Who Gets Paid First? Construction Liens vs. Mortgages in Florida

When a Florida project runs out of money, one question surfaces fast: whose claim comes first? An unpaid contractor may hold a construction lien, while the lender that financed the project holds a mortgage. Both are secured by the same property, which is often worth less than the two claims combined. Priority decides who gets paid and who is left chasing a deficiency.

Florida cares a great deal about the calendar, though not always in the way contractors expect.

Recording Dates Drive the Outcome

Under section 713.07(2) of the Florida Statutes, liens held by contractors, subcontractors, and suppliers take priority as of the date the notice of commencement is recorded. If no notice was recorded, priority runs from the date the claim of lien is recorded. Lawyers call this “relation back,” because a lien recorded months into a job can reach back to the day the notice hit the public record.

Section 713.07(3) provides the counterweight. A mortgage recorded before a lien attaches has priority over that lien, and so do the mortgage proceeds, regardless of when they are disbursed. In practice:

• A mortgage recorded before the notice of commencement generally beats the liens, even when the lender funds draws long after work begins.
• A mortgage recorded after the notice generally falls behind liens that relate back to it.
• With no notice of commencement, an earlier recorded mortgage will usually come first.

Why the Notice of Commencement Matters

With limited exceptions, section 713.13 requires an owner to record a notice of commencement before work starts and to post a copy, or a notarized statement of its filing, at the jobsite. The notice must identify any construction lender, and under section 713.13(7), a lender must record the notice before disbursing construction funds to the contractor.

Timing details can swing a priority fight. A notice is void if work does not actually begin within 90 days of recording, and unless it says otherwise, it stops being effective against mortgages and purchasers after one year. A stalled project can create gaps that either side may try to exploit.

Practical Steps for Contractors and Suppliers

Priority only matters if the lien is valid in the first place, so keep these habits on every job:

• Search the property records before you begin and compare the mortgage recording date to the notice of commencement.
• Serve required notices to owner on time and keep proof of delivery.
• Record your claim of lien within the statutory deadline.
• Track the notice’s expiration date and any amendments.

Get the Records Reviewed Early

If a lender and a lien claimant are competing over the same property, reviewing the recorded documents early can change the outcome. Our Florida construction lien attorneys at Linkhorst Law Firm can explain where you stand and what to do next. Call us at 561-626-8880 or use our online form, and we will take it from there.

Sources:

https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0713/Sections/0713.07.html

https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0713/Sections/0713.13.html