If you are a Florida contractor, you know that sometimes you encounter difficulties when attempting to get paid for the work you complete for homeowners. When the remodeling, renovation or home improvement work you agreed to perform cost over $2,500, you are entitled to file a lien against the homeowner’s property if (s)he does not pay you the full amount of your bill. There are, however, stringent rules and procedures with which you must comply in order to file and enforce your lien.
It goes without saying that you should never perform any work unless you have a written contract with the homeowner setting forth the following things:
- Your name, the homeowner’s name and the address of the property
- Exactly what work you will perform
- Your best estimate of the total cost of your work
- How and when the homeowner will pay you; i.e., down payment, partial payments as the work proceeds, full payment on work completion, or whatever terms you negotiate with the homeowner
To ensure that you have the legal right to file a lien if and when it becomes necessary, get a Notice of Commencement from the city or county that issues building permits for construction projects in its jurisdiction. Then file and/or record this Notice with the clerk of the circuit court in the county in which the property is located, and file it with the appropriate building department. Failure to do so will result in the building department’s inability to perform the necessary inspections. In addition, post a copy of this Notice on the job site.
Assuming you and the homeowner signed a written contract that specifies when and how you get paid, those contract provisions determine the payment schedule. If the contract calls for partial payments as the work proceeds, a savvy homeowner will ask you to give him or her a written Partial Release of Lien for all contractor, subcontractors and materials paid up to the point of each partial payment. If (s)he does, you must provide it. Likewise, if (s)he asks for a written Release of Lien before making the final payment, you must provide that, too.
This is the only protection (s)he has against you or a subcontractor later filing a lien against the property claiming nonpayment of monies owed. As a reputable contractor, you should willingly provide these Releases. In fact, it solidifies your reputation if you provide them even if the homeowner does not request them. Satisfied customers are your best source of new business.
Filing and enforcing your lien
If you neglected to obtain a signed written contract with the homeowner and must file a lien against his or her property for unpaid bills, you must give him or her a Notice to Owner stating the following:
- Your name and address
- Description of the real property
- Nature of the services and materials you furnished
You must serve this Notice on the homeowner before filing your lien or within 45 days thereafter. Otherwise you cannot enforce your lien. Even with this Notice, however, your lien is only good for one year unless you file a lawsuit sometime during that period against the homeowner to enforce it.
The homeowner has the right to contest your lien if (s)he believes it to be unjust, but must do so via a Notice of Contest of Lien. If (s)he files such a Notice, you must file your lawsuit within 60 days thereafter. Failure to do so invalidates your lien and relieves the homeowner from having to pay you by a forced sale of his or home. Thus your “collateral” is gone and you must absorb your unpaid costs.
Whether you are a professional contractor or someone who makes extra money doing as-needed construction jobs for friends and neighbors, you should consult an experienced construction attorney to help you draft your contracts. Good contracts are your best protection against having to file and enforce construction liens.