Do Not Bet Your Florida Construction Lien on a Judge’s Leniency

A Florida contractor can do everything that seems important.

The contractor can sign a written agreement, perform the work, document the completion, obtain the owner’s acknowledgment of the balance, timely record a claim of lien, and still face a serious challenge to the lien.

The problem may have started before the first day of work.

It may be sitting in the contractor’s standard contract.

Florida Statute § 713.015 requires a specific construction lien warning in certain direct residential contracts. Some contractors treat that warning as unimportant boilerplate. They assume that the homeowner received the same basic information somewhere else, or that a judge will overlook a technical omission when the debt is legitimate.

That is a dangerous assumption.

Some judges are sticklers. You cannot predict which judge will receive your case. You should not make the survival of your construction lien depend upon whether the assigned judge is willing to forgive an avoidable defect.

Save yourself the trouble. Stack the deck in your favor. Comply with every detail.

An Avoidable Problem in a Matter Handled by My Firm

In a recent matter handled by my firm, the contractor appeared to have an excellent underlying payment claim.

There was a written residential contract. The work had been performed. The owner had signed completion documents reflecting the final contract amount and the unpaid balance. The contractor had also recorded a claim of lien.

Then I examined the original contract for compliance with Florida’s Construction Lien Law.

The contract referred generally to incorporated “Statutory Warnings.” However, the contract packet supplied to me did not contain a signed and dated page setting out the actual warning required by § 713.015.

The owner was not completely unaware of Florida’s lien law. The project documents included other lien-related information. That may support an argument that the owner was not adversely affected by the omission.

But the omission created a problem that should never have existed.

Instead of presenting a straightforward case based upon the contract, completed work, acknowledged balance, and recorded lien, the contractor may now have to litigate an additional issue:

Does the lien remain enforceable even though the original contract did not contain the warning required by § 713.015?

There may be good arguments in the contractor’s favor. Good arguments still cost money to make. They create uncertainty. They give the owner an additional defense. They may also give the owner leverage to demand a discounted settlement.

The best statutory argument is often the argument you never need to make.

What § 713.015 Requires

Section 713.015 applies to a covered direct contract greater than $2,500 between an owner and a contractor for improvements to real property consisting of residential dwellings containing up to four units. The statute contains limited exceptions, including certain situations involving an owner who is a licensed contractor or a person who creates or regularly offers parcels for sale or lease. (Online Sunshine)

For a covered written contract, the required notice must be:

• Printed in no smaller than 12-point type;

• Capitalized;

• Boldfaced;

• Placed on the front page of the contract or on a separate page;

• Included in the contract document;

• Signed by the owner; and

• Dated by the owner.

  
  

For an oral or implied contract, the notice must be provided in a document that references the contract. (Online Sunshine)

Every one of those requirements should be treated as a checklist item.

Not most of them.

Not the requirements that seem important.

Every detail.

Here Is the Warning: Cut and Paste It

There is no reason to summarize the statutory warning, shorten it, or attempt to make it sound less alarming.

For a covered contract, use the statutory language:

ACCORDING TO FLORIDA’S CONSTRUCTION LIEN LAW (SECTIONS 713.001-713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR PROVIDE MATERIALS AND SERVICES AND ARE NOT PAID IN FULL HAVE A RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE ALREADY PAID YOUR CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF A LIEN IS FILED YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY. TO PROTECT YOURSELF, YOU SHOULD STIPULATE IN THIS CONTRACT THAT BEFORE ANY PAYMENT IS MADE, YOUR CONTRACTOR IS REQUIRED TO PROVIDE YOU WITH A WRITTEN RELEASE OF LIEN FROM ANY PERSON OR COMPANY THAT HAS PROVIDED TO YOU A “NOTICE TO OWNER.” FLORIDA’S CONSTRUCTION LIEN LAW IS COMPLEX, AND IT IS RECOMMENDED THAT YOU CONSULT AN ATTORNEY.

Contractors, cut and paste that language into your covered residential contract if your present form does not contain it. (Online Sunshine)

Do not paraphrase it.

Do not shorten it.

Do not delete a sentence because a salesperson thinks it might frighten the customer.

Do not substitute a friendlier explanation of Florida’s lien law.

Do not assume that similar language in another project document is close enough.

Preserve the capitalization and boldface. Use at least 12-point type. Place it where the statute requires. Obtain the owner’s signature and date.

Then verify that the warning actually appears in the final contract signed for that particular project.

Cutting and Pasting the Warning Is Only the Beginning

A compliant office template does not prove that the owner signed a compliant contract.

