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A construction lien, also known as a mechanic’s lien is the most powerful tool for getting paid in the construction industry. But filing it can be tricky and you need to file a few pre-lien documents before you can file your lien and get paid. Here we break it all down for you.
What Does a Construction Lien Do?
When you lien a property, the property cannot be sold, as the title’s name will be clouded. If there is a lender, the lien will stop all funding. The Florida construction lien law also informs all required parties that you are working on the project and have not been paid for providing labor or materials.
What Are the Steps to Liening a Project?
Step 1 – Send your Notice to Owner
If you have a direct contract with the owner of the property you do not need to send a Notice to Owner (NTO).
If you do not send an NTO you will not be able to file a lien later. Or if your NTO is received late, then you will not be able to file a lien later either.
The day you first furnish labor or supplied materials to a project is considered Day 1. You need to send your lien by Day 40 for the stamped USPS manifest to be considered served. If your Notice to Owner Florida Form is not received by the 45th day it is considered invalid.
An important note to remember is that with specially fabricated materials, the 45-day clock starts ticking as soon fabrication begins.
Step 2 – Prepare Your Construction Lien Using the Correct Form
A Notice to Owner Florida is a specific legal form, which can be downloaded here: Florida Statute 713.08.
Step 3 – Determine the Last Day on the Job
You have only 90 days from the last day you are on the property to record a lien. If you go to record your lien and wait until the final hour you may not be able to get the lien recorded in time. Best business practice is to lien the property within 60 days from last furnishing labor and/or materials.
Step 4 - Record the Construction lien
A lien is recorded in the county where you are making the improvements. So, if you are working in Miami Beach, Florida you will record your lien in Miami-Dade county.
Step 5 – Mailing your Construction Lien
You have to mail your lien by certified mail to all parties within 15 days of recording the lien. If you do not mail your lien, it is considered invalid.
Foreclosure – Enforcing a Construction Lien
Once you have sent your NTO, most general contractors make it a priority to pay you. If you do go ahead and file a construction lien then they should pay you after that.
What happens if they don’t though?
Then you have to file a lawsuit to enforce the lien. This is the last step in the construction lien process. Ordinarily, you have one year from the day your lien is recorded to foreclose.
Foreclosure – Shifting Deadlines
You normally have one year to foreclose on a property. But there are 3 exceptions to that rule:
- If a lien is contested it shortens its life. A Notice of Contest of Lien reduces the time to file suit from one year to 60 days (§ 713.22(2), Fla. Stat. (2019)).
- A 20-day summons to show cause reduces the time to file suit from 1 year to 20 days (§ 713.21, Fla. Stat. (2019)).
- If the Notice of Commencement is terminated the lien must be recorded within 30 days of the recording of termination and a new Notice to Owner form must be served (§ 713.132(c), Fla. Stat. (2019)).
Don’t slip up at the last mile! Make sure you comply with the extra bits of paperwork you will have to go through to get your money.
Amending Your Construction Lien Claim
If you've continued working on a project after filing your initial lien claim, you can update it. This amended claim should reflect any new unpaid amounts and the revised final date of your work. The filing process for this updated claim is the same as the original one. Importantly, the one-year deadline for enforcement now restarts from the date you file the amended claim.
Releasing Your Construction Lien Claim
If you get paid before the deadline, that's great news! However, you might still need to file a document called a "Discharge of Mechanics Lien." This process is simpler than the initial lien filing and essentially confirms that your claim is settled. Once this document is filed, the lien claim cannot be brought back or enforced again.
Contractor’s Final Payment Affidavit
A Contractor’s Final Payment Affidavit is a critical document. Without it, anyone doing business directly with the property owner will not be able to enforce their lien rights.
The affidavit has to list all lienholders under the contractor’s control and note whether those lienholders have been paid in full, and if not, the amount still due.
It is very important to be thorough when drafting this document and list everything yet to be paid. If you fail to include a debt, it is likely you will not be paid for the forgotten work or materials.
When do contractors need to submit an affidavit?
Contractors may need to submit an affidavit:
- Before filing a lien or lawsuit: In some states (like Florida), contractors must send an affidavit to the property owner a few days before taking legal action. This gives the owner a chance to pay before things escalate.
- Upon receiving final payment: In some states (like Tennessee), contractors need to send an affidavit to the owner after they get their final payment. This lets the owner know if there are any outstanding bills owed to subcontractors or suppliers.
- When closing out a loan: Banks or lenders may want an affidavit when the project is finished. This helps them confirm that all the bills have been paid and that the loan can be closed.
What's the difference between a sworn statement and an affidavit?
- Sworn statement: This is like a regular progress report. Contractors send it to the owner or bank throughout the project, usually with each invoice. It shows how much has been paid to subcontractors and suppliers and how much is still owed.
- Affidavit: This is a one-time document usually sent at the end of the project or before legal action. It confirms the final amounts owed to everyone involved in the project.
Tasks After Project Completion
After completion of the project, a contractor must respond to a Sworn Statement of Account.
The Sworn Statement of Account describes services or material furnished, the amount paid, the amount due, and the amount to become due if that is known.
If you fail to respond within 30 days or you submit the wrong information then you will lose your lien rights.
Public construction project works
Many contractors confuse getting paid on a public construction project with a lien. In the state of Florida, you cannot file a lien against funds, nor can you file a lien on city, county, or state construction work.
The government has sovereign immunity. You cannot foreclose on the property. Instead of liening the project, you would put a claim against the bond. If public projects were secured by a lien then people would be able to foreclose and acquire ownership of government property.
Why Choose SunRay?
Filing a mechanic's lien in Florida can be tricky, with strict deadlines and detailed requirements. Mistakes can lead to your lien being rejected. SunRay Construction Solutions is here to help you navigate the process, ensuring every deadline is met and every detail is perfect, so you can get paid for your work.
Common Questions Contractors Ask
1. How long do I have to file a lien after finishing work?
You have 90 days from the last day you provided labor or materials to record your lien.
2. Where do I file the construction lien?
You file the lien in the county where the construction project is located.
3. What happens if I'm not paid even after filing a lien?
You may need to file a lawsuit (foreclosure) to enforce the lien and get paid.
4. Can I update my lien if I continue working on the project?
Yes, you can file an amended lien to include additional unpaid amounts and the new completion date.
5. What if I'm paid before the enforcement deadline?
You'll likely need to file a "Discharge of Mechanics Lien" to release your claim.
6. What's a Contractor's Final Payment Affidavit, and why is it important?
This document lists all unpaid subcontractors and suppliers. It's crucial for their lien rights enforcement.
7. Is filing a lien on a public construction project different?
Yes, you cannot file a lien against government property. Instead, you file a claim against the bond.
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