7 Deadly Lien & Release Traps and How to Beat Them - Florida Webinar

In the webinar, presented by SunRay Construction Solutions and Alex Barthet, Principal, The Barthet Firm, we will outline seven specific lien and release traps in Florida that many individuals and businesses fall into and provide actionable steps to avoid them.

Understanding the Basics of Lien Laws

Before exploring specific traps, it is crucial to understand the fundamentals of lien laws. This knowledge helps identify potential risks and navigate the legal landscape successfully. We will discuss four lien-related traps and three release-related traps to ensure you have the necessary information to safeguard your financial interests.

Securing Your Lien and Bond Rights

Step 1: Serving the Notice to Owner

Within 45 days from your first work or delivery of materials, you must serve a Notice to Owner on both the owner and the contractor. This requirement applies if you are a subcontractor, sub-subcontractor, or a supplier to any of these parties. However, if you have a direct contract with the owner, you do not need to serve this notice.

For example, if you are a plumber, you are typically considered a subcontractor. But if you are hired directly by an owner, you don’t need to send the Notice to Owner to maintain your lien rights. That said, it is always a good practice to send the notice anyway. Sometimes, you may believe you are not a subcontractor when legally, you are. Additionally, sending a Notice to Owner serves as a strong collection tool—owners take it seriously, and it can increase the likelihood of getting paid.

Step 2: Recording the Lien

Within 90 days of your last work, you need to record the lien. You do not have to wait until your work is fully completed to do this—you can record a lien while you are still working. Many people mistakenly believe that they must finish all work before recording a lien, but that is not the case. Filing a lien while still on the job can exert pressure and act as an effective collection tool.

If you have a claim on a payment bond (e.g., for a public project or a private job where the contractor is required to issue a bond), you must serve a Notice of Non-Payment within 90 days of your last work. This is not the same as a lien—it is a separate signed and notarized document. If a project has a payment bond, this is the document you must use to protect your claim.

Step 3: Serving a Copy of the Lien

Within 15 days of recording the lien, you must serve a copy to all interested parties. Unlike other lien requirements, failing to do this does not automatically invalidate your lien. However, it is still a legal obligation, and if you use a service like Sunray for handling your notices and liens, they will handle this step for you automatically.

Step 4: Preparing the Contractor’s Final Affidavit (CFA)

If you have a direct contract with the owner, you must send a Contractor’s Final Affidavit (CFA) at least five days before filing a lawsuit to foreclose on your lien. The best practice is to prepare this affidavit at the same time you record your lien.

The CFA is a sworn document stating your name, the owner’s name, the contract details, the amount owed, and a list of any unpaid subcontractors or suppliers. This document must be signed, notarized, and sent to the owner via certified mail, but it does not need to be recorded.

Step 5: Filing a Lawsuit to Foreclose the Lien

Within one year of recording your lien, you must file a lawsuit to foreclose on the lien. There is no option to "re-record" a lien after this deadline passes. Similarly, if you have a claim on a payment bond, you must file a lawsuit within one year of your last work—note that this timeline differs slightly from the lien foreclosure deadline.

That said, you should not wait until the one-year deadline approaches. If you have not been paid within 30 to 60 days of recording your lien or serving your Notice of Non-Payment, it’s time to consider hiring a lawyer to enforce your rights in court.

Lien Traps to Avoid

Trap 1: The Notice to Owner Must Be Received—Not Just Sent—by the Deadline

The Notice to Owner must be received by the 45th day, not just mailed by that date. If you send it via certified mail on Day 41, there is a risk it won’t be delivered in time. If the notice arrives after Day 45, you lose your lien rights.

To avoid this, use a service like Sunray, which ensures the notice is brought to the post office by the 40th day and obtains a stamped manifest from the post office. This stamped document serves as proof of service, even if the notice is lost or delayed.

Trap 2: Retainage Must Be Liened Within 90 Days

There is no exception in lien law that extends your deadline for filing a lien if you are only owed retainage. If your last work was more than 90 days ago, you must still record your lien within that window, even if retainage is the only outstanding amount.

For bonded jobs, the rules differ slightly—if the only unpaid amount is retainage, the Notice of Non-Payment deadline does not apply. However, if you are owed any non-retainage amounts, you should serve a Notice of Non-Payment for the full amount.

Trap 3: If a Notice of Commencement Is Terminated, You Only Have 30 Days to File a Lien

Normally, you have 90 days to file a lien. However, if the Notice of Commencement (NOC) is terminated—due to a refinance, contractor change, or sale—you must lien for all amounts owed within 30 days of termination.

You may be notified of an NOC termination via certified mail, or you might hear about it if contractors request final releases. Be cautious—if you sign a final release without being paid, you may forfeit your lien rights.

Additionally, if an NOC is terminated, you must serve a new Notice to Owner after the new NOC is recorded. If you fail to do this, you will not have lien rights for future work.

