REAL ESTATE LAW
What is the Florida Lien Law Notice to Owner?
The Notice to Owner or otherwise known as NTO, is a type of written notice governed by Florida Statute §713.06. The Notice to Owner is used as an official document sent by a supplier or subcontractor who is not working directly with the owner in order to notify the owner to make sure that the contractor is making the necessary payments to the sender of the NTO.
Florida Lien Law Notice To Owner Requirements?
The requirement for the Notice to Owner provided for by Florida Statute §713.06, provides that the improvement owner must be served with the NTO within forty-five (45) days of the initial labor and services for improvement, and/or delivery of materials for the job as a requirement necessary to secure the rights of the sender to lien the property in case the sender is not paid for the services or labor performed at the property.
The Notice to Owner provides the property owner a chance to confirm payments to the sender, generally by getting a release of lien from the notice sender at the time that payments made to the contractor. In this scenario, the property owner is able to oversee that payments are proper to all the parties performing the improvements. Additionally, this scenario protects the owner from any surprise liens on the improved property from a party that the owner is not working with directly or contractually.
For subcontractors and suppliers who are not in contractual privity with the property owner for improvements, a Notice to Owner make good business sense because it well help to ensure that they are getting paid for work that is performed.
Who Serves the Notice to Owner?
In legal terms a lienor is a person whose property is officially held by someone who is owed money. Any probable lienor, such as a supplier or subcontractor who is dealing through a contractor and not directly with the property owner needs to serve an NTO. Furthermore, there are three exclusions where the lienor does not have to serve a Notice to Owner to secure his right to lien. These exceptions include the laborer, a professional, or any person whose work is limited to improvements on a subdivision. Any other perspective lienors not working directly with the property owner must serve a timely Notice to Owner as an initial step in order to ensure lien right protection even in scenarios where there are no foreseeable issues. Failure to serve the notice waives the potential lienor’s right to claim a lien against the property.
What Is Proper Service of the Notice to Owner?
Detailed provisions for delivery of the Notice to Owner are specified in Florida Statutes §713.18, this is also known as the Florida Construction Lien Law. Under the aforementioned statute, the following options are provided for delivery: (1) Actual delivery, which means that the owner is personally served. In cases where the owner is a corporation or business entity, service can be made on a director, officer, manager, or member; (2) Registered or Certified Mail, sent with prepaid postage, or priority overnight delivery service where a tracking number can be verified that the recipient received the notice; (3) Jobsite posting, can be used is methods (1) and (2) are not available.
What is a Release of Lien?
Generally, a release of lien discharges the lienor’s lien rights on the property. All probable lienor’s are required to give a release for most jobs. In certain situations, the release of lien may be for a certain specified amount, or a certain time period or a combination of both. The details and language in the release document are extremely important and control how the release is executed.
What is the Release of Lien Form Standard?
Standard release forms are available under Florida Statute §713.20. Keep in mind that this is just standard language, and releases are allowed to contain different verbiage from the language of the Florida Statute. It is critical that those who are obtaining and receiving the release of lien clearly understand the terms and language contained in the release. This could consist of the payment amount, payments for materials, and payments for services which may contain a certain date.
What is the Claim of Lien?
Florida Statute §713.08 defines a claim of lien as a recorded verified document found in the public records of the county in which the property exists. The claim of lien, concerns the title of real property and provides notice that there is a claim by the lienor against the property for unpaid funds for improvements made on the property. The lienor must record the claim of lien within 90 days from the most recent work done on the property or site delivery of materials used for improvement. Any warranty work is disregarded from this requirement. The owner must be served with a copy of the claim of lien within fifteen (15) days of the lienor’s recording of the lien. It is extremely important to serve the notice within the fifteen-day time limit since the owner can use failure to timely serve as a defense.
How Long Does the Lien Remain in Effect?
Alternatively, the one-year lien term can be shortened by either a voluntary release or two other methods. The first method will apply when a notice of contest for the lien has been recorded. The recording of the notice essentially shortens the time period to sixty (60) days from the date the lienor is served the notice of contest by the clerk.
The second method that will apply is if an interested party files a summons to show cause. If the lienor should get the summons to show cause, legal counsel acquainted with Florida Construction Lien Law should be consulted. In most cases, the lienor is required to file a counterclaim within twenty (20) days of receipt of the summons by service or as a consequence, the court may enter an order effectively discharging the lien. Consequently, the transfer of the lien to either a cash deposit or a bond will not affect the term of the lien.
Florida Statutes Chapter 85 governs the specifics as to the enforcement of the lien. The enforcement of the lien generally involves the pursuit of a judgment by the court acknowledging the lien and in most cases ordering the property to be sold free of any interests and claims that are lesser than the claim of the lienor. The property owner’s interest in the real property can be sold at a judicial sale subject to mortgages and earlier liens, however free and clear of any mortgages and/or lesser liens, provided that the inferior parties are named in the action.
The prevailing party in the suit may recover attorney’s fees. Most commonly, the prevailing party is the one who wins on the majority of the issues in the case. In the event that the lien fails to be established by failure of the party trying to prove its case, and no judgment is obtained against the property owner, the lienor might have to pay the opposing party’s attorney’s fees.
Who Is Entitled To Lien Rights?
Lien rights are available to those provide services and labor for improvements on the real property as well as the materials to be used. Persons with lien rights are specifically defined in Florida Statute §713.01 and broken down into the following categories.
Laborers, which are described as those persons providing or furnishing only labor.
Materialmen, which are described as persons supplying rental equipment and/or materials and no additional labor. Most commonly, a materialman, sells directly to either the owner, sub-contractor or contractor, and never to another materialman. The materials sold by the materialman, no to be delivered to the property improvement jobsite or sold for the express delivery to the particular job site.
Contractors are those persons that provide labor and or materials through the use of other people for the property owner.
Subcontractors are those persons providing more than just materials and/or one person’s labor and contract with a Contractor.
Professional Lienors, this category includes Architects, Engineers, Interior Designers, Landscape Architects, Mappers, and Surveyors.
What Property is Lienable?
A property owner’s interest in the real property that he contracts for improvements is lienable. Generally, if a tenant on the property contracts for improvement work, the interest of the landlord is not lienable. There are very limited exceptions and only in cases where the improvements are extensively noted in the lease.
Which Party Must Serve the Copies of the Notice to Owner?
In Florida, where there is a party in the middle of your customer and the property owner, you must serve the party with the copy of the Notice to Owner. In cases where you are the either a subcontractor, a supplier of materials, or a materialman, you need to serve the copy of the Notice to Owner on the main contractor for the property improvement project.
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