for repairs or improvements to your property from time to time. For small jobs involving a single tradesperson or a company that performs all facets of the work, the process is usually pretty straightforward. The company does the work and you write a check for the agreed to contract price.

Larger and more complex undertakings can often involve several subcontractors and suppliers brought in by the general contractor. That’s when the Florida mechanics lien law becomes a very important aspect of the project. The law provides the homeowner with certain protections and also requires specific warnings to help the homeowner navigate and assure payment of multiple bills--often from unknown suppliers, subcontractors and laborers.

Let’s assume that you’ve decided to build that new master bathroom. You contract with Slamemup Renovations to handle the job. Slamemup, acting as general contractor, will probably bring in a variety of subcontractors and suppliers to provide the materials and do some or all of the work. You make progress payments to Slamemup and expect the company to pay the subcontractors and suppliers their share. If the subcontractors fail to receive payment for their products and services, they can file a lien against the property to assure payment.

A lien is a statutory mechanism that allows the unpaid lienor to have the property foreclosed and sold, if necessary, in order to receive payment. The mechanics lien law also allows the foreclosing lienor to recover attorneys’ fees and costs as well as the entire value of the lien. Now that you are sufficiently alarmed and all of those unscrupulous contractor horror stories you’ve read over the years have come flooding out of the deep recesses of your mind into the forefront of your consciousness, you should also know that the Florida lien law provides a reporting system that helps you keep track of the entire payment process.

Each supplier, subcontractor, or (in some cases) laborer who is not directly contracting with the homeowner is required by statute to give the homeowner a notice that they have worked on the property. This document is called a “Notice to Owner” and must be delivered within 45 days following the first delivery of materials or first work performed on your home by that supplier or subcontractor. Failure to provide a Notice to Owner within the specified time period results in the absolute loss of any right to later claim a lien against the home.

Depending on the complexity of the project, you should expect to receive these notices from multiple parties. You may not have even been aware of some of them. The Notices are provided so that you can police your general contractor and ensure that at every step along the way each and every party who should be paid has been paid.

The Notice to Owner will also ask you to contact the subcontractor or supplier and ensure that they have been paid prior to disbursing funds to the general contractor. It helps assure that you don’t wind up paying twice for the same services or materials.

These notices will be delivered to your home via certified mail because statutes require that suppliers and subcontractors send their Notice to Owner by that delivery method. The notice process is set up in such a way that the homeowner can rely on certified mail to ensure that the notices are delivered and when they arrive. The homeowner has no obligation to seek out parties who do not provide a Notice to Owner.

Savvy homeowners keep a log of each Notice to Owner received and require proof of payment from the general contractor before disbursing funds or require a progress payment affidavit from the contractor as a condition to making a payment.

Each supplier or subcontractor must record a Claim of Lien within 90 days of the last date that the individual or company worked at or delivered supplies to your home. The statutes also require that the homeowner be provided with a copy of the Claim of Lien by certified mail in order to ensure that the homeowner knows of the outstanding bill prior to disbursing any final payments to the general contractor.

Before making any final payments to a general contractor, the homeowner should require a Final Contractor’s Affidavit, wherein the general contractor swears that all subcontractors and suppliers have been paid in full under penalty of criminal law.

Although few home renovation or repair contracts go awry, it does happen. Whether it’s a well-intentioned general contractor whose business collapses or an unscrupulous contractor who collects the lion’s share of the money and then skips town, the result is the same – a homeowner who must deal with unpaid suppliers and subcontractors. Thus, the advice of an attorney should be sought to explain the “ins and outs” of the Mechanics Lien Law and to assist the homeowner in obtaining the appropriate affidavits from the general contractor with respect payments to all those who participated in the enterprise.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Boutique Firm Sticks To Early Roots

Pohl & Short, P.A.
Year founded: 1993
Name partners: Frank Pohl, Houston Short
Attorneys: 14
Total staff: 55
Practice areas: Real estate, business law, commercial litigation and tax and estate planning
Web site: www.pohlshort.com

Pohl & Short, with 14 attorneys, calls itself ‘the alternative to a large law firm.’
By Jill Krueger/Staff Writer

ORLANDO—A dozen years ago when attorney Frank Pohl and Houston Short broke away to start their own firm, they searched far and wide for a formula to sustain what they wanted: a boutique law practice. Pohl, in fact, traveled to New York, Chicago and Los Angeles to observe the inner workings of successful specialty firms.

In shunning a general practice structure, the partners established in 1993 a firm, they say, rooted almost exclusively in four practice area: real estate, business law, commercial litigation and tax and estate planning.

