In Florida, construction lien rights provide contractors with a potentially powerful tool to assist them in getting paid. However, to have construction lien rights, the unpaid contractor must comply with the procedures and requirements in the statute. The contractor must record its claim of lien within 90 days of its final furnishing of labor, materials, or services to the project[i] and must serve the claim of lien on the owner within 15 days of recording[ii] it. The failure to timely record the lien will result in an unenforceable lien.[iii] Additionally, the failure to timely serve the claim of lien can result in an unenforceable lien.[iv]
An important but sometimes overlooked prerequisite to enforcing a mechanics lien in Florida is giving the owner a document called a “Contractor’s Final Payment Affidavit.” Furnishing the affidavit to the owner is a prerequisite to having a lien enforcement action.[v]
Mr. Murphy: The sometimes forgotten Contractor’s Final Payment Affidavit
One of the purposes of the Contractor’s Final Payment Affidavit is to protect the owner from having to pay twice.[vi] An owner is prohibited from making the final payment without first obtaining the affidavit from the contractor.[vii] But, with the Contractor’s Final Payment Affidavit, the owner can determine to whom other than the contractor payments may be made in compliance with the statute. Failure to withhold final payment as required opens the property to the full amount of all valid liens of which the owner has notice at the time the Contractor’s Final Payment Affidavit is furnished.[viii]
The statute provides a form affidavit.[ix] A contractor’s payment certificate of payment has been held to be insufficient.[x]
Download a free, customizable Florida Contractor Final Payment Affidavit template here.
Only contractors must give an affidavit
As its name suggests, only a contractor is required to furnish a Contractor’s Final Payment Affidavit. The statutory definition of “contractor” is:
a person other than a materialman or laborer who enters into a contract with the owner of real property for improving it, or who takes over from a contractor as so defined the entire remaining work under such contract. The term “contractor” includes an architect, landscape architect, or engineer who improves real property pursuant to a [legally authorized] design-build contract . . . .[xi]
Generally speaking, a “contractor” for purposes of the lien law is the person/company contracting directly with the property owner.[xii] The affidavit is not required from subcontractors, sub-subcontractors, suppliers, or “professional lienors” (a statutorily defined term).
Importantly, if a person has a contract directly with the owner, he is obligated to furnish the affidavit, regardless of whether that person subs out any of the work.[xiii] Thus trade contractors who might typically contract with general contractors to perform a portion of their scope will be required to provide the affidavit when they contract directly with the owner.
Where an owner acts as his own general contractor, those with whom he contracts are contractors for purposes of the lien law and, therefore, are required to furnish the Contractor’s Final Payment Affidavit.[xiv] A contractor that is terminated also must furnish a Contractor’s Final Payment Affidavit.[xv]
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Timely “delivery” of a Contractor’s Final Payment Affidavit
The consequences for failing to provide the affidavit are severe. The statute states that, “The contractor shall have no lien or right of action against the owner for labor, services, or materials furnished under the direct contract while in default for not giving the owner the affidavit.”[xvi] Furthermore, the statute requires that the contractor deliver the affidavit to the owner “at least 5 days before instituting an action as a prerequisite to the institution of any action to enforce his or her lien under this chapter.”[xvii]
Looking solely at the statute, the 5-day requirement can present a problem for the contractor whose recorded claim of lien is to expire in less than 5 days. A claim of lien expires as a matter of law 1 year from recording.[xviii] However, the Florida Supreme Court has ruled that so long as the affidavit is given to the owner within the statute of limitations period, the contractor’s lien action may proceed, even if the affidavit was not given 5 or more days before filing the lawsuit.[xix]
The same issue also arises in connection with a mechanism provided in the lien law for shortening the time within which a contractor must file its lien enforcement complaint. The statute allows an owner or her attorney to file a Notice of Contest of Lien.[xx] When a notice of contest of lien is filed, the contractor must file an action to enforce its claim of lien with 60 days of the notice of contest being served.[xxi] Applying the Florida Supreme Court rule discussed above, at least one appellate court has held that service of the affidavit within the 60 days constituted compliance with the statute, even though the affidavit was not delivered at least five days before filing suit.[xxii] However, if the affidavit is delivered late, the claim of lien is likely to be unenforceable because the failure to comply timely with the condition precedent cannot be cured.[xxiii]
The lien law also allows any interested party, which includes the owner, to serve the contractor with a 20-day summons to show cause why the lien should not be enforced by action or vacated and canceled of record.[xxiv] This procedure requires the contractor to file his lien enforcement action within 20 days of being served with the summons.[xxv] If the contractor fails to file within the 20 days, the court must order the cancellation of the lien.[xxvi] Unsurprisingly, it has been held that a contractor who has been served with one of these 20-day show cause summonses still must deliver a Contractor’s Final Payment Affidavit.[xxvii]
Currently, there is no controlling authority directly on point to say that the contractor has until the 20th day to deliver the affidavit rather than being required to do so 5 days beforehand as the statute seems to indicate is required, but such a ruling would be consistent with Florida Supreme Court precedent discussed above.
Inaccuracies in a Contractor’s Final Payment Affidavit
While Florida’s Construction Lien Law generally is not to be liberally construed,[xxviii] in the context of the Contractor’s Final Payment affidavit, the law allows for mistakes so long as the owner is not prejudiced. The statute states that “the negligent inclusion or omission of any information in the affidavit which has not prejudiced the owner does not constitute a default that operates to defeat an otherwise valid lien.”[xxix]
Nevertheless, great care should be given to the preparation of the affidavit because it is a statement given under oath and even the owner who is not prejudiced by inaccuracies in the affidavit will likely use it during litigation to attack the contractor’s credibility.
