Ensuring Payment for Construction Work
Receiving payment for the completion of a construction contract is, of course, the goal of any company entering into this type of agreement. However, in some cases, the contracting company will decide not to pay for the work performed. This failure or refusal may be due to claims the contractor did not perform the construction per the contract specifications, or the company simply choosing not to pay, presumably hoping that the contractor will go away. However, Florida allows any entity who performs services for the improvement of a piece property to place a lien on the property if the payment is not made. An illustration of this mechanism occurred recently in Orange County, where five subcontractors filed an action against a Winter Park general contractor to enforce their liens against property owned by the Walt Disney Company. Although it is unusual for disagreements like these to end up in court, it does show how having experienced construction lien attorneys can help a contractor if it does. A discussion on some requirements of Florida’s Construction Lien Law, as well as what to do if a lien needs to be enforced, will follow below.
Florida’s Construction Lien Law
As mentioned above, the Construction Lien Law in Florida allows anyone, whether an individual or a company, who provides services for the improvement of a parcel of property, to place a lien on the property if they are not paid for their services. Payment includes both labor and materials, and the ability to place a lien on a parcel of property extends to subcontractors who have not been paid by the general contractor (as in the news article above). Generally speaking, a lien, in this context, is an encumbrance that is placed upon a parcel of property which provides notice that the parcel is subject to an outstanding debt that has not been paid. In some cases, this notice will prevent transfer of the property from one owner to another until the debt has been resolved.
Beginning the Lien Process
The liens process is preemptive and involves filing and posting two documents: a Notice of Commencement and a Notice of Owner. A Notice of Commencement identifies the property to be improved, the owner of the property, the contractor who will be performing the work, and any lenders or sureties. The Notice of Commencement is filed with the County Clerk’s Office by the owner, and serves as a request to the contractor to identify any potential lienholders. Potential lienholders are usually subcontractors who will be working at the direction of the general contractor. The owner must also post a certified copy of the Notice at the jobsite. Every potential lienholder must then serve a Notice of Owner, which contains a description of the services to be performed, on each party above the lienholder, so everyone potentially responsible knows the existence of the claim. This Notice must be provided within 45 days after beginning work on the project.
After Completion of Work
Once work has been completed, typically, the contractor will submit an invoice to the owner for payment. In most cases, payment is made to the contractor, who then forwards the appropriate share to any subcontractors. If, however, payment is not forthcoming, the contractor has 90 days from the date of the contractor’s last work, or 90 days from the termination of the contract, whichever is sooner, to file a claim of lien at the County Clerk’s Office. Further, within 15 days of the filing, the contractor must serve the lien on the owner.
If the matter cannot be resolved amicably, the contractor then may institute litigation to enforce the lien. Retaining the services of an experienced construction lien attorney will ensure that these, and all other, deadlines are met, and will be able to satisfactorily assist the contractor in enforcement.
Seek Legal Advice
The best strategy, if you are a contractor or a subcontractor, is to retain the services of an experienced construction lien attorney at the commencement of a construction project. If you or your company is waiting for payment, obtain the services of an experienced construction lien attorney as soon as possible. The attorneys at Linkhorst & Hockin have the experience to help ensure you get the compensation you deserve. Contact our Jupiter office today for an initial consultation.