In Florida, performing construction work carries many technical requirements in order to properly perform the work. The technical requirements also apply to the contractor, subcontractor and material supplier who wants to protect its lien rights in the event the Owner does not pay. The first step in preserving subcontractor and material supplier lien rights is serving a Notice to Owner. The purpose of the Notice to Owner is literally contained within its own title. The purpose is to inform the Owner that the subcontractor (who does not have a contract with the owner) is providing labor, services, or materials for the improvement of the property. The Notice to Owner also lets the Owner know that the subcontractor has a right to lien the property if not paid and that the Owner could pay twice if it makes payment to the Contractor without getting a release from the subcontractor. The failure of the subcontractor to timely service a Notice to Owner is, however, a complete defense to enforcement of a construction lien. § 713.06(2)(a), Fla. Stat.
A subcontractor or material supplier must serve the Notice to Owner upon the Owner and other person(s) designated in the Notice of Commencement: (i) before furnishing labor, services or materials; (ii), not later than 45 days after furnishing labor, services, or materials, or (iii) before the owner’s disbursement of final payment after receiving the Contractor’s Final Payment Affidavit. §§ 713.06 (2)(a) and (2)(b), Fla. Stat. The Notice to Owner is effective as the date it was placed in the mail, provided it was placed in the mail within 40 days of the first day of providing labor, services and materials to the project. It is imperative that the subcontractor maintain the certified mail log to prove the day the Notice to Owner was placed in the mail.
Often times a contractor will simply not serve the Notice to Owner. As with all general rules, there are exceptions and below is a list of instances in Florida when the Notice to Owner is not required:
- When a lienor is in direct privity with the Owner. This one is somewhat obvious. The Owner has a contract with the contractor and does not need to receive a notice that it is performing work. The Owner has actual knowledge by virtue of the contract they signed.
- When your customer is the owner’s agent (construction manager). Similar to number 1 above, the agent binds the owner. Therefore the knowledge of the agent is imputed to the Owner.
- When there is common identity between the Owner and the general contractor. This usually arises when a developer sets up a single asset entity to owner the property, but also uses is own construction company to perform the work. This is a factual determination and is usually apparent that the owner and contractor are the same when they have same address, registered agent, officers and directors, etc.
- When performing horizontal improvements or infrastructure work on a subdivision, or you are a supplier or subcontractor to such a contractor. This is expressly discussing in Chapter 713.04, Florida Statutes
- When you are working on a federal project. Federal projects are not subject to Chapter 713, Florida Statutes.
- A “laborer” does not need to file a Notice to Owner. Laborers are expressly omitted from the requirement to serve a Notice to Owner.
- A “professional lienor” (architect, landscape architect, interior designer, engineer, or surveyor and mapper) does not need to file a Notice to Owner. Chapter 713.03, Florida Statutes, expressly states that professional lienors do not need to serve a Notice to Owner.
- When the direct contract between the owner and contractor is $2,500 or less, then Florida’s Construction Lien Law does not apply and the requirements for serving a Notice to Owner do not exist.
- When working on sovereign Indian Tribal Lands. Again, sovereign Indian Lands are not governed by Chapter 713 and are granted sovereign immunity. The contractor should consider having the Indian Tribe waive sovereign immunity in the contract and allow liens in the event that the contractor is not paid.
A clear understand of the requirement to serve a Notice to Owner in Florida will only aid contractors, subcontractors and material suppliers in protecting and preserving their Florida Construction lien rights.