When it comes to building your own home, there are a number of lessor known — but vitally important — precautions that property owners must take to protect themselves, their properties and their bank accounts.
According to Florida law (Florida Statute 713, Part 1), those who work on a property or provide materials, and are not paid-in-full, have a right to enforce their claim for payment against said property. Further, if a contractor fails to pay subcontractors or material suppliers, the people who are owed money may look to the property owner for payment, even if the contractor has been paid in full.
This claim is known as a construction lien. If a lien is filed against a property, it could be sold against the owner’s will to pay for labor, materials or other services which a contractor may have failed to pay.
Following are tips for property owners on how to avoid construction liens.
When hiring a contractor for improvements costing more than $2,500:
- An owner may be liable if he pays the contractor who then fails to pay his suppliers or contractors. For protection, owners should have suppliers and subcontractors sign a “Release of Lien,” which is a written statement verifying payment has been received for the materials used and work performed on the property.
- Request from the contractor, via certified or registered mail, a list of all subcontractors and suppliers who have a contract with the contractor to provide services or materials for the property.
- If the contract calls for partial payments before the work is completed, get a “Partial Release of Lien” covering all workers and materials used to that point.
- Before the last payment is made to a contractor, obtain an affidavit from the contractor that specifies all unpaid parties who performed labor, services or provided services or materials for the property. Make sure the contractor provides final releases from these parties before a final payment is made.
- Always file a “Notice of Commencement” before beginning a home construction or remodeling project. The notice informs of the intent to begin improvements, the location of the property, description of the work and the amount of bond (if any). It also identifies the property owner, contractor, surety, lender and other pertinent information. The local authority that issues building permits is required to provide this form, which must be recorded with the Clerk of the Circuit Court in the county where the property being improved is located. A certified copy also must be posted at the job site. The building department is prohibited from performing the first inspection if the “Notice of Commencement” is not also filed with there. You can also supply a notarized statement that the notice has been filed, with a copy attached.
Notice To Owner
Prior to filing a lien, a lienor who does not have a direct contract with the owner, must serve the owner with a “Notice to Owner.” This notice must state the lienor’s name and address, and a description of the real property and the nature of the services or materials being furnished. The Notice to Owner must be served before commencing, or within 45 days of commencing, to furnish the services or materials (but before owner’s final payment to the contractor). A lien cannot be enforced unless the lienor has served the “Notice to Owner.”
Contesting A Lien
A lien is valid for one year, unless a lienor files a lawsuit to enforce the lien prior to the expiration of the year. An owner has a right to file a “Notice of Contest of Lien” during the one-year period. Upon the filing of a “Notice of Contest of Lien,” a lienor must file a lawsuit to enforce the lien within 60 days. Failure of the lienor to timely file a lawsuit renders the lien invalid.
To register a complaint (or learn if complaints have been filed against a prospective contractor), contact the Florida Department of Business and Professional Regulation’s Customer Contact Center at 850-487-1395 or CallCenter@dbpr.state.fl.us
Or write to: Florida Department of Business and Professional Regulation 1940 North Monroe Street, Tallahassee, Florida, 32399-1027. Or visit online at: www.MyFloridaLicense.com
License verification is available 24 hours a day and 7 days a week by calling DBPR’s Customer Contact Center at 850-487-1395 or going online to www.MyFloridaLicense.com› Search for a Licensee.
The information may be available through a local building department or the Better Business Bureau as well.
How a Release Works:
Whose responsibility is it to get these releases?
You can stipulate in the agreement with your contractor that he must provide all releases of lien. If it is not a part of the contract, however, or you act as your own contractor, and you must get the releases. If you borrow money to pay for the improvements and the lender pays the contractor(s) directly without obtaining releases, the lending institution may be responsible to you for any loss.
What can happen if I don’t get “Releases Of Lien?”
You will not be able to sell your property unless all outstanding liens are paid. Sometimes a landowner can even be forced to sell his property to satisfy a lien.
Who can claim a lien on my property?
Contractors, laborers, materials suppliers, subcontractors and professionals such as architects, landscape architects, interior designers, engineers or land surveyors all have the right to file a claim of lien for work or materials. Always require a release of lien from anyone who does work on your home.