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What Are the Pitfalls of Construction Lien Law?

I’m Chad Walker, a partner with Regan Atwood. We’re a Florida law firm based in Jacksonville, Florida, with offices in Orlando, Florida, where I work.

What Are the Pitfalls of Construction Lien Law?

I’m going to answer the question: what are the pitfalls of construction lien law?

One of the primary ways that Regan Atwood assists construction clients is recovering payment for work performed or materials supplied when there’s a dispute on a construction project.

One way a client can recover is against the party with whom you contracted through a breach of contract claim or through an implied contract claim, which I talked about in another video.

What is a Claim of Lien?

An alternative avenue for recovery is a claim of lien. The claim of lien is a lien against the project owner’s property and it establishes another type of cause of action, which is a lien foreclosure action. You can foreclose against the owner’s property to recover your payment in much the way that a bank or a mortgage holder can recover in a foreclosure on a mortgage.

The claim of lien has another important aspect to it, which is that it gives you an additional basis to recover attorney’s fees. You may not have a basis to recover attorney’s fees in your contract and the statutes that provide for the claim of lien can give you that ability.

Even short of filing a lawsuit, a lien creates additional leverage in pursuing recovery of payment for work that you’ve performed or materials you supplied because a lien is an encumbrance against the owner’s property.

If you’re constructing improvements to commercial or multifamily or single family property, a claim of lien is obviously a very powerful tool for securing your right to payment.

Pitfalls in Perfecting a Claim of Lien

Unfortunately, perfecting your claim of lien, as you may know from your own experience, is not always the most straightforward process. There are a number of what I call pitfalls that could result in a waiver of your lien rights.

1). Timing:

You first, for example, have to determine if you’re required to deliver a notice to owner within 45 days of beginning work.

2). Prepare, Serve Record:

Then with actually preparing, serving, and recording the claim of lien, there are a number of critical questions that you have to be able to answer.

3). Identify Property:

What property is subject to the claim of lien? This is more complicated if you did work for a tenant or a condominium unit or if it was for common elements on a condominium?

4). Define Amounts:

You also have to determine what amounts can be included in the claim of lien because not all amounts are lienable.

5). When, How Delivered:

You have to determine when and how the claim of lien has to be delivered. We live in the digital age obviously, but the statutes honestly haven’t caught up to that.

6). Who Receives:

You have to determine to whom does the claim of lien need to be delivered? The obvious answer would be the owner, but there can be additional people that are specified that have to receive the claim of lien.

7). When to File Suit:

You have to determine when it is that you need to file suit. And with the claim of lien —  just like on a bond claim as I discussed in another video — there’s a much shorter window for filing a lawsuit than there is on a claim like breach of contract.

In addition to that, the owner can take certain steps to shorten the time frame in which you need to file your lawsuit.

And among other things, there are steps the owner can take that can shorten it to a period as short as 60 days.

As a construction law specialist, we can step in and assist our client with understanding and perfecting their lien rights. It’s our job to make sure that when it comes time to file suit that all the potential avenues for recovery are available to our clients.

If you have questions about construction lien law, speak with an experienced construction litigation attorney. Chad Walker is a Florida Bar board certified construction law attorney and a partner with Regan Atwood based in Orlando, Florida. Regan Atwood also has offices in Jacksonville.

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