As construction lawyers asserting lien claims, we commonly have our opponents recite the maxim “construction lien statutes must be given a strict reading,” leading to an argument that a failure to follow the lien law’s very technical requirements leads to a windfall victory for the other party. While leading to unmercifully unfair results in many instances, courts give little deference to claimants who have failed to jump through the statutory hoops necessary to perfect their lien claims.
Suppose for a moment that you’re a supplier on a large commercial construction project, supplying drywall materials to the drywall subcontractor. At some point during the project, the drywall subcontractor defaults and the general contractor begins purchasing drywall materials directly from you.
Under Florida’s Construction Lien Law, specifically, Florida Statute section 713.06, in order to perfect your lien rights as a “lienor not in privity with the owner,” you are required to serve a Notice to Owner on the owner of the property within 45 days of starting to supply materials to the project. The Notice to Owner is also to be served on anyone up the chain to the owner that the lienor is not within contractual privity of contract (meaning a sub-subcontractor or supplier to the subcontractor should serve the notice on the contractor as well).
Now, in the factual scenario described above, when the drywall supplier defaulted and the general contractor started buying directly from you as the supplier, did you serve an additional Notice to Owner within 45 days of starting to supply materials directly to the general contractor ?
If you answered no, then you lost your lien rights with respect to the materials supplied directly to the contractor after the drywall subcontractor defaulted. The reason is that upon supplying materials directly to the general contractor, you restarted the requirements for perfecting your lien with respect to the materials supplied to the general contractor because you were supplying materials to a different party to the project. Section 713.06 sets forth a form for the Notice to Owner which calls for a lienor to identify under whose order the lienor supplied materials to the project.
Let’s take another example. This time suppose you’re a drywall supplier and you supply materials to a drywall subcontractor on another large commercial construction project. The owner records a notice of commencement indicating that no payment bond is involved. Due to lack of funding, construction on the project ceases and you record a Claim of Lien which is later satisfied by the owner who then records a notice of termination of the notice of commencement followed by a new notice of commencement. In the new notice of commencement, this time it indicates that a payment bond has been issued covering the claims of lienors and a copy of the bond is attached to the commencement as required.
When construction recommences, you once again start supplying drywall materials to the same drywall subcontractor. Because the owner is familiar with you (having previously recorded a Claim of Lien and the owner satisfying such Claim of Lien), did you serve a Notice to Contractor to perfect your claim against the payment bond now in effect this time around?
If you answered no, then you lost the ability to make a claim against the payment bond. Under a similar scenario, even where the exact same parties were involved and the general contractor had actual notice that the supplier was supplying materials to the recommenced project, at least one Florida court has held that a new notice was required when the project recommenced. See e.g., Stock Bldg Supply of Florida, Inc. v. Soares De Costa Construction Serv., LLC, 760 So. 3d 313 (Fla. 3rd DCA 2011). As the Soares court held:
Accordingly, when the Owner recorded a new Notice of Commencement, the Project began anew, thereby renewing the notice requirements of the Construction Lien Law. As a result, [the supplier]was required to send new notices under the Construction Lien Law in order to perfect its lien rights relating to materials [the supplier] furnished after the Project recommenced.
Basically, the court was unsympathetic to the failure to serve the second notice, again reciting the requirement to strictly comply with the lien law. This case also highlights a notable issue for many lienors who outsource the service of their statutory notices to companies who perform the services on their behalf. In the above scenarios, had additional questions been asked, the supplier’s lien or bond rights could have been preserved.
Because the Construction Lien Law has so many different requirements depending on the circumstances and the case law interpretations create additional concerns, a “one size fits all” approach employed by notice services is not advised. The services are not following the factual developments on the projects and, thus, are unable to ascertain the need to ask very important questions required to avoid the lien law’s technical mine fields.
Rather than employing a robotic approach, we strongly suggest that an attorney knowledgeable of the Construction Lien Law be involved in the preparation of the statutory notices as well as the preparation and recording of claims of lien.