Trap 4: First and Last Work Dates Determine Lien Deadlines, Not Invoice Dates

Your first and last work dates—not when you send invoices or when payments are due—determine your lien and Notice to Owner deadlines. Calculating these dates correctly is crucial to preserving your rights.

Note: When determining when your lien rights begin, it’s important to focus on when you performed actual, meaningful contract work or approved change order work for the delivery of materials. Simply looking at your records and identifying when you sent a pay application is not the correct way to calculate lien deadlines. Your lien rights start running from the date you last performed meaningful work—whether that means labor or delivering materials to the job site. For example, if your last work occurred on the 7th of the month, but you didn’t send your bill until the 25th, your lien deadline calculation should be based on the 7th, not the end of the month.

Release Traps to Avoid

Release Trap #1: Email Copies of Signed Releases Are Valid

Many people mistakenly believe that an emailed release is unenforceable because they hold the original signed document. However, if you send an unconditional release via email, even if you never receive payment, you may have given up your lien rights. For instance, if a supplier provides a release to a subcontractor, who then passes it along to the contractor and owner, the owner may fund the payment based on that release. If the check never makes its way back to the supplier, they could lose their lien rights.

To avoid this, you must expressly condition your release on receiving actual payment. You can include language such as:
"Notwithstanding anything to the contrary, this waiver and release is conditioned upon and not effective until the undersigned receives paid funds of [insert amount]."
For example, if you are expecting a $28,000 check, explicitly stating this in the release ensures that your rights remain protected until payment is received.

Release Trap #2: Issuing a Final Release Requires a New Notice to Owner

If you issue a final release and later deliver more materials or perform more work on the project, you must serve a new Notice to Owner to maintain lien rights. For example, if a supplier to a subcontractor issues a final release and then later provides additional materials, they must serve a new Notice to Owner within 45 days of the new delivery. Without this notice, they will not have lien rights for the additional materials.

Be very careful when issuing a final release. If there’s a chance you may need to provide more work or materials, ensure that you send a new Notice to Owner in a timely manner.

Release Trap #3: The “Through Date” of a Release Controls Over the Payment Amount

The through date on a release is more important than the payment amount listed. Suppose you expect a $10,000 payment to cover work through July 31st, but you only receive $8,000. The $8,000 does not fully cover the entire month’s work, so you must adjust the through date accordingly—perhaps to July 23rd or July 17th, depending on the portion of work paid for.

If you fail to adjust the through date, you may unintentionally waive rights to the remaining unpaid amount. One way to address this is by adding an exception to the release, such as stating: “This release excludes Invoice #1234 for $2,000.”

We've seen clients who repeatedly accepted short payments and signed unconditional releases through the end of the month each time. Over time, this resulted in a loss of claim to nearly $96,000 in unpaid amounts. Their assumption was that the pay applications would protect them, but because they signed releases that covered the entire month, they unintentionally gave up their rights. Always ensure that the through date reflects what you were actually paid for.

Handling an Expired Notice of Commencement

A Notice of Commencement (NOC) typically expires after one year or on a specific date. If a new NOC is created, retainage does not automatically transfer to the new one. However, this is different from a terminated NOC, which involves an affirmative action by the owner. Understanding this distinction is crucial when managing payments and lien rights.

Filing a Lien While Still Working on a Job

If you are still working on a job but haven’t been paid, you can file a lien—but only for work that has already been completed. For example, if you are owed $100,000 for completed work, $50,000 for future work, and $20,000 in retainage, your lien should only include the $100,000. The retainage should be mentioned in a footnote within the lien but not included in the claim itself.

Once you complete additional work, you can amend your lien to reflect the updated amount. You can file an Amended Claim of Lien anytime within 90 days of your last work on the project.

By understanding these rules and using the right tools, you can protect your lien rights and avoid common pitfalls in construction payments.

Common Questions Contractors Ask

What is retainage?

Retainage is a withheld portion (typically 10%) of the contract amount as security for project completion. It is more common in commercial projects than residential ones.

Can financing costs be recovered under lien laws?

Yes. Lien laws allow recovery of finance charges, such as interest from supplier credit agreements.

Does the 30-day period to file a lien apply if no notice of NOC termination is given?

No. A recent law change clarified that if you do not receive notice of termination, the 30-day deadline does not apply.

How can contractors protect themselves from unpaid suppliers’ NTOs after paying subcontractors?

• Provide a Contractor’s Final Affidavit before final payment to the owner.

• Collect releases from subcontractors and their suppliers before making payments.

• Require subcontractors to affirm supplier payments in their releases.

• Have contracts with indemnification clauses to ensure subcontractors fulfill payment obligations.

By understanding and avoiding these lien and release traps, contractors, suppliers, and property owners can better protect their financial interests and ensure compliance with lien laws.