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Should I worry about construction liens?

I have decided to sell my home and move to a condo. A real estate agent suggested I remodel the kitchen before putting the house on the market. My old friend, Freta, said that I could get into trouble if my brother-in-law, the general contractor I would use, neglects, as he sometimes does, to pay for the materials he uses in my home. She says under the "Construction Lien Law" I might have to pay twice, first my brother-in-law’s company and then his suppliers. Is this true?

ANSWER:

That’s a very real possibility. Under certain circumstances, Florida law allows people who work on your property or who provide construction materials and are not paid, to enforce their claim for payment against your property. This claim is known as a construction lien. If all the requirements of the law are met, properties can be sold in order to pay these liens.

But you can protect yourself. If you hire a contractor and the improvements cost more than $2,500, obtain a "Release and Waiver of Lien", a written statement which removes your property from the threat of lien, covering the materials used and work performed. Do this before you make any payment. If your contract calls for partial payments before the work is completed, get a "Partial Release and Waiver of Lien."

Before you make the last payment to your contractor, obtain an affidavit that lists everyone who provided materials or services. Be sure that your contractor obtains releases from these parties before you make the final payment. Also, be sure you obtain releases from anyone that has sent you a Notice that they performed work or supplied materials to the job. If the bank you used to finance the remodeling is making payments to the contractor for you, be sure the lender gets releases before making any payments. If the bank does not follow the legal requirements, it may be responsible to you for any loss but addressing this issue in the initial stages of negotiation may save legal fees later on.

Always file a Notice of Commencement before beginning a major remodeling project. Record this form with the Clerk of the Circuit Court and post a certified copy at the job site. You could post an affidavit stating a Notice of Commencement has been recorded with a copy of the Notice if you do not wish to post the original.

Contractors, laborers, material supplies, subcontractors and professionals such as architects, landscape architects, interior designers, engineers or land surveyors all have a right to file a claim of lien for work or materials. Be sure that your release of liens includes everyone.

Florida Statutes 713, the "Construction Lien Law," states that "the right, title, and interest of the person who has contracted for the improvements may be subject to attachment." Be sure your brother-in-law does not put you in jeopardy.

Also, be sure he secures a building permit and adheres to all building codes and ordinances. Choose your contractor very carefully.

This information is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.

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