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Contesting Construction Lien Claims – Contractor’s Beware of the Notice of Contest of Lien During Litigation
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Contesting Construction Lien Claims – Contractor’s Beware of the Notice of Contest of Lien During Litigation

June 13, 2024 Construction Industry Legal Blog

Reading Time: 5 minutes


In Florida, persons and entities that perform work on a construction project may be entitled to record a construction lien. Chapter 713 of the Florida Statutes governs the recordation and perfection of construction liens and contains many traps for the unwary. Moreover, Florida courts have consistently ruled that Florida Construction Lien law is to be strictly construed and strict adherence to it is an absolute condition precedent to a party seeking affirmative relief under Chapter 713.

In a recent case, Jon M. Hall Company, LLC v. Canoe Creek Investments, LLC, et al. (“Hall”), the appellate court reiterated Florida courts’ strict constructionist philosophy as to Florida lien and bond law, even during the course of litigation.

Facts of Hall

In Hall, the owner hired plaintiff (contractor) to provide construction and other services at the owner’s property. After the owner did not pay the contractor for its work, the contractor recorded a claim of lien on the owner’s property in the amount of $825,639.46.

Thereafter, the owner transferred that claim of lien to a transfer bond, pursuant to section 713.24 of the Florida Statutes. Three days later, the owner then recorded a notice of contest of the contractor’s lien, pursuant to section 713.22, Florida Statutes.

The contractor then amended and increased its original claim of lien from $825,639.46. to $1,837,516.76. Ultimately, the contractor filed a lien foreclosure lawsuit against the owner, but did not name the owner’s transfer bond surety as a defendant. After the contractor filed that lawsuit, the owner then transferred the contractor’s amended claim of lien to a bond, pursuant to section 713.24, of the Florida Statutes (the same transfer bond surety as with the original claim of lien) and recorded a notice of contest of that amended claim of lien.

The owner moved for partial summary judgment in the lawsuit on the contractor’s lien foreclosure claim, arguing that transferring both construction liens to the bonds and recording notices of contest of both liens shortened the time period for the contractor to file suit on the bonds. According to the owner, since the contractor failed to timely file suit on the bonds (within 60 days of service of the notice of contest), the liens were automatically extinguished.

The trial court agreed with the owner’s position that the liens were extinguished, and the appellate court affirmed that decision.

What is a Notice of Contest of Lien and Its Significance in Hall  

A notice of contest of lien is a statutory form that provides in pertinent part as follows:

  • The lien of any lienor upon whom such notice is served and who fails to institute a suit to enforce his or her lien within 60 days after service of such notice is extinguished automatically.
  • The clerk shall serve, in accordance with 713.18, a copy of the notice of contest on the lienor at the address shown in the claim of lien or most recent amendment thereto and shall certify to such service and the date of service on the face of the notice and record the notice. After the clerk records the notice with the certificate of service, the clerk shall serve, in accordance with s. 713.18, a copy of such recorded notice on the lienor and the owner or the owner’s attorney. The clerk of the court shall charge fees for such services as provided by law.

F.S. 713.22(2)

Significance of Lien Transfer Bond

Once a construction lien is transferred to a bond, in accordance with Section 713.24 of the Florida Statutes, a party must then file suit on that transfer bond within one-year after the transfer, unless the time period to file suit is shortened by operation of law (i.e. by recording a notice of contest of lien).

According to the appellate court in Hall, once the contractor filed suit on its amended claim of lien, and the owner transferred the lien to a bond and recorded its notice of contest of lien, the contractor had 60 days to file a lawsuit against the payment bond surety. Since the contractor in Hall failed to timely file suit against the surety, in the required 60 days, the contractor lost its lien rights. Moreover, the fact that the contractor commenced an action against the owner on its lien claim, it did not equate to timely filing suit against the surety, as required by Florida Statutes section 713.22 and 713.24.

Conclusion

Florida construction lien law is a creature of statute, and parties must pay close attention to its timing and notice requirements to ensure that lien and bond rights remain intact. Once a claim of lien is recorded, a lienor must be vigilant as to any subsequent documents it receives that reference that lien.

If, as was the case in Hall, a notice of contest of lien is served or that lien is transferred to a bond, a lienor must know about the deadline to file suit on the bond. After recording a claim of lien, vigilant parties should notify counsel of any documents they receive from the owner and/or Clerk of Court relating to that lien, in order to preserve lien and or bond rights.

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