Florida Construction Lien: Final Furnishing – Does it Include Punchlist or Closeout Work?
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This blog is part of a series covering a critical component of a Florida construction lien—recording the claim of lien within 90 days’ of “final furnishing.” Failing to record a claim of lien within the 90-day final-furnishing deadline renders the lien completely invalid and useless. The trick is knowing when the 90-day deadline starts to run . . . knowing the date of final furnishing. A common question we hear about final furnishing is: Does it include “Punch List” or “Closeout” work? Stated differently, does performance of punchlist or closeout work extend the 90-day deadline to record the claim of lien? As explained below, the answer to that question is: maybe.
General Rule For Final Furnishing
Under section 713.08(5), Florida Statutes, a claim of lien must 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.” In determining when the “final furnishing” occurred, the question is whether the work was (i) done in good faith, (ii) within a reasonable time, (iii) pursuant to the terms of the contract, and (iv) necessary to a finished job (the “Aranson” test). See Swedroe v. First Am. Inv. Corp., 565 So.2d 349, 353 (Fla. 1st DCA 1990). Work done in fulfillment of the contract is work contemplated by the contract, and it extends the time for filing the lien because the contract is not complete until the work is done. Delta Fire Sprinklers, Inc. v. OneBeacon Ins. Co., 937 So.2d 695, 698 (Fla. 5th DCA 2006). However, remedial work such as warranty work, corrective work, repair work, or work that is incidental and not necessary to a completed contract does not extend the time for filing a claim of lien. See, e.g., Herpel, Inc. v. Straub Capital Corp., 682 So.2d 661, 663 (Fla. 4th DCA 1996).
Misperception Of Punchlist Work And Supreme Court Precedence
This author has often heard other practitioners proclaim that “punchlist” work is not lienable work and does not extend the final furnishing 90-day time period. However, the issue is not black and white. A generalization that punchlist work is not sufficient loses sight of old well-established Florida Supreme Court precedence, and is most likely based on a misunderstanding of what so-called punchlist work actually is.
Having worked in the construction industry, it has been my experience that most punchlist or closeout work is comprised of items that are necessary for a finished job, required by the contract, and must be completed before the owner accepts the project as completed. What is a punchlist if not a list of items that the owner does not accept as properly completed? That type of work should be lienable work, and should extend the final furnishing date. Furthermore, the owner will often withhold some payment until the punchlist work is complete.
In Century Tr. Co. of Baltimore v. Allison Realty Co., 141 So. 612, 617 (Fla. 1932), the Florida Supreme Court held that “checking up odds and ends” required to complete the contract was lienable work that extended the final furnishing date. In holding that the lien was timely filed, the Supreme Court found that: “Here there is no evidence to show that ‘patching,’ touching up, and slight repair work, or the furnishing of articles of a trivial character, was delayed for the purpose of extending the time for bringing the suit, or that the building had been accepted as completed . . . . [A]nd the assistant architect testified that about a week before the issuance of the certificate there were some men on the job checking up odds and ends, and that the contract would not have been completed ‘if those odds and ends had not been done.’” Id. Checking up odds and ends, sounds like punchlist work, and should suffice to be final furnishing.
In Serv. Lumber & Supply Co. v. Cox, 123 So. 820, 821 (Fla. 1929), the Florida Supreme Court held that a lien was timely, which was based on one day’s worth of “patching” plaster after the “bulk of the work was finished.” The Court found that: “The evidence justifies the … finding that the parties interested did not consider the ‘job as finished’ until the [lienor] completed certain work of lathing and plastering, which he called ‘patching,’ which amounted to about a day’s work.” As further evidence that the punchlist work was lienable, the Court pointed to the fact that “the owner of the property considered it so important that he refused to make a payment upon the account until that work was completed and used it as an excuse for delaying payment.” Id. When the owner did not consider the project completed, and withheld payment, because of the punchlist or closeout work, that fact should be dispositive to make the work suffice as lienable final furnishing.
Punchlist To “Correct” Work
More recent cases solidify and clarify the well-established Florida Supreme Court precedence regarding punchlist work’s effect on final furnishing.
In Herpel, the lienor supplied a cast-stone mantel under a materials-only contract. Herpel delivered the mantel and it was installed, but upon later inspection, the owner was not satisfied with the appearance of it and required Herpel to take it down and back to the shop for additional curing (i.e. sounds like punch list work to me). Herpel re-delivered the mantel a month later. Herpel ultimately filed a lien. The lien was filed within 90 days of re-delivery, but 113 days after original delivery. Herpel, Inc., 682 So.2d at 663.
The Trial court held that final furnishing occurred when the mantel was first placed on the job site and, thus, the lien was not filed within 90 days of final furnishing. However, the Appellate court overturned the Trial court, and held that final furnishing actually occurred when the “cured mantel was redelivered” and the lien was timely filed. Id. The Appellate court provided the following reasoning: “The owner rejected the mantel as non-conforming to the contract when it was initially tendered. In response to the owner’s objections, Herpel took the mantel back, allowed for further curing, and presented the mantel once again for acceptance. Under the circumstances, it is clear that the additional work on the mantel was performed to complete the job in compliance with the contract.” Id. In other words, the punchlist work to correct the mantel to conform with the contract requirements for it, constituted lienable work that extending the date of final furnishing.
In Swedroe, the Court held that the Architect’s review of the finished work on the project to check for compliance with the drawings (i.e. developing the punch list) could be lienable services that constitute final furnishing. Swedroe, 565 So.2d at 353. The architect’s contract included services to inspect the work for compliance. As such, inspection and preparation of a punch list constituted lienable work that extended the date of final furnishing.
In sum, the proper view is that punchlist work to conform the work to the requirements of the contract and acceptance by the owner, should be considered lienable work that extends the date of final furnishing.
Be aware that some Courts within the Fifth District Court of Appeals have applied a so-called “substantial-trivial” test to determine that punchlist work trivial to the overall project is not lienable work that extends final furnishing. See e.g. Federal Ins. Co. v. Exel of Orlando, Inc., 685 So.2d 896 (Fla. 5th DCA 1996). However, as explained in a prior blog, the Fifth District Court of Appeals seems to have gone astray, and the better test, applied by the other Appellate Courts, is the Aranson test originated by the Florida Supreme Court in Century Trust Company of Baltimore.
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 v. Gazebo Landscaping Design, 660 So.2d 623, 625-26 (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.
If you are considering using punchlist or closeout work as your touchstone for final furnishing, think through whether such work was (i) done in good faith, (ii) within a reasonable time, (iii) pursuant to the terms of the contract, and (iv) whether it was necessary to a finished job. If the punchlist or closeout work satisfies all four prongs of this test, then it should be lienable work that extends the final furnishing date.
For more information about final furnishing, read these additional blog articles: