2023 Changes to Florida's Lien Law - Webinar

In this blog, presented by SunRay Construction Solutions and Alex Barthet, a board-certified construction attorney, we will list the various changes and provide a brief explanation of each of those changes.

What is the Effective Date of Changes?

The effective date of all these changes is October 1, 2023. Most of these changes are just procedural changes which are in place to tighten up the around the edges on various issues. There are no major changes regarding deadlines or notices to be provided.

What are the Changes to the Definitions?

There are two major changes to the definitions – one is to the definition of ‘Contractor” and the other is ‘Final Furnishing’.

A) What is the new definition of Contractor?

• The definition of ‘Contractor’ has been updated to include construction management. So, the definition now is, “The term [contractor] also includes a licensed general contractor or building contractor, as those terms are defined in s. 489.105(3)(a) and (b), respectively, who provides construction management services, which include scheduling and coordinating preconstruction and construction phases for the construction project, or who provides program management services, which include schedule control, cost control, and coordinating the provision or procurement of planning, design, and construction for the construction project.”
• The new addition to the definition may be slightly unclear, especially the last phrase. Let’s say that you are a licensed contractor involved in preconstruction services, such as scheduling, cost control, etc., but the project never takes off. Does this mean that you still have your lien rights even though you may never perform any actual work on the project?  
• As per the last phrase, there must be some work performed in the construction project, even if it is not performed by you, for you to have the lien rights.

B) What is Final Furnishing?

• Final Furnishing means the last date that the lienor furnishes labor, services, or materials. The addition to this definition is that with respect to rental equipment, the term ‘final furnishing’ means that date that the rental equipment was last on the site of the improvement and available for use.
• In the past, there was some distinction on whether the rental equipment was needed on the site in order for it to be lienable. However, with this new addition, the rental equipment must be both on the site of improvement and available for use to be lienable.

Apart from the additions to these two terms, there is also a new definition created for ‘finance charge’.

C) What is a Finance Charge?

• ‘Finance Charge’ means a contractually specified additional amount to be paid by the obligor on any balance that remains unpaid by the due date set forth in the credit agreement or other contractor.
• A few years ago, there was a case which tried to distinguish between interest and finance charges, and the end result was that a lienor was not entitled to recover interest or finance charges.
• This new definition overturns this legal case and makes it clear that finance charges are 100% recoverable as part of your lien amount.

How do you now calculate Holidays and Weekends?

This statutory change with regards to calculating holidays and weekends clarifies what the existing state of the law is, meaning that the law, based on the cases, now says what the statute says. In short, they took the current state of the law and put it in the statute.

• “In computing any time period under this part, if the last day of the time period is a Saturday, Sunday or holiday specified in s. 110.117(1), or any day observed as a holiday by the clerk’s office or designated as a holiday by the chief judge of the circuit, the time period is extended to the end of the next business day.”
• What the definition means is that if your last day lands on a weekend or holiday, then your deadline for notice to owner, claim of lien, and notice of payment gets rolled over.  
• Now, you can take advantage of the LienZone App which offers various features including Calc-U-Lien which can be used to calculate the various deadlines. It also includes the standard legal holidays, so it will automatically know if your last day has landed on a weekend or a holiday, then it will roll over to the next business day.
• The recent pandemic also led to the addition of a new section to cover situations where the office may be closed due to unexpected issues.  
• “If the clerk’s office is closed in response to an emergency for 1 or more days so that a person may not present a document for recording or an action for filing in person with the clerk’s staff, the time period for recording a document or filing an action with the clerk’s office under this part is tolled. When the clerk’s office reopens, the time period is extended to the end of the business day which equates to the number of days the clerk’s office was closed.”

There is some uncertainty with this new addition. For example, you are on your 40^th day on your deadline of 90 days and the clerk’s office is closed for four days because of a hurricane. Now, when it is time to record your lien, do you record it on the 90^th day or do you get four additional days since the clerk’s office was closed for four days during the period of 90 days.  

• Since this part of the statute is not clear, it is recommended that you don’t wait until the 90^th day to record your lien.
• If in case you are late, then maybe you can look at this statute and see if you can get those 3-4 additional days since the clerk’s office was closed due to a pandemic or a hurricane, etc.

What are Mobile Home Liens?

Mobile home lien was one of the major changes in the statute. The statute now makes it clear that the landlord who rents their property to a mobile homeowner, their property is not subject to lien.

• “The interest of the lessor [landlord] is not subject to liens for improvements made by the lessee [tenant] when the lessee is a mobile homeowner who is leasing a mobile home lot in a mobile home park from the lessor.”
• So, if you are working on a mobile home for a mobile homeowner who does not own the land that the mobile home is on, then your lien will be attached only to the mobile home and not to the land on which it sits.

Terminating Notices of Commencement

As per the current state of the law:

• A lien must be recorded within 90 days of your last work.
• If a Notice of Commencement is terminated, then you must record your lien within 30 days from the date that the notice of termination was recorded.

But what happens if you did not get the notice that the notice of commencement was terminated? This scenario is what the new law clarifies.

• “However, if a lienor who began work under the notice of commencement before its termination lacks a direct contact with the owner and timely serves his or her notice to owner after the notice of termination has been recorded, the owner must serve a copy of the notice of termination upon such lienor, and the termination of the notice of commencement as to that lienor is effective 30 days after service of the notice of termination.”
• So, as per the new addition, the owner must serve a copy of the notice of termination upon the lienor, and the termination of the notice of commencement is effective only 30 days after the service of the notice of termination.  
• This gives you a small window to protect your lien rights wherein you will have 30 days to record your lien for any work you did in that period. Also, do not forget to serve a new notice to owner for any work performed after the notice of termination.

How can you discharge a Lien?

As per the current law, there are various ways to discharge a lien, such as:

• By recording a satisfaction  
• By order of court
• By failing to enforce the lien in a timely manner

Based on the new changes, the law now clarifies that liens can be released in whole or in part. Although most of them practice the process of partially satisfying a lien, there were some cases where it was considered improper. But with the changes to the legislation, it is now clear that you can partially satisfy your lien.

The statute has also added language to indicate that the ‘satisfaction or release must include the lienor’s notarized signature and set forth the official records’ reference number and recording date affixed by the recording office on the subject lien.”

You can also make use of another free tool called Make Me Conditional Stamp which is a free stamp.

• It is always a good practice to only send conditional releases that are conditioned on you actually receiving the payment. The best way to do that is to use conditional language.
• The Make Me Conditional Stamp provides the language, ‘notwithstanding, anything to the contrary, this waiver and release is conditioned upon and not effective until the undersigned receives paid funds of $______.  

• You can put the amount in the blank and put this stamp on your releases, so that you can be sure that all your releases that go out have this conditional stamp on them.

Private Project Notices of Nonpayment

Previously, on private projects, those not in privity with the contractor had to serve a copy of the Notice of Nonpayment only on the contractor. However, as per the recent changes, a copy of the Notice of Nonpayment must be served on both the contractor and the surety.  

So, ideally those who are in privity as well as those who are not in privity with the contractor must serve a copy of the Notice of Nonpayment on both the contractor and the surety.  

Lien Transfer Bonds

The lien transfer bonds were slightly modified.

• When a lien is transferred to a security bond, in calculating the value of the bond, the clerk’s office is now required to use either $5,000.000 (as opposed to $1,000.00) or 25% of the value of the lien to account for attorney’s fees in the bond, whichever is greater.
• So, the major change here is that the minimum value has increased from $1,000.00 to $5,000.00.
• Also, the clerk’s office is now required to serve a copy of the transfer certificate and a copy of the deposit or cash/security bond supporting the transfer on the lienor.
• Previously, the clerk’s office would just provide the transfer certificate which would not have all the details, thus making it difficult to determine who to sue.
• However, with the new change, the clerk’s office is now responsible for sending both the transfer certificate and a copy of the bond.

Public Project Notices of Nonpayment

For public project notices of nonpayment, language has been added:

• To allow claimant to serve a notice of intent to look to the bond for protection 45 days after claimant is served with a copy of the bond if the bond is not recorded before commencement of work or before recommencement of work after a default.
• So, what this language clarifies is that the notice of nonpayment must be served to the contractor, with a copy to the surety by those people who are not in privity with the contractor, especially when a copy of the bond is not recorded in the public record.
• This is helpful when you are working on a public project, and you are not aware that it is bonded because the contractor did not record a copy of the bond.

Also, just a reminder that there is no need to serve a notice of nonpayment for those who are working on a public bonded project and are in privity with the contractor.

So, these are all the changes to Florida’s Lien Law. Remember that all these changes will be effective from October 1, 2023.