Construction Liens: Breaking it Down, Part 2

Construction Liens: Breaking it Down, Part 2

In Part 2, of Cameron Townes Gore’s Construction Blog, Cameron sheds light on “Notices to Owners” and their application in the construction industry.  Be sure to stay tuned for Part 3, coming soon.

What is a Notice to Owner and who must serve a one?

A “Notice to Owner” must be provided to the Owner by all potential lienors who do not have a direct contract with the Owner. Generally, this means subcontractors, sub-subcontractors, and material suppliers. Laborers as defined in § 713.01(16), Fla. Stat., and professionals, such as architects, are not required to serve a Notice to Owner. The Notice to Owner does not indicate non-payment or even any sort of problem. Prudent subcontractors and potential lienors send them out as a matter of course. The purpose of the Notice to Owner is to provide preliminary notice to the Owner that labor, materials, and services are being provided by a the potential lienor.

How is a Notice to Owner Timely Served?

A Notice to Owner must be served on two parties:  1) the Project Owner, and, 2) all parties designated in the Notice of Commencement to receive notices at the addresses stated therein. When a Notice to Owner is served, it must adhere to the following:

  1. The most common method of service is by certified mail, but other methods are permissible. If you receive it, regardless of method, record it in the log.
  2. Notice to Owner must be timely served. It must be served either before the lienor’s work begins or within 45 days of the first labor, materials, or supplies for the project.
  3. If the materials are being “specially fabricated” off site, the 45 day clock starts when fabrication begins, not when the materials arrive on site.
  4. Failure to timely serve is a complete defense to assertion of a claim of lien by a lienor not in privity with the Owner.

What is the form found in § 713.06(2)(c), Fla. Stat. and why is it important?

This form contains the mandatory warning language that must be included in all capital letters at the top of the Notice. The Notice to Owner must be “substantially” the same as the form provided in the statute.

What should property owners keep in mind when a Notice to Owner served?

Owners should remember that it is very important to keep track of all Notices to the Owner as they come in so that you are aware who may assert a lien against the property. For example, maintain  a “Notice to Owner” log, recording the date received, name of the potential lienor, and what they are providing. Include a separate column for each draw request from the General Contractor to record whether you have received a lien release or waiver from each lienor who has provided a Notice to Owner.

Ensuring that lien releases are provided for all who have served notices to Owner is critical. Owners should make sure to obtain a lien release from each subcontractor or material supplier who has served a Notice to Owner for each payment. If the lienor’s work is done and they are fully paid, the Contractor should furnish a final unconditional lien waiver as to that lienor.

 

Clark Partington’s Construction Law Group is equipped to answer questions related to your specific situation. With offices in Pensacola, Destin, Santa Rosa Beach, Tallahassee, and Orange Beach (Alabama), we are a full-service firm covering this part of the Gulf Coast.  To reach one of Clark Partington’s Construction attorneys, contact Cameron Townes Gore at (850) 208-7031 or cgore@clarkpartington.com; or, Bruce Partington at (850) 436-6466 or bpartington@clarkpartington.com.

 

This publication should not be construed as legal advice.  Its applicability is dependent upon specific facts and circumstances and is provided for informational purposes only.  You should not act upon this information without seeking advice from a lawyer licensed in your own state.