A construction lien is filed against your property claiming that a contractor (or even a subcontractor hired by your contractor) was not paid for labor, services, and/or materials rendered.
To shorten the one-year time period available to a lienor to commence an action to enforce any claim of lien (or claim against a bond/security), the owner or its attorney can record a Notice of Contest of Lien with the clerk’s office using a form provided in § 713.22(2). This notice provides the lienor with a 60-day notice to institute lien foreclosure proceedings. If the lienor fails to institute suit to enforce the lien within 60 days after being served with such Notice of Contest, the lien shall be extinguished automatically.
Transferring the lien to security, such as a cash or surety bond, removes the potential cloud that the lien places on the property’s title. However, once the lien is transferred to such security, the lienor’s claim for recourse is against the security/bond – not against the property.
If a lienor timely records a claim of lien and even files suit within the year to foreclose on such lien, the property owner may still invoke the remedies and transfer the lien to a bond/security and, by properly recording and serving the Notice of Contest, the owner can accelerate the time for the lienor to take action against the surety or face losing its interest in the value of the claimed improvement or enhancement to the property.
Accordingly, lienors should be mindful upon receipt of a notice of the transfer bond and notice of contest that they should act within 60 days to institute a suit or amend and join the surety to the existing suit, or possibly face losing their security interest.
Notably, this process only applies to a potential extinguishment of the lien and right to pursue the security. However, a failure to comply with these statutory mechanisms does not operate to preclude a contractor from proceeding with certain of its other claims against the owner, if applicable.
It is critical to consult with experienced construction attorneys, like our team at Haber Law, in order to assist owners effectuating the transfer within the statutory deadlines to protect their rights and limit contractor remedies, or, on the flip side, protect contractors from having their rights extinguished when such statutory mechanisms are being utilized.
Miami-based Habel Law set up shop in two new cities in South Florida to expand…
As most construction litigation practitioners are aware, the vast majority of construction defect cases settle…
In the world of high-end residential real estate, developers are constantly pushing the boundaries of…
The reading of a community association’s election results can be filled with mixed emotions ranging…
A well-drafted partnership agreement among law firm partners is often the initial step to long-term…
The leadership team at Haber Law today announced the promotion of long-time office administrator, Nilka…