Florida Construction Lien and Bond Law: Changes are on the Horizon
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Florida construction lien and bond law is an ever-evolving statutory creature. Chapter 713 (pertaining to construction liens) and Chapter 255 (pertaining to public project bonds) of the Florida Statues should be reviewed regularly. Statutes & Constitution :View Statutes : Online Sunshine (state.fl.us) 713.01 and Statutes & Constitution :View Statutes : Online Sunshine (state.fl.us) 255.05
Recently, the Florida legislature made certain amendments to Florida lien and bond law, with those changes taking effect on October 1, 2023. See CS/CS/HB 331 (2023) – Liens and Bonds | Florida House of Representatives (myfloridahouse.gov) While this post does not articulate all of those recent changes, it highlights the major changes. House Bill 331 (2023) – The Florida Senate (flsenate.gov)
Public Project Bond Claims – Florida Statute 255.05(2)(a)2.
This section of the Florida statutes addresses notice requirements to perfect a public project bond claim. Before commencing or within 45 days of such date, a bond claimant, that is not in privity of contract with the general contractor, must serve that contractor with a written notice that he/she will look to that bond for protection. Effective October 1, 2023, the statute will better protect those bond claimants that were not afforded a copy of the bond. The amendment to the statute provides:
If the payment bond is not recorded before the commencement of work or before the recommencement of work after a default or abandonment as required by subsection (1), the claimant may serve the contractor with such written notice up to 45 days after the date that the claimant is served with a copy of the bond.
The amendment also requires that, for a bond claimant not in privity with the contractor and who has not been paid, that it also serve a copy of the notice of non-payment on the surety (and not just on the contractor).
Definition of “finance charge” – Florida Statute 713.01
Florida lien law allows certain persons to record a claim of lien for: “any money that is owed to him or her for labor, services, materials, or other items required by, or furnished in accordance with, the direct contract and for unpaid finance charges due under the lienor’s contract.”
Nevertheless, before these recent amendments, the term “finance charge” was not defined. Of course, this led to arguments as to what could and could not be included in one’s claim of lien as a “finance charge.” The following statutory amendment should provide clarity to this debate:
“Finance charge” means a contractually specified additional amount to be paid by the obligor on any balance that remains unpaid by the due date set forth in the credit agreement other contract.
Computation of Time Clarified – Florida Statute 713.011
It’s imperative that liens are recorded timely. The computation of the deadline for recording liens has been the subject of some litigation. Chapter 713 provides that a party has 90 days from final furnishing of work to record a claim of lien. But, what happens if the ability to timely record has nothing to do with the lienor’s diligence, and everything to do with the day of the week of the deadline, a holiday, or Courthouse closure?
Effective October 1, 2023, the statute provides:
In computing any time period under this part, if the last day of the time period is a Saturday, Sunday, or holiday specified in s. 110.117(1), or any day observed as a holiday by the clerk’s office or designated as a holiday by the chief judge of the circuit, the time period is extended to the end of the next business day. If the clerk’s office is closed in response to an emergency for 1 or more days so that a person may not present a document for recording or an action for filing in person to the clerk’s staff, the time period for recording a document or filing an action with the clerk’s office under this part is tolled. When the clerk’s office reopens, the time period is extended by the number of days the clerk’s office was closed.
Notice of Termination – Florida Statute 713.132
Florida lien law allows an owner to terminate a notice of commencement, provided certain requirements are met and certain information is included in the notice of termination. Before recording the notice of termination in the public records, the owner must serve a copy of it on each lienor who has a direct contract with the owner or who has timely served a notice to owner.
The amendment to this statute now requires the owner to include a statement in the notice that it will serve a copy of the notice of termination on anyone who timely serves a notice to owner after the notice of termination has been recorded. The amendment also specifies that the notice of termination must include the official records reference numbers and recording date of the notice of commencement.
This amendment also allows an owner to record a notice of termination at any time after construction completion or when construction ceases before completion and all lienors have been paid in full or pro rata in accordance with the statute.
If you are working on a construction project in Florida, you should be vigilant of these changes to Florida lien and bond law. Contractors, subcontractors, suppliers and any other lienors should consult counsel to best protect their lien and bond rights.