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.