“Delivery” of a Contractor’s Final Payment Affidavit
In the lien law, documents are typically required to be served, and the lien law provides a lengthy if not complicated set of rules explaining what constitutes service.[xxx] Not so when it comes to “delivery” and the Contractor’s Final Payment Affidavit. The statute does not provide a definition for “delivery.” However, one appellate court has addressed the question. It held that “evidence of proper posting in the mail of the affidavit at least 5 days before filing suit is compliance with the statute.”[xxxi]
What the contractor wants to avoid is an argument that the owner did not receive the affidavit. The ideal evidence would be a notarized signature of the owner accepting delivery of the affidavit, but in most cases that is not practical if for no other reason than because the owner does not have a legal duty to provide a notarized signature of receipt. Other types of receipts bearing the owner’s signature, such as a Federal Express delivery receipt or a certified mail receipt, would provide a basis for challenging any denial the owner might make to receipt of the affidavit. Similarly, fax transmittal with a record of delivery would provide the needed evidence.
Those who are more tech savvy might attempt to deliver the affidavit by email using a tracking program that can demonstrate delivery to the recipient’s inbox or even that the email was opened. However, due to potential evidentiary challenges and the sparse law on what constitutes delivery, it is suggested that the affidavit should also be sent by regular, first-class mail and that a contemporaneous record of mailing is made, too.
Conclusion
Florida’s Construction Lien Law requires that each person having a direct contract with the owner deliver a Contractor’s Final Payment Affidavit at least 5 days before filing suit to enforce lien rights. The statute provides a form affidavit. Care should be taken to ensure its accuracy and actual delivery to the owner. By complying with the statutory conditions for a construction lien, including furnishing a Contractor’s Final Payment Affidavit, a contractor can utilize the powerful tool of a construction lien to secure payment of amounts unpaid under the contract.
This post is provided by Robert Tanner, a Florida Bar Board Certified in Construction Law from the Law Office of Robert S. Tanner who specializes in representing owners, contractors, subcontractors, and material suppliers concerning construction contract negotiations and drafting, liens, bonds, and defect claims and defenses. He has been practicing law for more than 14 years and is licensed in Florida, Maryland, and the District of Columbia. He welcomes your emails at rst@robtannerlaw.com, and can also be reached at (754)-800-9550.
REFERENCES
[i] Florida Statutes, section 713.08(5).
[ii] Florida Statutes, section 713.08(4)(c).
[iii] Florida Statutes, section 713.08(5).
[iv] Florida Statutes, section 713.08(4)(c).
[v] Florida Statutes, section 713.06(3)(d)(1).
[vi] Coquina, Ltd. v. Nicholson Cabinet Co., 509 So. 2d 1344, 1346 (Fla. 1st DCA 1987).
[vii] Florida Statutes, section 713.06(3)(d)(5).
[viii] Florida Statutes, section 713.06(3)(d)(6).
[ix] Florida Statutes, section 713.06(3)(d)(1).
[x] McMahan Const. Co., Inc. v. Carol’s Care Ctr., Inc., 460 So. 2d 1001 (Fla. 5th DCA 1984).
[xi] Florida Statutes, section 713.01(8).
[xii] The term “owner” can mean, for example, a tenant contracting for build-out or other improvements. The term is not restricted to the fee/title owner.
[xiii] Florida Statutes, section 713.06(3)(d).
[xiv] Atlantic Gardens Landscaping, Inc. v. Boca Raton Land Development, Inc., 360 So.2d 1278 (Fla. 4th DCA 1978).
[xv] Florida Statutes, section 713.06(3)(d)(1).
[xvi] Florida Statutes, section 713.06(3)(d)(1).
[xvii] Florida Statutes, section 713.06(3)(d)(1).
[xviii] Florida Statutes, section 713.22(1).
[xix] Holding Electric, Inc. v. Roberts, 530 So. 2d 301 (Fla. 1988).
[xx] Florida Statutes, section 713.22(2) (“The lien of any lienor upon whom such notice is served and who fails to institute a suit to enforce his or her lien within 60 days after service of such notice shall be extinguished automatically.”).
[xxi] Charles Redi-Mix, Inc. v. Phillips, 580 So.2d 166, 167 (Fla. 4th DCA 1991) (“Notice of Contest acts by operation of law to discharge a lien on the sixtieth day”).
[xxii] Coquina, Ltd. v. Nicholson Cabinet Co., 509 So.2d 1344, 1346 (Fla. 1st DCA 1987).
[xxiii] See, e.g., Pierson D. Const., Inc. v. Yudell, 863 So.2d 413 (Fla. 4th DCA 2003).
[xxiv] Florida Statutes, section 713.21(4).
[xxv] Florida Statutes, section 713.21(4).
[xxvi] Florida Statutes, section 713.21(4).
[xxvii] Hanley v. Kajak, 661 So.2d 1248 (Fla. 4th DCA 1995).
[xxviii] Florida Statutes, section 713.37.
[xxix] Florida Statutes, section 713.06(3)(d)(1).
[xxx] Florida Statutes, section 713.18.
[xxxi] State-Wide Const., Inc. v. Dowda, 418 So.2d 1238 (Fla. 5th DCA1982).
