According to Florida law, those who work on your property or provide materials, 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 fails to pay subcontractors or material suppliers or neglects to make other legally required payments, the people who are owed money may look to your property for payment, even if you have paid your contractor in full.
This means that if a lien is filed against your property, it could be sold against your will to pay for labor, materials or other services which your contractor may have failed to pay.
This document explains Florida Statute 713, Part 1 , as it pertains to home construction and remodeling, and provides tips on how you can avoid construction liens on your property.
Things you should know before starting:
The most frequently cited complaints concerning home remodeling, home improvements and home repair are the cost overruns, missed deadlines and inferior workmanship. Another persistent problem is "fly-by-night" contractors who take deposits or payments before finishing or starting work.
When you need something done to your home, choose a contractor carefully. Be wary of door-to-door salespeople and telephone solicitors promising "this-month-only" bargains. Make sure your contractor is properly licensed and insured.
The Construction Lien Law is complex and cannot be covered completely on this page. We recommend that whenever a specific problem arises, you consult an attorney.
If you hire a contractor and the improvements cost more that $2,500 ($7,500 or more for a/c replacement), you should know the following:
- You may be liable if you pay your contractor and he then fails to pay his suppliers or subcontractors. There is a way to protect yourself: A Release of Lien is a written statement that removes your property from the threat of lien. Before you make any payment, be sure you receive this waiver from suppliers and subcontractors covering the materials used and the work performed.
from the contractor, via certified
or registered mail, a list of
all subcontractors and suppliers
who have a contract with the
contractor to provide services
or materials to your property.
If your contractor calls for partial payments before the work is completed, get a Partial Release of Lien covering all workers and materials used to that point.
- Before you make the last payment to your contractor, obtain an affidavit that specifies all unpaid parties who performed labor, services or provided materials to your property. Make sure that your contractor obtains releases from these parties before you make the final payment.
- Always file a Notice of Commencement before beginning a home construction or remodeling project. The local authority that issues building permits is required to provide this form. The form must be recorded with the Clerk of the Circuit Court. Also post a certified copy at the job site. (In lieu of a certified copy, you may post an affidavit stating that a Notice of Commencement has been recorded. Attach a copy of the unrecorded Notice of Commencement to the affidavit.)
- In addition, the building department is prohibited from performing the first inspection if the Notice of Commencement is not also filed with the building department. You can also supply a notarized statement that the Notice has been filed, with a copy attached.
The Notice of Commencement :
- notes the intent to begin improvements, the location of the property, description of the work and the amount of bond (if any). It also identifies the property owner, contractor, surety, lender and other pertinent information. Failure to record a Notice of Commencement or incorrect information on the Notice could contribute to you having to pay twice for the same work or materials.
Whose responsibility is it to get these releases?
You can stipulate in the agreement with your subcontractor that he must provide all releases of lien. If it is not a part of the contract,however, or you act as your own contractor, YOU must get the releases.
If you borrow money to pay for improvements and the lender pays the contractor(s) directly, instruct the lender to get the releases before making any payments. If your lender then fails to follow the legal requirements, the lending institution may be responsible to you for any loss.
What can happen if I don't get releases of lien?
You will not be able to sell your property unless all outstanding liens are paid. Sometimes a landowner can even be forced to sell his/her property to satisfy a lien.
Who can claim a lien on my property?
Contractors, labors, material suppliers, subcontractors and professionals such as architects, landscape architect, interior designers, engineers or land surveyors all have the right to file a claim of lien for work or materials. Always get a release of lien from anyone who does work on your home.
Additional tips on home construction:
- Verify that your contractor is properly licensed. Information regarding licensing can be found at DBPR for state certified contractors and at PCCLB for county licensed contractors.
- If you intend to get financing, consult with your lender or an attorney before recording your Notice of Commencement.
- Insist that the contractor/remodeler secures a building permit and adhere to all building codes and ordinances.
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Information all construction contracts should contain.
- The contractor's name, address, telephone number and the contractor's license number.
- A precise description of work and materials to be supplied. The contract should specify the grade of construction, flooring and trim materials to be used. We don't accept the phrase "or equivalent"; the contract should specify appliance model and alternates for models if not available.
- A beginning date.
- A completion date.
- A complete list of companies or individuals supplying the contractor with labor and materials. Be sure they are insured so you are protected against theft or damage to their supplies or work.
- Financing information and the payment schedule.
- All necessary building permits or licenses.
- Agreement regarding site clean-up and debris disposal.
- All warranty agreements.
- Ask for explanations and clarifications of legal terms or confusing language. Be sure you understand completely what you are signing: Remember, promises are difficult to enforce unless they are in writing. Even for small jobs, have a written contract spelling out the details. Be wary of anyone who says, "We don't bother putting it in writing
Some contractors require a down payment of 10-30 percent of the total and an additional payment at the halfway point in the project. Pay only when the work is done to your satisfaction and you have releases of lien as described previously. If the completion date is critical, like a swimming pool planned for summertime use, link payment to on-time performance. Changes to a contract after construction has begun can cost you. Specify in the contract how changes are to be handled and insist that all change orders be in writing and signed by both you and the contractor.
Cancellation of contractors:
Some home repair/improvement contracts can be cancelled in writing (preferably by certified mail) without penalty or obligation by midnight of the third business day after signing. They include:
- Those signed anywhere other than the seller's normal place of business.
- Those signed as a result of door-to-door solicitation, except emergency home repairs.
- Those paid on an installment basis.
Other contracts are binding as soon as they are signed, so be sure before you sign.