Your home in the Sunshine State is not merely a place to live, but also a valuable asset, which you might wish to sell or refinance someday. Unfortunately, mechanic's liens filed against your property can impede these efforts.
Mechanic's liens are essentially clouds on the title to your home and property, usually filed by contractors or subcontractors who claim that they are owed money from you. A lien lets them 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 Florida home?
As a Florida homeowner, you have hopefully never encountered a "mechanic's lien." Many homeowners have not even heard of them at all. Nevertheless, disputes with contractors are not uncommon, and some can lead to lien filings.
Specifically, the disgruntled contractor would file a lien in a Florida county clerk's office. There are 67 counties in Florida, and the contractor would need to file the lien in the county where your home is located, not necessarily the county where his or her business is based.
The lien, once filed, becomes a cloud on your title, meaning that your ownership title is subject to the contractor's stated financial interest in it.
Consider this example: You hire a tiling company to redo the tiles in your Sarasota kitchen. After finishing the job, the contractor's company tries to charge you $1,000 more than was agreed to in 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 Sarasota county clerk. Anyone who later buys your property would buy it subject to owing the contractor that $1,000. This can make it difficult to sell or refinance the property, since no one would want to take property that is subject to this claim. They'll expect you to pay the money to remove the lien or lower your selling price accordingly.
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 might 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" them for the work.
If your contractor asserts that you owe 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. The contractor is 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 might have a good faith disagreement about whether certain work was part of the contract, or about the quality of that work. 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 arrive at a fair settlement. Try to remain open to clever settlement strategies. Rather than paying a lump sum of money, for instance, perhaps payments could be made over time. Rather than fighting in court, you could offer the contractor discounted payment in exchange for a limited scope of ongoing work.
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 beforehand. You need not give into all of the contractor's demands, but 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 relevant statute: Florida's Construction Lien Law, at Florida Code § 713.001 et. seq. As with most states, Florida's lien laws are complex, containing rules and exceptions that depend on the type of property involved and the work performed.
Broadly speaking, Florida law permits many different types of entities to file a lien on a home if they're left unpaid. Under Florida Code § 713.04, that includes anyone who performs services or furnishes material under a contract related to construction or improvements. This commonly includes contractors, subcontractors, and material suppliers. Moreover, architects, landscape architects, interior designers, engineers, and surveyors and mappers have the right to file a lien.
Also know that the contractor will be expected to comply with various procedures, including filling out and submitting a short form that lists 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.
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.
Another is to obtain what's known as a "lien bond," through a surety company. This essentially guarantees that you will pay the contractor in the amount of the lien if the contractor is successful on the legal claims, but in the meantime, it removes the lien from your property record.
Yet another is to petition a court (the Florida Circuit Court serving your county) to remove the lien. Your grounds for removal could include, for example, 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, such as that the contractor missed the strict deadline for filing. To be valid, the unpaid business 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." (See Florida Code § 713.08.)
Once the lien is filed, the person who did so must serve a copy of it 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 adds some requirements. Subcontractors are hired by general contractors, rather than directly by you. While contractors you hire directly can immediately file a lien for monies due, they 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. (Florida Code § 713.06.)
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 an amount lower than $2,500 (whether the sub gave you "notice" or not), that lien can also be stricken.
Fortunately, few contractors in the Sunshine State wish to actually initiate lien-related litigation against a homeowner. Most 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.