Today, Pohl & Short, P.A. has not wavered from its focus. The firm targets small to midsize businesses that are dealing with complex problems and want more personalized service than large law firms can offer.

“We are the alternative to a large law firm,” says corporate and tax law attorney Gary A. Forster.

‘Preventive law’
Though Pohl & Short started with three lawyers and a paralegal, the firm now has 14 attorneys and a total staff of 55 people.

Pohl gives several reasons for the firm’s longevity.

Among them is the fact that the firm practices “preventive law.” Pohl refers to the firm’s attorneys as “counselors at law” who build relationships with their clients and help them solve problems before they develop into big issues.

Take, for example, Dr. Alan M. Cohen, chief executive officer and medical director of the National Deaf Academy LLC.

“I have not had a single contract with a secretary or a paralegal,” he says. “I have direct access to three senior attorneys whenever I need it.”

Cohen says he’ll continue doing business with Pohl & Short, because “it is a small commercial firm that offers sophisticated legal services.”

Limiting firm’s size
Pohl & Short recently added a new partner and a litigator. But unlike many other small law firms, Pohl says he’s limiting the firm’s size.

“Our goal is no more than 15 or 16 lawyers,” he says. “We don’t want to add clients just to add clients, but to add quality clients.”

Rich Heinle, a corporate business law veteran previously with Foley & Lardner, was recently elected as a partner. Pohl also brought aboard Orlando litigator Steve McDonald, who has more than 20 years of experience.

Their backgrounds are typical of the firm’s attorneys, who have an average of 10-plus years of experience.

Beyond the two recent additions, Pohl says he plans to add two more attorneys at the most.

When you go beyond 15 or 16 attorneys, “it is hard to maintain the quality of what goes out the door,” he says.

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WHO DO YOU TRUST?

Winter Park Home, Spring, 2005

Trusts can be tricky. Consider the case of a man who turned to me when he ran into a huge obstacle that derailed his efforts to obtain a mortgage from a local bank. Ironically, he had inadvertently created the obstacle by his own actions. Fresh from attended a seminar on trusts and excited about the potential advantages offered by these legal tools, the individual promptly conveyed his home into a trust, using forms he had received at the seminar. Unfortunately, he failed to name a trustee on the deed.

Upon reviewing the trust, I determined he had not only failed to name himself (or anyone else) as the trustee, but also had not granted any powers to a trustee anywhere in the trust. He had, in effect, written his property into an inaccessible box. He could neither sell nor mortgage it until substantial legal work was undertaken to extricate him from this self-inflicted problem.

Trusts are often used to purchase real property. When properly set up, they are an effective form of ownership. Their purposes include, but are not limited to, estate planning, insulating property from the claims of judgment creditors, and/or allowing multiple properties to be purchased without disclosing on the public record the identity of the actual principals. Let’s examine the basic format of a “trust” and some of the issues associated with conveying real property in Florida, when title is held in a trust.

A “trust” is a form of ownership by which a Grantor transfers property to a named individual (a “trustee”), under the terms of a written document (the “trust”), to administer the property for the benefit of one or more individuals or entities (the beneficiaries). In most trusts, known as “active trusts,” the trustee is given the power to make all decisions involving the assets of the trust, including the power to sell, convey and mortgage real property, without interference or direction from any other parties. In other trusts, known as “passive trusts,” the beneficiaries direct the trustee on how to act – the trustee in this example is more of a figurehead, without any real power.

Conveyances involving trusts must include both the name of the Trustee and the name of the trust itself. It is the Trustee acting on behalf of the trust, and not the trust itself, that has the legal power to convey real property. If the land trust powers are recited in the deed, but the name of the trustee is not shown on the deed, the benefits of any land trust will be lost, since the trustee will have to prove his identity on the public record. This can only be done by recording the entire trust, or relevant portions of the trust. If the trust is passive, each one of the beneficiaries will be treated as an actual owner of the property, and will also have to execute the deed or mortgage. Since most trusts are created to avoid letting others know the terms of the trust and the names of the beneficiaries, the advantages of placing the property in the trust will obviously be eliminated in this case.

Homestead is another factor to consider when conveying property into trusts. Under Florida law, if the trustee uses the property as a primary residence, any deed or mortgage by the trustee will also have to be signed by the trustee individually, along with the trustee’s spouse.

There is also a misconception that placing property into a trust guaranties that the property will not have to be probated when the trustee dies. Although this may often be true, it is important to be guided by competent legal counsel. The following example illustrates a situation where property held in trust still needs to be probated.

