Florida Construction Liens: Final Furnishing – What Does it Mean?
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The Florida Construction Lien Law can be a contractor’s best tool for getting paid in full. The rub with the Lien Law is knowing how to use it properly. If not used properly, this tool will fail completely. One common misuse is failing to record a claim of lien within the 90-day final furnishing deadline, rendering the lien completely invalid and useless. The trick is knowing when the 90-day deadline starts to run. The applicable statutory language is: “final furnishing.” But what does that mean? When does final furnishing occur? When does the 90-day clock start to run?
The Florida Construction Lien Law is Strictly Construed
The starting point for understanding the claim of lien deadline is Chapter 713, Florida Statutes—the Construction Lien Law. The statutory language is of primary importance. Because Florida’s lien law is a creature of statute, courts must strictly construe its provisions, particularly as to time deadlines. Stunkel v. Gazebo Landscaping Design, 660 So.2d 623, 625-26 (Fla.1995) (“Mechanic’s lien law is a creature of statute and must be strictly construed.”)
90-day Deadline to Record a Claim of Lien
Pursuant to the statutes, a claim of lien is timely filed if it is filed within 90 days from the “final furnishing of the labor, services, or materials by the lienor.” The relevant statute provides:
The claim of lien may be recorded 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. However, if the original contract is terminated under s. 713.07(4), a claim for a lien attaching prior to such termination may not be recorded after 90 days following the date of such termination or 90 days after the final furnishing of labor, services, or materials by the lienor, whichever occurs first.
“With respect to rental equipment, the term means the date that the rental equipment was last on the job site and available for use . . . or 2 business days after the lessor of the rental equipment receives a written notice from the owner or the lessee of the rental equipment to pick up the equipment, whichever occurs first.” Fla. Stat. § 713.01(12),(13)
Based on the foregoing statutes, the 90-day claim of lien deadline can be summarized as follows:
The claim of lien must be recorded within 90 days of the earliest of:
(1) final furnishing of labor, services, or materials by the lienor,
(2) last date that rental equipment was available for use, or two days after the equipment rental lienor receives written notice to pick up the equipment, whichever occurs first (for a rental equipment lienor), or
(3) date of prime contractor default for one claiming through the prime contractor.
713.01(12), (13), Fla. Stat.; § 713.08(5), Fla. Stat.
Secondary Source
A well respected secondary source provides guidance on counting up and determining the deadline date. The last day of furnishing labor or materials is not counted in the 90 days. If the 90th day falls on a Saturday, Sunday, or holiday, the time goes over to the next business day. § 8:36.Claim of lien, 8 Fla. Prac., Constr. Law Manual § 8:36 (2017-2018 ed.)
“Final furnishing,” in its simplest meaning, is the “last” labor or services or materials provided by the lienor to the project. Unfortunately, the analysis is more complicated than it appears at first blush. There are many fine nuances that go into the analysis and could make or break a lienor’s claim of lien. Ultimately, the analysis boils down to this question: what does final furnishing mean?
Definition of “Final Furnishing”
The Construction Lien Law clarifies some of the answer by providing the following definition for final furnishing:
“Final furnishing” means the last date that the lienor furnishes labor, services, or materials. Such date may not be measured by other standards, such as the issuance of a certificate of occupancy or the issuance of a certificate of final completion, and does not include correction of deficiencies in the lienor’s previously performed work or materials supplied.
The definition does not clarify what type of labor, services, or materials count toward determining final furnishing. However, it does tell us some things that do not count. Based on this definition, we know that the “certificate of occupancy” does not determine the date of final furnishing. We also know that “correction of deficiencies in previously completed work” (e.g. warranty work) cannot be used as the final furnishing date.
That is about the extent of answers provided by statute. For further answers we turn to the case law.
Case Law Clarifications of Final Furnishing
To be sure, the determination of final furnishing is highly fact-driven and case specific. Furthermore, “[t]here are no steadfast rules to apply in making this determination.” Sam Rodgers Properties, Inc. v. Chmura, 61 So. 3d 432, 438 (Fla. 2d DCA 2011). However, the applicable case law does shine sufficient light to guide through many situations.
The Proper Test—now known as the Aronson/Michnal test
In Florida, there is a solid line of cases stretching back over the past 85 years, which have articulated a workable test for making the final furnishing determination. Under what is now known as the Aronson/Michnal test, to determine whether labor, services, or materials were “furnished” is whether the work was:
(i) performed in good faith;
(ii) within a reasonable time;
(iii) in pursuance of the terms of the contract; and
(iv) whether the work was necessary to a “finished job.”
Aronson v. Keating, 386 So.2d 822, 823 (Fla. 4th DCA 1980) (citing Century Trust Company of Baltimore v. Allison Realty Co., 141 So. 612 (1932)); Michnal v. Palm Coast Development, Inc., 842 So.2d 927, 933 (Fla. 4th DCA 2003), rev. denied, 882 So.2d 385 (Fla.2004). This four-step test may seem fairly straight-forward, but the application is fact driven, and the facts of each construction project vary widely.
