Due to the large number of contractor's who went under during the past two years I have had questions regarding Mechanic Liens and how they affect title to property. I have begun answering these questions locally by emailing to groups of realtors and lenders to try to help people understand how they work. The following is the latest email I sent regarding this issue.
Today's lesson in mechanic lien law: If the sub-contractor was hired by a general contractor and the owner has not been involved with the sub-contractor, creating a privity situation, the only way a sub-contractor can file a valid lien against property in Florida is if they follow the Statute to the letter. The statute states under Section 713.06 "(2)(a) All lienors under this section, except laborers, as a prerequisite to perfecting a lien under this chapter and recording a claim of lien, must serve a notice on the owner setting forth the lienor's name and address, a description sufficient for identification of the real property, and the nature of the services or materials furnished or to be furnished. A sub-subcontractor or a materialman to a subcontractor must serve a copy of the notice on the contractor as a prerequisite to perfecting a lien under this chapter and recording a claim of lien. A materialman to a sub-subcontractor must serve a copy of the notice to owner on the contractor as a prerequisite to perfecting a lien under this chapter and recording a claim of lien. A materialman to a sub-subcontractor shall serve the notice to owner on the subcontractor if the materialman knows the name and address of the subcontractor. The notice must be served before commencing, or not later than 45 days after commencing, to furnish his or her labor, services, or materials, but, in any event, before the date of the owner's disbursement of the final payment after the contractor has furnished the affidavit under subparagraph (3)(d)1. The notice must be served regardless of the method of payments by the owner, whether proper or improper, and does not give to the lienor serving the notice any priority over other lienors in the same category; and the failure to serve the notice, or to timely serve it, is a complete defense to enforcement of a lien by any person. The serving of the notice does not dispense with recording the claim of lien. The notice is not a lien, cloud, or encumbrance on the real property nor actual or constructive notice of any of them. What this means is that if the sub-contractor did not send a Notice to Owner to the property owner within 45 days of commencing work on the property they have no right to file a lien against the property. If they did send the Notice to Owner within the time prescribed by Florida Statute, the sub-contractor then has a right to record a Claim of Lien against the property in the public records. This lien will expire within 12 months from the date same is recorded unless an action to foreclosure the lien is initiated by the sub-contractor. There is no right to re-record the lien to extend the time the lien is attached to the property. The sub-contractor is just out of luck on payment of the debt if they do not start the foreclosure action. In the event a customer of yours has a lien recorded against their property which is less than 1 year old, they can record a Notice of Contest of Lien in the public records which forces the sub-contractor to file a foreclosure action against the owner of the property within 60 days after service of the notice (this time is started when the Notice of Contest of Lien is recorded in the Public Records. At that time the clerk's office sends out, certified mail, return receipt requested, a certified copy of the Notice of Contest to the sub-contractor). Since most of these properties have first mortgages on them the sub-contractors will seldom initiate a foreclosure action and the lien expires upon the termination of the 60 day period, instead of waiting the full year for the lien to expire. In the event the owner hired the sub-contractor and did not pay them there is no requirement for a Notice to Owner by the Statute and the Claim of Lien can be recorded against the property. Again, this would expire 12 months after recording of same unless a foreclosure action is filed. I felt you should know that many of the liens which were filed over a year ago have now expired, and why, and your seller does not need to worry about them. Have a great day.
Comments(1)