Thursday, May 3, 2012

Loophole for Florida Contractors to Lien Lessor's Property

For many years, Florida lessor's have been protected from assuming the liability of construction liens placed against their property for improvements made by their lessee.  This was accomplished when the lessor filed the lease stating that the lessor would not be subject to liens for improvements made by the lessee.

However, Florida just handed contractors a loophole that may allow a contractor to lien the lessor's interest regardless if the lessor filed a document advising of the limitation of liens.  A contractor should be sure to serve a Notice to Owner within 45 days from the first date of work, and the contractor should now request a copy of the filed lease that limits a lessor's lien liability.  The lessor must provide a verified copy of the filed lease advising of the limitation of liens within 30 days after receiving written request.  The lessor must also have recorded the lease prior to the filing of the notice of commencement.

Suggestions for Lessors:
  • Update all leases to contain a blanket provision to prohibit liability.
  •  Record the lease or "blanket filings" for all new leases as soon as the lease is executed.
  • Respond to all written demands for a copy of the lease provision prohibiting liability within 30 days of the request.
  • Verify that the lease containing the provision to prohibit liability has been filed before signing a notice of commencement.
  • Make it a practice to require the lessee to provide copies of all releases of lien.

Suggestions for Contractors:
  • Be sure you understand your lien rights and what is required of you before entering into a contract.  LienItNow.com can help keep you up-to date on the most current Florida Lien Law Statutes.
  • Process the Notice to Owner on the 1st day of work, not the 45th day.
  • At the start of a project, send a written request for a copy of the lease advising of the limitation of liens on every project - don't wait to see if payment comes.

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