As a homeowner in the Sunshine State, your home is not merely a place to live, but also a valuable asset. You may wish to sell or refinance your home as a means of funding other goals in your life. Unfortunately, mechanic’s liens on your property can impede these efforts.
Mechanic’s liens are essentially clouds on the title to your home, usually filed by contractors or subcontractors that claim that they are owed money. A lien is a mechanism for these companies to secure their financial interests without immediately filing a formal lawsuit in Florida’s Circuit Court. What exactly is a mechanic’s lien, and what can you do if one is placed on your home?
As a Florida homeowner, you have hopefully never encountered a “mechanic’s lien.” These legal documents are somewhat obscure, and many homeowners have not heard of them at all. What exactly is a mechanic's lien, and what does it mean for you?
A lien is a document that gets publicly filed in the Florida county clerk’s office, in the county where your property is located. Note that there are 67 counties in Florida; the contractor would file the lien in the county where your home is, not necessarily the county where his or her business is based.
The lien, once filed, becomes a cloud on your title, meaning that the title is subject to the contractor’s stated financial interest in it.
To understand how a lien functions, consider this example: You hire a tiling company to redo the tiles in your kitchen. After the contractor finishes the work, you have a payment dispute. The company tries to charge you $1,000 more than the original contract, or claims that you asked for additional work, when you did not. You refuse to pay the additional sum. The contractor could then file a $1,000 mechanic’s line with the local Florida county clerk. This essentially means that anyone who buys your property would buy it subject to owing the contractor that $1,000. This will make it difficult to sell or refinance the property, since no one would want to take property that is subject to this claim. Contractors therefore use liens as a means of incentivizing property owners to settle with them in order to get them to clear the title.
You can view a model lien form for free online (though the version filed on your home might look slightly different). The short form will list your name and contact information, the contractor’s name and contact information, the name of any general contractor involved (if a subcontractor or supplier is filing the lien), the amount of money allegedly due to the lienor, and a description of the lienor’s labor or materials provided to the property.
In most cases, you should be able to avoid the nuisance of mechanic’s liens on your property by engaging in a reasonable negotiation with your Florida contractor before the lien is filed. Liens are typically a sign of frustration and a relationship that has broken down. The contractor believes you are either ignoring payment requests, or simply intend to “stiff” him or her for the work.
If your contractor asserts that he or she is owed an extra sum of money, do not just ignore the phone calls or invoices. This might be viewed as a sign of disrespect, as well as a sign that you have no intention of honoring the request. While you might think that this “strong signal” will convince your contractor to simply go away, the contractor is just as likely to dig in his or her heels and cause legal trouble for you, either through a lien or a lawsuit (or both).
You and the contractor may have a good faith disagreement about whether certain work was part of the contract, or about the quality of that work. Rather than ignoring the issue, have a frank discussion about it, or consider going to mediation.
In mediation, a third-party neutral (often an attorney or individual with experience in the construction industry) can help you and your contractor to negotiate a fair settlement. In both negotiation and mediation, you should be open to clever settlement strategies. Rather than paying a lump sum of money, for instance, perhaps payments could be made over time. Rather than a monetary settlement, maybe you could offer the contractor a public endorsement or reference. Rather than fighting in court, you could offer the contractor discounted payment in exchange for a limited scope of ongoing work. The creative possibilities are endless.
Naturally, there are legal remedies available to Florida homeowners with which to fight a lien after it is filed. However, you are likely to save time and money if you find a way to settle the payment dispute with the contractor. This does not mean you need to give into all of the contractor’s demands, but it does mean that you should keep in mind the costs of legal action if the contractor files a lien.
If a lien is placed on your property, it will be helpful to familiarize yourself with the statute that governs liens in Florida. Liens are controlled by Florida’s Construction Lien Law, codified at Florida Code § 713.001 et. seq. As with most states, Florida’s lien laws are complex. They contain many rules and exceptions, depending on the type of property involved and the work performed.
Broadly speaking, you should know that Florida permits many different types of entities to file a lien on a home. Under Florida Code § 713.04, “Any lienor who, regardless of privity, performs services or furnishes material to real property for the purpose of making it suitable as the site for the construction of an improvement or improvements shall be entitled to a lien on the real property for any money that is owed to her or him for her or his services or materials furnished in accordance with her or his contract and the direct contract.” Moreover, “Any person who performs services as architect, landscape architect, interior designer, engineer, or surveyor and mapper” also has the right to file a lien.
All of this language is a bit dense, but essentially, anyone who has an agreement to improve property with you directly, or an agreement with another contractor that has such an agreement with you, can file a lien if left unpaid. This commonly includes contractors, subcontractors, and material suppliers.
Now that you know that mechanic’s liens can create problems for you, how can you get rid of a lien once it’s filed? There are several strategies to get the lien removed. The first, as mentioned, is to negotiate a resolution with your contractor. There are a couple of other options.
One is to obtain what's known as a “lien bond,” through a surety company. The bond essentially guarantees payment to the contractor in the amount of the lien, if the contractor is successful on the legal claims, but also removes the lien from your property record.
Another is to petition a court (specifically, the Florida Circuit Court that serves your county) to remove the lien. Your grounds for removing the lien could include that the contractor never did the work that the lien claims, or that the work was already compensated.
You can also attack legal deficiencies in the contractor’s lien. The most common deficiency for Florida liens involves the strict deadline for filing. To be valid, the lienor must file the lien “at any time during the progress of the work or thereafter but not later than 90 days after the final furnishing of the labor or services or materials by the lienor.”
In other words, under Florida Code § 713.07, lienors generally have 90 days from the date that they last provided labor or materials to a project to file their lien. Once it is filed, the lienor must serve a copy of the lien on the property owner (you) within 15 days. Consequently, you should be conscious of the contractor’s “last date.”
Many contractors will get tripped up by these deadlines. Courts construe them strictly, and if the lien is filed or served too late, it will be stricken.
Moreover, if the lien is filed by a subcontractor, Florida law places additional requirements on that entity. Subcontractors are hired by general contractors, rather than directly by you. While contractors you hire directly can immediately file a lien for monies due, subcontractors must provide a “Notice to Owner” within the earliest of either (i) 45 days after the commencement of work on the project or (ii) before the date of the owner's final payment to the contractor. If the subcontractor fails to meet this gateway requirement, and jumps ahead to file a lien anyway, the lien is most likely invalid. You would be able to petition the court to remove it from your property docket.
Finally, Florida law actually prohibits certain subcontractors from filing liens at all. Under Florida Code § 713.015, only those entities with a direct contract with the property owner can file a lien if the total price of the improvement is $2,500 or less. In other words, if a subcontractor that you never directly hired files a lien for less than $2,500 (whether the sub gave you “notice” or not), that lien can also be stricken.
Liens are unfortunately a common feature of Florida construction projects. Homeowners should not be overly surprised if they face a lien filed on their property (or at least the threat of such a filing) during their project.
Fortunately, few contractors in the Sunshine State wish to actually initiate litigation against a homeowner in order to foreclose on a lien. Litigation is time-consuming and expensive. Most contractors would prefer to settle with you quickly for a reasonable sum. Keep this leverage in mind as you explore the legal options available to you under Florida law.