For anyone having work done on their property, understanding the construction lien law is extremely important. Unfortunately, many property owners do not understand the law and wind up paying twice for the same work. The purpose of this article is to avoid this result.
First the basics: a construction lien is a lien placed on your property by someone ("lienor") who performs work or delivers material to the property. The lien protects the lienor from non-payment. If the lien isn't paid, the lienor can foreclose the lien and sell the property at a public auction, with the proceeds of the sale used to satisfy the lien. This is a very general overview which doesn't consider the priority of the lien in relation to other liens or mortgages. However, the bottom line is that construction liens are not good for the property owner and must be taken seriously. Contrary to what many people think, a construction lien can be enforced against your homestead property. There is a specific exception to the homestead protection in the Florida Constitution which permits this.
The best way to explain the nuts and bolts of a construction lien is to use an example. Let's assume you hire Charlie Contractor to build an addition on your house and Charlie Contractor sub-contracts the work to Frank the Framer. Marty the material supplier delivers all the material to your property for the addition. Assuming Frank and Marty follow the requirements of the construction lien law, they will serve you with a Notice to Owner ("NTO") within 45 days of beginning work or delivering the materials. The purpose of the NTO to put you notice that they are involved in your addition project. You might not otherwise know this since you hired Charlie, not Frank or Marty. You must pay attention to these NTOs since they are the first step Frank and Marty must take to put a lien on your property. Each time you pay Charlie, you must get lien waivers from Frank and Marty. This ensures they have been paid for the work performed or materials delivered through the date of the payment to Charlie. If you pay Charlie without getting lien waivers from Frank and Marty, and Charlie does not pay them, Frank and Marty can file a lien against your property. The lien covers the amount they are owed for the work or materials, plus interest, costs and attorney fees. If a lawsuit is brought to foreclose the lien, the attorney fees and costs can greatly exceed the amount originally owed for the work or materials. This doesn't make for a happy property owner.
You must also get a contractor's final affidavit and final lien waiver from Charlie, and final lien waivers from Frank and Marty, before you make final payment. If you don't and Charlie doesn't pay Frank or Marty, your property is subject to a construction lien. Charlie can also lien your property if you don't pay him. However, Charlie isn't required to send you a NTO since you have a direct contract with him. A construction lien must be filed within 90 days of the work being done or delivery of the materials or it is barred.
Protect yourself by hiring a reputable contractor. Familiarize yourself with the basic requirements of the construction lien law. When in any doubt, hire a construction litigation lawyer familiar with the construction lien law to help you avoid a lien and paying twice for the same work.