Guide to Construction Liens, Waivers, and Bonds in Florida
During a construction project, contractors, subcontractors, property owners, and anyone else with a vested interest in the project want to make sure their financial assets and work are protected. Construction lien laws are in place to protect contractors, but it’s important that contractors fully understand their rights regarding payments, liens, wavers, and bonds in Florida with the help of one of our Miami construction law attorneys. Below, we’ll go over the difference between liens, waivers, and bonds, and what you should do if you need help protecting your business assets.
Related: What Are a Contractor’s Lien Rights?
A mechanic’s Lien, as outlined in Chapter 713 of Florida Statutes, is a statement declaring unpaid debts by a hired contractor or subcontractor that becomes attached to a property. The lien remains on the property until the debt is paid in full and can be placed if an invoice is not paid on time. A lien puts a hold on real estate sales or transfers until the debt is paid, ultimately serving as a protection for the contractors and subcontractors that the owner will not disappear and sell the property after work is completed.
The ability to file a lien does not rest on the main contractor alone. There are often multiple subcontractors and material providers involved in one construction project that work under the general contractor, many of which are not in direct contact with the owner of the property. Once payments are made to the general contractor, he should then disburse payments to subcontractors, who then pay sub-subcontractors, and so on, until all parties receive payment for services and materials provided. Unfortunately, this does not always happen. As a result, construction professionals may be forced to exercise their lien rights.
To file a lien, a contractor must record and obtain the following items as outlined in Section 713.08 of the Florida Statutes:
- Name of lienor and an address where the notices can be served to the lienor
- Name of the person the lienor contracted or who employed them
- All labor, services, and materials furnished
- A description of the real property, enough for identification
- Name of the owner
- The time when the first and last labor, service, or material items were supplied
- The amount unpaid to the lienor
- The date and method of service of notice to the owner
It is very important that all information is correct when filing a lien. An error in the amount owed, the date and method of service of notice to the owner, or in any of the materials furnished can cause you to lose your lien rights.
The claim of lien must be recorded no later than 90 days after the final appointing of the labor, services, or materials by the lienor. The lienor will have one year to file a lawsuit before the claim is voided. The one-year rule does have a couple of special exceptions. If there is a proper amendment to the claim, the date may be extended. Additionally, if the owner files a “Notice of Contest of Lien,” the one-year deadline for the lienor is shortened to 60 days after service of the notice to file a lawsuit or the claim is denied.
Any time you file a lien, you should consult with one of our Miami contractor attorneys to ensure that all requirements have been met and all forms are filed correctly.
What is a Lien Waiver?
A lien waiver is issued between the contractor and property owner upon payment for services. A lien waiver is more than just a receipt; it also ensures payment to the contractor or subcontractors and protects the owners from future liens for the same debt. The waiver may not be issued before payment is received. In short, lien waivers protect all parties involved.
There are lien waiver forms outlined by Florida Statutory Law, but you may also choose to use a different type of document. These may include the use of a conditional or unconditional waiver, and within those two categories you may also choose a partial or final stipulation. One of our Miami contractor lawyers will be able to walk you through which type of lien waiver is right for your project and will serve best to protect your interests.
A construction bond is also created in the interest of protecting those invested in a project, but it is not the same as a lien. A construction bond is a type of surety bond used by investors in construction projects that protects against disruptions or financial loss due to a contractor's failure to complete a project or failure to meet contract specifications. These bonds ensure a construction project’s bills will get paid.
There are three types of construction bonds: bid, performance, and payment. By submitting a construction bond, the party managing the construction work states it can complete the job according to the contractual policy. A Miami construction attorney will discuss with you the correct type of bond for your project.
Who Can File Liens and Who Needs Bonds?
A licensed contractor or subcontractor can file a lien. Liens cannot be filed by unlicensed contractors. Additionally, parties who furnish supplies, for example, the providers of generators or cranes used in the project, can file a lien. As for bonds, all general contractors and subcontractors must obtain a contractor license bond from the Construction Industry Licensing Board, which is under the jurisdiction of the Florida Department of Business and Professional Regulation.
How Can You Avoid Disruptions?
One of our Miami construction lawyers will help contractors and subcontractors avoid disruptions by fully reviewing all contracts used in any given project. Additionally, they will help contractors and subcontractors obtain the proper bonds and insurance.
Maintaining documentation of all payments received and made can go a long way in avoiding disruptions relating to non-payment. It is important to follow up with all subcontractors to make sure that they have received payment as well.
If you are in need of experienced and dedicated Miami contractor lawyers with an intimate knowledge of lien law, Cotney Attorneys & Consultants can help. Our law firm is dedicated to representing the construction industry, and our team of lawyers routinely handle all aspects of construction litigation, including appellate work. Our national OSHA defense practice has been recognized for its representation and aggressive defense of contractors, suppliers and manufacturers against OSHA.
If you would like to speak with a Miami construction attorney, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.