How SMBs Can Prevent Construction Lien Disputes Before They Happen

A single construction lien can freeze your financing, cloud your property title, or even lead to foreclosure. Florida’s construction lien law (Chapter 713, Florida Statutes) is designed to protect contractors and suppliers. But for SMBs, it can create significant legal exposure, especially when a lien is filed even after the contractor has been fully paid. Our recent article How SMBs Can Face Lawsuits for Unpaid Construction Work examined these risks. 

Fortunately, many lien disputes are preventable. By understanding their obligations and being proactive with documentation, contracts, and communication, Florida SMBs can reduce the risk of lien disputes before they arise.

1. Start With Strong Construction Contracts

Well-crafted contracts not only prevent confusion but also establish enforceable expectations that reduce the risk of liens being filed in the first place. Every construction agreement should include:

• a clear and enforceable payment schedule tied to milestones;
• requirements for partial and final lien waivers from all subcontractors and suppliers;
• a condition that the contractor provide a Contractor’s Final Payment Affidavit before the final payment (as required by Fla. Stat. § 713.06);
• dispute resolution terms and an attorney’s fees clause, and 
• precise “pay-if-paid” or “pay-when-paid” language where applicable (See our article Enforceability of Contingent Payment Provisions in Construction Contracts).

2. Record and Manage a Notice of Commencement 

Before construction begins, the property owner must record a Notice of Commencement (NOC) with the county clerk and post it at the job site. This document identifies the owner, contractor, and scope of work and establishes lien priority on the property. Lien priority determines which claims against a property get paid first, making this filing critical for protecting both owners and contractors. Failing to record the NOC—or recording it with incorrect information—can expose an owner to liens and even delay inspections.

The NOC is also essential for determining lien deadlines, as it signals to subcontractors and suppliers how to preserve their rights. If it is not properly managed, you risk duplicate claims or disputes over responsibility.

3. Require and Track Lien Waivers at Every Payment Stage

Many lien disputes arise from nonpayment to subcontractors and suppliers, even when the general contractor has been paid. To avoid this, require partial lien releases at the completion of milestones and a final unconditional waiver at project closeout.

Before making final payment, request a Contractor’s Final Payment Affidavit that lists all unpaid parties (Fla. Stat. § 713.06). Review this affidavit carefully. If subcontractors or suppliers remain unpaid, ensure lien releases are provided or consider making joint payments to those parties. This strategy is often used to ensure that funds reach the intended recipients.

4. Track Pre-Lien Notices and Timelines

Florida law requires strict notice and filing rules for lien rights. Most lienors not in direct contract with the owner must serve a Notice to Owner (NTO) within 45 days of first providing labor or materials. Failure to do so is a complete defense to lien enforcement (see Stunkel v. Gazebo Landscaping Design, Inc.).

Owners should keep a list of all subcontractors and suppliers who serve NTOs and monitor them until their work is complete and a lien waiver is received. This reduces the risk of double payment (i.e. paying a contractor but still facing a lien from an unpaid subcontractor). For example, if a subcontractor begins work on May 1, their NTO must be served by June 15 to preserve lien rights.

5. Use Payment Bonds When Possible

On large projects, consider requiring the contractor to post a payment bond, which protects against liens by shifting the risk of nonpayment to a surety. When a valid bond is in place, lien claims are replaced by claims against the bond (Fla. Stat. § 713.23).

This approach is helpful in avoiding construction liens that could otherwise cloud your title or interfere with your financing. Confirm that bonds are properly recorded and that the bond amount aligns with the contract value.

6. Consider Defensive Legal Tools Like the “Show Cause” Process

Even with strong preventive steps, some SMBs may still face a construction lien. In that case, Florida law offers an expedited remedy through a Complaint to Show Cause under Fla. Stat. § 713.21(4). This legal action allows a property owner to require the lienor to explain, within 20 days, why the lien should not be enforced or canceled. If the lienor fails to either file a lien foreclosure lawsuit or show cause within that deadline, the court will cancel the lien.

This “special statutory proceeding” is strictly enforced. 

• KA Properties, LLC v. USA Construction, Inc.: Filing a motion to compel arbitration does not preserve lien rights.
  
• Brookshire v. GP Const. of Palm Beach, Inc.: A lienor must file a proper foreclosure action, not just a defensive response, to enforce the lien.

This tool gives owners critical leverage to resolve invalid or stale liens, but the process is technical and time-sensitive.Experienced legal counsel is essential. (For more, see our article Florida Lien Law: Removing a Construction Lien From Your Property).

7. Careful Documentation and Open Communication

Documentation is your strongest defense. Maintain detailed records of:

• contracts and change orders;
• NOCs and NTOs;
• all lien releases and affidavits;
• payment logs; and
• communications with all project stakeholders.

Incomplete documentation is a pitfall that can derail a defense. Digital tools can help track deadlines and documents to avoid administrative errors that lead to lien disputes.

Open communication can also help diffuse conflicts before they escalate. Many disputes stem from misunderstandings about payment timing, scope changes, or delays.

8. Beware of Fraudulent or Improper Liens

Not every lien is valid. If you suspect a lien is exaggerated, includes unauthorized work, or was filed improperly, you may be dealing with a fraudulent lien. Under Fla. Stat. § 713.31, this is a serious offense and a complete defense to enforcement.

In cases where a contractor misapplies funds or fails to pay subcontractors despite receiving full payment, you may also have recourse against the contractor or even the construction lender under Fla. Stat. § 713.3471, as discussed in Holding the Construction Lender Liable.

Conclusion: Proactive Legal Planning Prevents Disputes

Florida’s construction lien laws are complex, strict, and carry serious consequences. For SMBs, a single lien can disrupt operations, stall growth, or even lead to a forced sale. Fortunately, disputes can be avoided with early legal guidance, strong contracts, and careful compliance with notice and waiver requirements.

At Jimerson Birr, we help Florida businesses protect their property before problems arise. Whether you are planning a project, facing a lien notice, or reviewing your contracts, our attorneys can provide the insight and support you need. Contact us to schedule a consultation.