Problems arise when:

• The warning is reduced to 10-point type during formatting;

• The boldface disappears when the document is converted to PDF;

• The warning is contained in an attachment that the salesperson forgets to send;

• The owner signs the contract but not the separate warning page;

• The owner signs the warning but does not date it;

• The electronic signature program permits the owner to skip the warning page;

• An old contract version remains saved on a salesperson’s computer;

• The contract refers to statutory warnings that are not actually attached;

• The customer receives only selected pages of the agreement; or

• The contractor cannot later produce the complete executed packet.

The relevant question is not:

Does our standard contract normally contain the warning?

The relevant question is:

Can we produce the complete contract for this specific project and show the judge that the owner signed and dated the correctly formatted statutory warning?

If the answer is “I think so,” your document process is not reliable enough.

A Permit Warning Is Not the Contract Warning

A contractor may discover the omission after the owner refuses to pay and say:

The owner received the lien warning in the permit paperwork.

Or:

The owner signed a Notice of Commencement.

Or:

The warning appeared in another project document.

Those facts may be useful evidence concerning whether the owner was actually harmed by the omission.

They are not the same as complying with § 713.015.

For a written contract, the statute says that the notice must be in the contract document. A Notice of Commencement serves a different purpose. Permit materials serve a different purpose. A general reference to “all statutory notices” does not reproduce the required statutory warning in the required format. (Online Sunshine)

Do not plan to explain later why another document should have been good enough.

Put the warning in the contract.

The Statute Contains a Savings Clause

Section 713.015 provides that failure to give the written notice does not bar enforcement of a lien against a person who was not adversely affected by the failure. (Online Sunshine)

That language can give a contractor an important argument after a mistake has occurred.

Depending upon the facts, the contractor may be able to show that:

• The owner already understood Florida’s lien law;

• The owner received lien information through other project documents;

• The owner did not make any payment or decision in reliance upon the missing warning;

• No subcontractor or supplier claim arose from the omission;

• The owner acknowledged the unpaid balance;

• The owner accepted and retained the completed improvement; and

• The omission had no effect on the owner’s conduct.

Those facts may support enforcement.

But the savings clause should be treated as an emergency exit, not as permission to disregard the statute.

Relying upon it may require litigation over who bears the burden of proof, whether the owner was adversely affected, what evidence is sufficient, and how strictly the statute should be construed.

One published Florida circuit court decision demonstrates how badly that dispute can go for the contractor.

The Warning From Poinciana Development Group v. Marchetta

In Poinciana Development Group LLC v. Marchetta, a contractor entered into a residential proposal and contract involving driveway alterations, a ramp, and a fountain. The contractor later recorded a construction lien and filed an action seeking to foreclose it.

The homeowner sought judgment against the lien count because the contractor’s agreement omitted disclosures required by § 713.015 and applicable county and municipal provisions. The contractor argued, among other things, that the homeowner had not alleged or established that he was adversely affected by the missing disclosures.

The court rejected that argument.

The court concluded that the homeowner did not first have to prove adverse effect in order to challenge the statutorily noncompliant lien. It granted judgment on the pleadings against the contractor’s lien foreclosure count and determined that the missing disclosures precluded enforcement of the lien.

The court emphasized the principle that construction lien rights are created by statute and are strictly construed. It relied upon prior circuit court decisions concluding that the appropriate consequence of noncompliance was the loss of the lien rights the contractor sought to enforce.

Poinciana was a circuit court order, not a statewide appellate decision binding every Florida trial court. It also involved county and municipal disclosure requirements in addition to § 713.015.

That does not make it harmless.

The owner’s lawyer can cite it. The judge can read it. Another court may find its reasoning persuasive.

Your lien should not depend upon persuading the judge to reject a published decision that could have been made irrelevant by placing the required warning in the contract.

“Surely the Judge Will Not Invalidate the Lien Over This”

Perhaps the judge will view the omission as a technical defect and focus on the absence of actual harm.

Perhaps not.

The judge may instead ask:

The Legislature specified the language, type size, capitalization, boldface, placement, signature, date, and document. Why did the contractor not follow those directions?

Some judges place greater emphasis on the practical merits of the debt.

Other judges place greater emphasis on exact statutory compliance.

Some judges may apply the savings clause generously.

Other judges may begin with the principle that construction liens are powerful statutory remedies and insist upon strict compliance with the conditions for obtaining them.

You do not know which judge will receive the case when your contract is signed.

You will usually learn the judge’s identity long after the opportunity to fix the contract has passed.

The Debt and the Lien Are Not the Same Thing

Failure to comply with § 713.015 does not necessarily mean that the owner no longer owes the underlying contract debt.

The contractor may still have a breach of contract claim or another claim for payment.

But the construction lien gives the contractor something more valuable than an ordinary unsecured claim. It gives the contractor a potential remedy against the improved real property.