Michael Johnson, a divorced father of minor children, owns homestead property and places it into his trust, naming himself as the trustee, while reserving the right to revoke the trust at any time. Mr. Johnson then dies without leaving a will. The successor trustee named in the trust now contracts to sell the property.

Even though the language in the trust clearly authorizes the successor trustee to sell the property, Florida law prohibits the successor trustee from transferring the property because Mr. Johnson was survived by minor children. The property will have to be probated because minor children have rights in homestead property that must be probated.

There are obviously many factors to consider when creating a trust.

Before transferring any real property into a trust, you should always obtain competent legal advice to determine the correct parameters of your trust document, and the best language to be placed into the deed when you initially purchase the property on behalf of the trust.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

SURVEYS CAN BE A BUYER’S BEST FRIEND

Winter Park Home, Winter, 2004

As an attorney involved in real estate closings and the issuance of title insurance, I find that clients frequently raise the issue of a property survey. The question is almost always the same. “Do I really need a survey for this property or am I just throwing money away on an unnecessary exercise?”

If a mortgage lender is involved, you probably won’t have a choice. Most banks and mortgage companies require a survey at closing. It’s for their protection…and yours. Even if it’s a cash sale, I always tell buyers to get the survey. The buyer needs to know the exact location of the property boundary lines in order to know precisely what is and what isn’t part of the property.

Over the years, the exact location of boundary lines can often become fuzzy in people’s minds. An owner may think a boundary runs to the left of an old oak tree, when it actually runs to the right. As a result, improvements made during the previous owner’s tenure may encroach on a neighbor’s property or a neighbor’s improvements may encroach onto your property.

Another common occurrence is an improvement that encroaches on a utility easement. In many cases the consequences of such an encroachment are almost nonexistent. In others, they may be catastrophic. If a house sits directly over a power easement through a lot, the power company could make the owner move the house. Fortunately, in unusual situations like this, power companies will usually agree to re-route the utility easement or (if it isn’t being used) vacate the easement entirely.

When considering a property purchase, it’s easy to assume that an existing fence or hedge accurately reflects the actual property boundaries. All too often, that’s not the case. Never assume that the owner’s recollection is accurate or that the location of greenery is related to actual legal boundaries. Even seemingly harmless encroachments can cause legal problems down the road. When that happens, the question really becomes, “who pays for the remedy?”

You want to know BEFORE the closing, that your property is clear of any significant encroachments. Even if you decide that an encroachment is acceptable to you, it could have a negative impact on your ability to sell the property in the future.

Surveys can uncover property-related problems that range from the mundane to the arcane. A good survey will not only reflect the location of all physical improvements and public utility easements, it will also delineate public right-of-ways. At the arcane end of the spectrum, a survey could point out that the property is not legally adjacent to a public street. Most of us would assume that you would be fully entitled to drive to and from your house without interference. However, that isn’t always the case. For example, if the property is located next to a dirt road, you will need to ascertain that you have a legal right to use that road to access a public street or highway. (Interestingly, a number of homes in Central Florida are, in fact, landlocked.)

Surveys also depict recorded building setbacks and the location of fences. If you plan to build a new home or addition that will extend into the building setbacks, make sure that you can get a variance to the setbacks prior to purchasing the property. Without an approved variance, the city will not issue a building permit. Even in the unlikely event that you do manage to circumvent the need for a variance and acquire a building permit, the association (in a platted subdivision) or a next door neighbor could object and bring suit to prevent construction or force you to comply with the setbacks.

If you buy an existing home that violates setbacks, the possibility of a challenge becomes increasingly unlikely and unsupportable with the passage of time. Even if the house is old, a fence extending into neighbor’s property or into a public right-of-way, may have to be removed or relocated if the city or adjacent property owner objects.

A survey can also record physical evidence that someone is using the property in a manner inconsistent with your exclusive ownership. For instance, there might be a pathway crossing through your property from a neighbor’s property. This could be evidence of a prescriptive (an unrecorded right to cross the land based on usage over time) easement by neighbors. Blocking their usage by putting up a fence may seem a reasonable solution, until they file suit to force you to take down the fence and allow continued use of the path across your land. You may legally prevail in fighting the suit, but the effort could be costly.

The survey normally becomes an integral part of an Owner’s Policy of Title Insurance that is issued as part of the property closing. Under Florida law, providing a current survey at closing will remove any generic survey language and exceptions from the title policy. The issued policy will reflect only the matters specifically appearing on the survey. This effectively insures you that there are no adverse matters, except those shown on the survey. If the survey company fails to reflect a substantive problem and that problem causes you to suffer a financial loss, you may have a claim against both the title insurance policy and the surveyor.

