Attention Contractors and Subcontractors: Know Your Customer!
Did you know that not all construction work entitles you to lien the Owner’s property? Your lien rights go only as far as the land rights of the person who contracted the work. Knowing who your customer is puts you in the best position to file a Claim of Lien that will withstand a legal challenge.
As a construction lien attorney, I have seen too many Claims of Lien that do not properly identify the property to be liened because the contractor doesn’t know whether the person contracting the job is an owner or tenant. I’ve also seen mistakes in liens when the contractor preparing the lien does not understand how to lien work performed for an Association or a condominium unit owner.
When the work is being contracted by:
- The owner of the property: This is obviously the best situation because your lien rights would attach to the entire property being improved. The Owner would not be able to transfer the title to that property while your valid lien is in place.
- A Tenant/Renter: If a tenant is the one making the contract for the improvements, then your potential lien rights are only against the tenant’s interest (i.e., his leasehold). This is not a very valuable lien and does not provide much security.
- An Owner of a Condominium Unit: Your lien is against the Owner’s Unit only. However, a condominium unit owner not only owns his unit but also owns an undivided percent share of the common elements as well, with that percent determined by the Declaration of Condominium recorded in the public records.
- A Condominium Association: Your lien is against all of the units in the Association, not the Association’s property (common elements). For work done on behalf of a Condominium Association, each unit owner becomes technically responsible for their relative percent of your lien amount based upon the ownership that their unit represents as a percent of the whole Association as determined in the Declaration of Condominium. When a condo unit is being sold, the title company will want a release of the unit from your construction lien. This is often accomplished by unit owners “buying out” their percentage of the debt by paying their relative amount from closing in exchange for a limited release that releases only their unit from your Claim of Lien.
Identifying the proper legal description in your Claim of Lien can be tricky, and you are best advised to consult a construction lien attorney to learn how to properly do this. For those who are not familiar with it, Florida’s Construction Lien Law is filled with traps. The lien laws are very technical and any misstep in the preparation or recording of a Claim of Lien can absolutely destroy your lien rights. Consult with a South Florida construction attorney, like me, Andrew Wyman, to obtain the tools and advice you need to make sure you properly and timely preserve your lien rights.