Losing the lien may mean:

• The property no longer secures the debt;

• The contractor must rely upon collecting a personal judgment;

• The owner has less incentive to resolve the dispute before selling or refinancing;

• The contractor loses settlement leverage;

• The litigation becomes more expensive;

• The owner gains an additional dispositive argument; and

• The contractor may face attorney’s fee exposure in the lien litigation.

Florida law generally permits the prevailing party in an action to enforce a lien to recover reasonable attorney’s fees. That makes an avoidably defective lien count potentially expensive for both sides. (Online Sunshine)

A contractor may ultimately recover the unpaid balance and still regret losing the lien remedy.

Stack the Deck in Your Favor

A contractor should create a document process that makes omission difficult.

Use the Exact Current Language

Use the statutory text reproduced above.

Do not rely upon an old contract found online. Do not copy the warning from a form that has not been reviewed in years. Statutes can change, so compare your permanent form periodically with the current published version of § 713.015.

Preserve the Formatting

Use at least 12-point type.

Keep the notice capitalized and boldfaced.

Do not assume that the formatting will survive conversion into a PDF or an electronic signature platform.

Put It in the Correct Location

Place the warning on the front page of the contract or on a separate page included within the contract.

Do not bury it in website terms or in an unattached office policy.

Require a Signature and Date

Create required signature and date fields on the warning itself.

As an additional risk-control measure, when more than one owner is signing the contract, consider having every owner sign and date the warning page.

Preserve the Entire Executed Contract

Save one complete PDF containing:

• The contract;

• The statutory warning;

• Every exhibit and addendum;

• All signatures and dates;

• The electronic signing certificate, when applicable; and

• A record showing that the complete agreement was delivered to the owner.

Do not plan to reconstruct the contract from scattered emails several years later.

Test the Electronic Signature Process

Send the contract through the same workflow used for customers.

Download the completed document and confirm that:

• The warning page is included;

• The type remains at least 12 point;

• The capitalization and boldface remain intact;

• The signature and date fields cannot be skipped;

• Every exhibit is attached; and

• The customer receives the complete final agreement.

Control Your Contract Versions

A perfect form at the main office does not help when a salesperson is using an obsolete contract saved on a tablet.

Give every contract version a date or version number. Remove old forms from circulation. Audit completed contracts periodically.

Check Local Requirements

The Poinciana decision involved municipal and county disclosures as well as the state statute.

Contractors should determine whether the county or municipality where the project is located imposes additional contract requirements.

Compliance with § 713.015 may not be the end of the inquiry.

Do Not Rely on These Explanations

A contractor should not begin a project expecting to argue later:

The owner already knew about liens.

The warning was in the permit package.

The owner signed a Notice of Commencement.

The contract incorporated statutory notices by reference.

The owner was not actually harmed.

The owner is sophisticated.

The owner admitted owing the money.

The work was completed.

The judge will not invalidate the lien over one missing page.

Those facts may be useful after the mistake has occurred.

None is as useful as a compliant contract.

Review Your Contract Before the Next Dispute

Do not wait until a customer refuses to pay before checking your form.

By then, the work has been performed, the debt exists, the lien deadline may be approaching, and the parties may already be preparing for litigation.

Review the contract template now.

Then review an actual completed agreement produced through the company’s real sales process. A template can be perfect while the document actually signed by the owner is defective.

For an active project involving a potentially noncompliant agreement, consult a Florida construction lawyer before assuming that a later notice or addendum will retroactively solve the problem. Section 713.015 expressly requires the notice to appear in the written contract document. (Online Sunshine)

The Bottom Line

My client had a signed agreement, completed work, an owner’s written acknowledgment of the balance, and facts suggesting that the owner understood Florida’s Construction Lien Law.

Those facts give the contractor arguments.

A compliant warning would have provided something better:

One less issue to litigate

Do not rely upon the court to forgive a defect because the underlying debt is legitimate.

Do not rely upon the owner’s inability to prove prejudice.

Do not assume that the judge will interpret the savings clause in your favor.

Some judges are sticklers. You cannot predict which judge will receive your case.

Save yourself the trouble. Stack the deck in your favor.

Cut and paste the statutory warning. Preserve its formatting. Put it in the proper location. Have the owner sign and date it. Save the complete executed contract. Check every detail.

The cost of compliance is almost nothing.

The potential cost of noncompliance is your construction lien.

The Law Office of Ari Mendelson LLC assists Florida contractors with construction contract review, lien compliance, payment disputes, demand letters, construction liens, and collection litigation.

This article provides general information and is not legal advice. Florida’s Construction Lien Law is technical. The enforceability of a particular lien depends upon the contract, the property, the parties, the work performed, the statutory notices, the applicable deadlines, and the surrounding facts.