Surveys help you identify and understand any potential problems associated with a property. They provide useful information for deciding whether or not to complete the purchase; renegotiating the terms of the sale or requiring that all potential problems be resolved prior to closing; and, clarify the manner in which you can expect to improve and enjoy your land.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

WHEN A TREE FALLS IN WINTER PARK...WHO PAYS?

Winter Park Home, Fall, 2004

After the hurricanes tore through Winter Park, many homeowners found themselves poking through a mass of limbs, branches, and leaves to assess the damage to their homes, cars, and other valued possessions. Like most of us, they hadn’t really thought much about who would ultimately be responsible for the extensive damage that those normally benign shad trees can cause when they come crashing down.

Many of us assume that the owner of the property on which the tree formerly resided would be the responsible party. In most instances, that’s not the case.

According to Frank Pohl, partner at Pohl & Short, a Winter Park law firm specializing in real estate law, “In general, it doesn’t matter whose property the tree was located on prior to its collapse. Once that falling tree crosses your property line it becomes your responsibility.” You and your insurance company are responsible for removing the carcass and repairing or replacing any structures, vehicles, or other items on your property that were damaged or destroyed by the wayward tree.

However, Pohl notes that there are exceptions to the rule. If the neighbor’s tree was in obvious decline through damage or disease for a significant period of time prior to falling on your property AND you had made several attempts to notify the neighbor of your concerns in writing (preferably with copies to the city’s Forestry Division), you may have a case for suing the property owner for negligence.

Proving negligence is very difficult without a strong paper trail of prior notifications that went unheeded. So, Pohl cautions that the generally accepted premise that the falling tree becomes your responsibility upon crossing your property line is the only realistic approach in most situations.

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Frank Pohl founded Pohl & Short, P.A. based upon the belief that a high quality small commercial law firm was needed in the Orlando, Florida area as an alternative to the large commercial law firms. He still believes that client responsiveness and satisfaction has a place in a fast changing legal profession. Frank has been involved in the Central Florida community for more than twenty-five years. He has been a dedicated past board member of many local organizations over the years. Frank graduated magna cum laude with a B.G.S. Degree from the University of Miami in Coral Gables, Florida; attended the University College at the University of London as an undergraduate studying British literature and British history; obtained his Juris Doctorate Degree in 1979; and obtained a Masters of Law and Letters Degree (LL.M.) from New York University School of Law in 1980. Frank is a member of The Florida Bar, the California Bar, and the District of Columbia Court of Appeals. He is also admitted to the U.S. Supreme Court. He has served on the Orange County Bar Association Real Estate Committee and is a member of the The Florida Bar’s Real Property and Corporation and Business Law Section. He has also served on the Florida Bar Grievance Committee.

Seminole Chamber of Commerce - 1999 Small Business Award

PRESS RELEASE: Winter Park, Florida
October 7, 1999

Winter Park Law Firm Recipient of
Greater Seminole Chamber of Commerce
"1999 Small Business Award"

Pohl & Short, P.A. was named a winner of the 1999 Small Business Award by the Greater Seminole Chamber of Commerce. The Greater Seminole Chamber of Commerce commended Pohl & Short, P.A. as a small business that demonstrates hard work, vision and entrepreneurial spirit. The offices of Pohl & Short, P.A. are located in Winter Park, Florida.

Candidates for the Award were judged on four areas: Human Resources and Community Involvement; Innovation and Imagination; Growth, Stability, and Staying Power; and The Future Goals of the Business.

Pohl & Short, P.A. considers itself an "old fashioned" law firm wherein trust is established between lawyer and client. Pohl & Short, P.A.’s lawyers have exclusive practice areas and tries to deliver its services at reasonable rates. Pohl & Short’s approach to legal services has been to provide the consumer with an alternative to large law firms wherein the quality of its lawyers matches what one would expect to find in large firms but where the atmosphere is one of a small "mom and pop" business.

The law firm of Pohl & Short, P.A. plans to continue into the future as a business boutique law firm that services the legal business needs of small to mid-size businesses. The law firm hopes that at the same time it provides quality legal services to its clients, that it also provides the type of working environment that benefits not only its employees and its clients, but also the community at large.

Pohl & Short, P.A. Recognized by Fannie Mae 1998

Pohl & Short, P.A. was recognized by Fannie Mae as one of their top three closing agents in the Southeast Region of the United States. Pohl & Short, P.A. was nominated for the "Signature Award" at the 1998 Awards Banquet in Houston, Texas. Pohl & Short, P.A. was commended as a law firm that excels in innovative problem solving. The offices of Pohl & Short, P.A. are located in Winter Park, Florida.