Florida Construction Liens: First 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. While the Lien Law ultimately helps ensure full payment for contractors, it is not always clear regarding the procedural requirements for perfecting lien rights. Understanding the nuances and technical requirements is critical in a contractor’s efforts to be fully and fairly paid. If not used properly, this tool will fail. Of particular concern is the requirement that a lienor not in direct privity of contract with the property owner (except a laborer, professional lienor, or subdivision improver) is required to serve its Notice to Owner at any time before the 45th day after the lienor’s “first furnishing” of work or materials at the property. Anything less than full compliance with this requirement will result in a lienor being unable to enforce a lien. Lien rights are lost if Notice to Owner is not served within 45 days of first furnishing.
Florida’s Construction Lien Law is Strictly Construed – Close is Not Good Enough
Florida’s Construction Lien Law is found in Chapter 713, Florida Statutes. This is the primary source of law governing construction liens. Florida courts strictly construe timing deadlines because lien law is a creature of statute that replaces the common law. Stunkel v. Gazebo Landscaping Design, 660 So.2d 623, 625-26 (Fla.1995) (explaining that the Lien Law “is a creature of statute and must be strictly construed”). Because the Lien Law is strictly construed, if the Lien Law says “45 days,” it means 45 days. Not 46 days. Close is not good enough. A day late and your lien is lost.
45-Day Deadline to Serve Notice to Owner
Lienors in direct privity with the owner (i.e. the prime contractor) are not required to serve a Notice to Owner. However, those not in direct privity with the owner (e.g. subcontractors and suppliers), must timely serve a Notice to Owner to maintain their lien rights. The Notice to Owner is explained here.
A Notice to Owner is timely served if it is delivered within 45 days “after beginning to furnish labor, materials, or supplies.” This concept is commonly known as “first furnishing.” The relevant statute provides:
The notice must be served before commencing, or not later than 45 days after commencing, to furnish his or her labor, services, or materials, but, in any event, before the date of the owner’s disbursement of the final payment after the contractor has furnished the affidavit under subparagraph (3)(d)1 . . . and the failure to serve the notice, or to timely serve it, is a complete defense to enforcement of a lien by any person.
Section 713.06(2)(a), Florida Statutes. That you have 45 days to serve the Notice to Owner is clear. The question is though: when does the 45-day clock start to run. It starts to run at first furnishing (i.e. commencing to furnish labor, services, or materials). But what constitutes first furnishing?
When does first furnishing occur?
The general rule is that first furnishing occurs “when services or materials are delivered to the jobsite.” Stunkel, 660 So. 2d at 625. This is known as the delivered-to-the-jobsite rule. Accordingly, a subcontractor or supplier does not start the clock until he or she starts to perform services or deliver materials at the property.
The Florida legislature intended first furnishing to begin when services or materials are furnished at the job site because the statute allows liens only for services or materials that improve specific real property. Id. “If the time of first furnishing begins when the services or materials are delivered at the job site, subcontractors will know exactly when the time period begins for giving notice to owner.” Id.
The 45-day clock is easily triggered. For example, one court decided that the time limit started to run from the time the pieces to a crane were delivered to a job site, even though the crane itself was not assembled and could not be used until several months later. Essex Crane Rental v. Millman Const. Co., 516 So. 2d 1130, 1131 (Fla. 3d DCA 1987). Be cautious about early material or equipment drops. They will start the clock, even if labor doesn’t commence until later.
The delivery of rental equipment to the job, but not handtools, site counts as first furnishing and will start the 45-day clock. See id.; also Section 713.01(13), Florida Statutes (“‘Furnish materials’ . . . includes supplying rental equipment, but does not include supplying handtools.”)
Selection of materials off the jobsite
Selecting fungible materials off the job site does not constitute first furnishing. Stunkel, 660 So. 2d at 625 (clarifying that first furnishing did not occur when trees were selected at the nursery, but rather when the trees were later installed at the job site).
Submittals / shop drawings
Submittal and shop drawings do not count as first furnishing. See Section 713.01(13), Florida Statutes (“‘Furnish materials’ means supply materials which are incorporated in the improvement . . . not including any design work, submittals, or the like . . . .”).
Off-site services do not constitute first furnishing. See id. at (16)(“‘Laborer’ means any person . . . who . . . personally performs on the site of the improvement labor or services for improving real property . . . .”); id. at (14) (“‘Improve’ means . . . perform any labor or services upon the improvements . . . .”)
The Specially-Fabricated Materials Exception
An important exception to the delivered-to-the-jobsite rule is the case of specially-fabricated materials. The clock starts before delivery of specially fabricated materials. For those, “the supplier must deliver a notice to the owner within 45 days of starting to manufacture the materials.” Oolite Indus., Inc. v. Millman Constr. Co., 501 So. 2d 655, 656 (Fla. 3d DCA 1987). Specially-fabricated materials will be examined more closely in a subsequent blog.
In general, the Notice to Owner must be served within 45 days of first delivering materials to the jobsite or commencing labor at the jobsite. However, there is no good reason to wait until the deadline. Make it your standard practice to serve the Notice to Owner on the day you sign your contract, or as part of your internal administrative job file setup process. Don’t wait. Serve your NTO right away, and on every job.
Austin B. Calhoun, Esq.