The Determinative Issue
In most cases, the determinative issue will be whether the final work was necessary to complete the contract. Work performed “in fulfillment of a contract … extends the time for filing [a claim of lien], since the contract is not complete until the work is done.” Herpel, Inc. v. Straub Capital Corp., 682 So.2d 661 (Fla. 4th DCA 1997) (final furnishing of mantel occurred when modified mantel was re-delivered after mantel initially tendered was rejected as non-confirming to contract for materials; contract could not be considered complete until satisfactory product delivered) ; compare Cross State Dev. Co. v. Indepco Constr. Co., Inc., 346 So.2d 127 (Fla. 1st DCA 1977) (mere storage of machinery at job side does not constitute furnishing of services or labor).
Stated differently, where the work performed is a necessary continuation of the contract work, it will be deemed a “final furnishing.” Wolford v. Sapp, 448 So. 2d 1113, 1114 (Fla. 1st DCA 1984) (affirming lien for additional survey work that was a continuation of the original work, and was necessary to meet the governing authority’s requirements for the project).
Contrasting With Remedial Work
However, remedial work such as corrections or repairs completed after the job is done, or work that is not necessary to a completed contract does not extend the time for filing a claim of lien. Rather, any such additional work performed “is merely incidental to the executed contract.” Herpel, 682 So.2d at 662–63; In re Starlight Homes, Inc. 297 B.R. 856, 860 (Bankr. M.D.Fla. 2003) (remedial work does not extend the time for recording a claim of lien) (citing Viking Builders, Inc. v. Felices, 391 So.2d 302 (Fla. 5th DCA 1980)).
In sum, the question is whether the contract can be considered complete without the work being performed. Work that is required by the contract is considered furnishing. Work that is not required by the contract is not considered furnishing. Moreover, warranty work to repair defective work is not considered furnishing.
The “Substantial-trivial” Test – rejected by the Florida Supreme Court
The Fifth District Court of Appeals seems to have gone astray, and has come up with a so-called “substantial-trivial” test, rather than the Aranson test originated by the Florida Supreme Court in Century Trust Company of Baltimore.
In Federal Ins. Co. v. Exel of Orlando, Inc., 685 So.2d 896 (Fla. 5th DCA 1996), the Fifth District Court of Appeals originated the “substantial-trivial” test in determining that punch list work did not extend the time to file a lien foreclosure complaint under the lien law. That Court said that “[w]hen compared to the work done on the whole contract, punch list work is trivial and unsubstantial.” Id.; see also Delta Fire Sprinklers, Inc. v. OneBeacon Ins. Co., 937 So.2d 695, 699 (5th DCA 2006) (noting that the Fifth DCA applies the substantial-trivial test and that the Fourth DCA applies the Aronson/Michnal test). This broad overstatement and miscontrual of the lien law precedent has led many to blanketly state that punch list work does not count for final furnishing.
However, the “substantial-trivial” test was rejected by the Florida Supreme Court as early as the year 1932. See Century Tr. Co. of Baltimore v. Allison Realty Co., 141 So. 612, 617 (Fla. 1932). The substantial-trivial test will be closely scrutinized in a subsequent blog, as some practitioners have similarly been led astray to misapply the relevance of “substantiality” in the final furnishing analysis.
Substantial Completion is NOT the Test; “Final Completion” is the Test
“Final furnishing” is not set by “substantial completion.” Rather, it is set by “final completion.” In re Starlight Homes, Inc., 297 B.R. at 860 (citing Century Trust Company of Baltimore v. Allison Realty, 105 Fla. 456, 141 So. 612 (Fla.1932)) The 90–day period for recording the claim of lien begins to run when the last work is done, which is necessary to finish the job, not when enough work is done to render the job substantially completed.
Other Critical Questions
This blog does not answer all of the questions that may arise when dealing with “final furnishing.” For instance, does final furnishing include work for “punch list” or “closeout”? Will final furnishing be said to include “change order” work or “unauthorized” work? How does final furnishing apply to “specially fabricated materials”? Can a subcontractor’s final furnishing date occur after a general contractor’s final furnishing date? Subsequent blog posts will delve deeper into some of these critical questions of final furnishing.
Conclusion
The Lien Law should be your best tool in getting paid. “Mechanic’s liens protect suppliers who furnish labor or materials to the property by assuring them of full payment.” Stunkel, 660 So. 2d at 626 (Fla. 1995). If done right, a contractor can almost guarantee that it will get paid in full by using the Lien Law. However, strict compliance with the Lien Law is required and it is laced with traps for the unwary.
Many contractors fail to perfect their lien rights properly and find themselves unable to get paid. Don’t let that happen to you. Make sure you understand how “final furnishing” is determined, and take a conservative approach in calculating your final furnishing date.
For more information about final furnishing, read these additional blog articles: