Currently, the Florida Legislature is considering Senate Bill 460 which seeks to amend Section 713.08(5), Florida Statutes and would have a profound effect on any potential lienors under Florida’s Construction Lien Law. As it stands now, a person or company performing work under contract on a construction project has the right to lien the property to protect payment for their services, material or labor, with a few exceptions including public projects and private projects that carry bonds. Every potential lienor must file their claim of lien not later than 90 days after the final furnishing of the labor, services or materials to the project.
Sometimes, the date of final furnishing, or “work”, is an issue of factual debate because there are questions of fact as to that specific date. However, the penalty for filing a claim of lien in Florida after 90 days from final work is usually the loss and waiver of lien rights and lien must be removed from the property. Now, under SB 460, Florida’s construction players could potentially be exposed to an entirely different type of penalty.
Pursuant to the proposed SB 460, the claim of lien must still be recorded not later than 90 days after the final furnishing of the work; however, the recording of a claim of lien after the 90 day period is an act of FRAUD, punishable as provided under Section 713.31, Florida Statutes. Under Section 713. 31, Florida Statutes, Florida law provides for certain remedies for willfully filing fraudulent lien claims which contain exaggerated amounts or show collusion to deprive a lienor of their rights. Under said Section, the most important sanctions or penalties for such willful conduct include: a third-degree felony, a possible license complaint to the Department of Business and Professional Regulation, an independent action by the owner for actual and punitive damages, and the payment of reasonable attorney’s fees.
Although Section 713.31, Florida Statutes provides for remedies for willful acts, the new SB 460 does not state that there has to be a finding that the construction lienor willfully filed the claim of lien after the 90 day period; rather, the way that it is currently framed directs that any claim of lien filed after the 90 day period is an act of fraud – willful or not. That notwithstanding, even if the intention of the Florida Legislature is to punish the willful filing of claims of lien after the 90 day period, the current SB 460 and use of the penalties under Section 713.31, Florida Statutes is simply draconian. This is true for the reasons stated above, i.e., sometimes there is a factual dispute concerning the final day of work on the project. Thus, the construction
This is true for the reasons stated above, i.e., sometimes there is a factual dispute concerning the final day of work on the project. Thus, the construction lienor will sometimes knowingly file the claim of lien after what the owner would consider the 90 day period because arguably there is a later date that could be the final day of work. Now, if this factual dispute occurs, the shorter time frame is found to be correct, and the owner prevails, the lienor is facing a multitude of potential problems, including being charged with a third-degree felony. This cannot stand as it would result in Florida’s construction lienors filing liens far quicker, either during the course of work or shortly after completing work, without much negotiation for payment from the owner due to the impending fear of filing a “fraudulent” lien.
Check back to this Blog as the Florida Legislative session continues for updates on the status of Senate Bill 460. In the meantime, check out our Construction Litigation page for more business and construction law information.