One of a construction material supplier’s biggest concerns is making sure they will get paid. There are a few things a supplier can do to ensure they get paid on a construction project. One of the most important steps a supplier should take is preserve its lien rights under Florida’s Construction Lien Law, Section 713.001-.37, Florida Statutes. The purpose of the Florida Construction Lien Law is to protect construction material suppliers from nonpayment. The Lien Law should become your best friend. You should know it well. If done right, a supplier can almost guarantee that they will get paid in full by using the Lien Law. However, strict compliance with the Lien Law is required and it is laced with traps for the unwary. Many suppliers fail to perfect their lien rights properly and find themselves unable to get paid. Don’t let that happen to you. This blog focuses on one of the initial steps a supplier must take to preserve its lien rights: properly and timely serve a Notice to Owner.
The first thing to understand is that a Notice to Owner is a prerequisite to perfecting a lien, unless you are in direct privity with the Owner. Fla. Stat. § 713.06(2)(a). If your contract is with the property owner, you don’t have to serve a Notice to Owner. However, if you are furnishing materials under an order by someone other than the Owner (e.g. general contractor or subcontractor), then you must serve a Notice to Owner. If you don’t comply with this step you have lost your construction lien rights. Strict compliance is required. Failure to properly and timely serve a Notice to Owner is an absolute bar to your lien.
The second thing to understand is that a Notice to Owner is not a lien and it does not have a negative effect upon the Owner. Fla. Stat. § 713.06(2)(a). Owners are not angered by receiving a Notice to Owner. It won’t have a negative effect upon your business relationships. Actually, it helps the Owner. The purpose of the Notice to Owner is to put the Owner on notice that you are supplying materials to the project so that the Owner can protect itself from the possibility of paying over to its contractor monies which ought to go to you. The Owner can prevent paying twice for work by verifying pursuant to a lien waiver (partial or final) that money paid to the contractor ends up paid to you. Fla. Stat. § 713.06(3).
The third thing you must understand is that the Notice to Owner must be served timely. “The notice must be served before commencing, or not later than 45 days after commencing, to furnish his or her labor, services, or materials, but, in any event, before the date of the owner’s disbursement of the final payment. . . .” Fla. Stat. § 713.06(2)(a). In other words, the Notice to Owner must be served within 45 days of first delivering materials to the jobsite. However, there is no good reason to wait until the deadline. Make it your standard practice to serve the Notice Owner on the day you make your first delivery. Don’t wait.
The fourth thing you must understand is that the Notice to Owner must be served properly. The Notice itself must be proper, and the service must be proper. For the Notice to Owner to be proper, it must be in substantially the form, and include the information and warning, set forth in Fla. Stat. § 713.06(2)(c). To prepare the Notice, you should use the information contained in the recorded Notice of Commencement. If there is no recorded Notice of Commencement, then you should use the information contained in the building permit application. Make sure to properly describe the services or materials that you are supplying; make it broad enough to cover all materials that you may supply for the project.
As to proper service, you must make sure to send the Notice to all required recipients and use the proper method of delivery. The Notice must be sent to the Owner at the address stated on the Notice of Commencement. If you are aware of additional addresses for the Owner, it is good practice to send the Notice to those addresses as well. There may be other required recipients based on the circumstances. The Notice of Commencement may identify other recipients. It is good practice to send it to everyone stated on the Notice of Commencement. In addition, if you are in contract with a subcontractor, you must serve the Notice to Owner on the general contractor. If you are in contract with a sub-subcontractor, you must serve it on the general contractor and the subcontractor that the sub-subcontractor is in privity with, if known.
The proper method of delivery is set forth in Fla. Stat. § 713.18. We recommend that you use Certified Mail, Return Receipt Requested, and email a copy if you know the recipients email address. Make sure to track delivery. It’s a good idea to calendar a follow-up reminder to verify receipt. Make a copy of the envelope that the Notice was delivered in, keep it in your file with a copy of the Notice, and put the signed Return Receipt in the file once you get it back. There are other methods of delivery if Certified Mail does not work. You can hand deliver to the proper person. Your last (and worst) option is to post your Notice to Owner at the jobsite. If you are forced to post it, make sure you take pictures of the Notice posted at the jobsite for your file. You will have to prove that you posted it.
A material supplier would be wise to utilize Florida’s Construction Lien Law on every project. But if it is not used correctly, it will not help you. There are many traps in Florida’s Construction Lien Law, we suggest you seek the advice of qualified counsel until you have mastered if for yourself.