Use a Lawyer to Prepare YOUR Construction Lien

Here is a reason why you should always consider using a lawyer in preparing your construction liens.  And, I am talking about a lawyer that is going to review your pertinent documentation in preparing your lien and spending the time to ask you the pertinent questions.

Recently, I was involved in a matter defending against a subcontractor’s lien. It was a high six-figure lien.  However, the lien on it face established that the subcontractor did not timely serve its notice to owner.   The lien on its face demonstrated that the subcontractor served its notice to owner outside of its 45-day window from initial furnishing.  This turned out problematic for the subcontractor.

Use a lawyer to assist you in preparing your construction liens.  Being unwilling to proactively devote the resources on the front-end to ensure your lien rights are maximized and best protected is silly.   You could wind up recording a lien that, on its face, reflects there are no lien rights.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Make the Pre-Suit Settlement Offer before a Lien Foreclosure

You are involved in a payment dispute with your contractor. The contractor records a lien against your property. What do you do?

Sometimes the best thing to do is to make a good faith settlement offer.  Offer an amount of money that you believe in good faith is a fair resolution to the dispute.  Why?

There is case law that says that to be the prevailing party for purposes of attorney’s fees in a construction lien action, the party must recover an amount in excess of what was offered prior to the lawsuit.   Hence, if the contractor rejects this offer, you have now created a defense as to the contractor’s right to recover attorney’s fees, particularly if the contractor is unable to beat that earlier settlement offer many months (or years) later when the dispute is resolved.   For more information on this, please check out this article.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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You Still Need to Timely Foreclose Your Lien Against a Lien Transfer Bond


The other day, I consulted with a contractor that recorded a construction lien.  Its lien had been transferred to a lien transfer bond pursuant to Florida Statute s. 713.24.  With the lien transfer bond, instead of foreclosing the lien against the real property, you are foreclosing it against the bond.  This is not a bad deal.  In this case, however, the contractor failed to file a lawsuit within one year, meaning its rights to foreclose against the lien transfer bond expired.  There was nothing I could do relative to its lien or the fact that it had been transferred to a lien transfer bond.  Remember, just because your lien was transferred to a lien transfer bond does not mean you get more time to file your foreclosure lawsuit.  A lawsuit must still be filed within one year (short of that period being specifically shortened under operation of the law).  The only exception is that if the lawsuit is filed and the lien transfer bond is then posted (post-lawsuit), the lienor has one year to amend to sue the lien transfer bond.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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No Reason to Sue Miller Act Payment Bond for Claims other than Action on Bond

When a claimant sues a Miller Act payment bond, there is no legitimate reason to sue the payment bond surety for other counts hoping some other count sticks.  This is especially true if the payment bond claim was timely filed and the claimant preserved its right to sue the bond.  If the claimant failed to timely sue or failed to preserve its rights, perhaps there is a reason to be creative.  But, more than likely, the payment bond surety will only be liable for one count — a statutory action on the bond.

In a recent case example, discussed here, a subcontractor claimant tried to sue the Miller Act payment bond surety for breach of the underlying subcontract, open account and account payable.  Nor surprisingly, the trial court dismissed these gratuitous causes of action.  These other causes of action were not necessary and, importantly, the subcontractor did not have a valid claim against the Miller Act payment bond surety for a claim other than an action on the prime contractor’s Miller Act payment bond.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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The Notice to Owner Must be Serviced within 45 Days from Lienor’s Initial Furnishing

As a subcontractor or supplier, it is important to preserve your lien rights by serving a Notice to Owner within 45 days from initial furnishing.  If you are a supplier of specially fabricated materials, the Notice to Owner must be served within 45 days from the start of fabrication.

Recently, I represented an owner that received a lien. The Notice to Owner represented an initial furnishing date and a Notice to Owner service date to reflect the Notice to Owner was served within 45 days from initial furnishing.  The problem was that the lienor’s initial furnishing date was wrong.  It was wrong by a long shot.  Not even close!  Photographic evidence established that the lienor’s initial furnishing date was many months earlier.  This meant the lienor failed to serve its Notice to Owner within 45 days of its initial furnishing date and, thus, failed to properly preserve its lien rights.   If the lienor moves to foreclose on its lien, chances are the evidence will prove the lienor never properly preserved such rights and the  lien should be dismissed as a matter of law, giving the owner an argument that it should be entitled to attorney’s fees.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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File Your Miller Act Payment Bond Lawsuit Early…Not Late

If you are working on a federal government construction project as a subcontractor or supplier, you know (hopefully!) about the Miller Act.  You also know (hopefully!) that a prime contractor’s Miller Act payment bond is an avenue to pursue payment in the event you are not paid.

An action against a Miller Act payment bond must be initiated within one year from your final furnishing date.  Generally speaking, repairing one’s own work does NOT extend this period.  For this reason, when considering your final furnishing date, do NOT factor in the last date you were performing warranty or punchlist work.  Factor it on a date you were performing base contract work or approved change order work (i.e, work approved in a change order), if possible.

In a recent case, a subcontractor, after it completed its work, was asked to repair its work due to an issue caused by another subcontractor. Before the subcontractor proceeded with this work, it sent an e-mail to the prime contractor stating that this is additional work and it will need confirmation that it will receive a change order.  Although the prime contractor confirmed such points, no change order was ever issued.   The issue in the case was whether this so-called additional work constituted the subcontractor’s final furnishing date. If it did not, then the subcontractor filed its Miller Act lawsuit too late.  (For more information on this case, please read this article.)

The issue the case discussed, however, was a truly avoidable issue.  The subcontractor should have instituted its lawsuit much earlier meaning it should not have based its final furnishing date on the date it did the purported additional work by repairing its own work due to an issue caused by another subcontractor.  Had the lawsuit been filed earlier, this issue would be off the table and the subcontractor would not have given the Miller Act payment bond surety and prime contractor the defense that the subcontractor filed its lawsuit after the one-year statute of limitations expired.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

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Miller Act Payment Bond Fundamentals — Ebook

Ebooks are great resources to quickly and efficiently learn about a subject area.  They can provide the nuts and bolts about an issue to give you the high and material points about that issue.   If you are interested in the nuts and bolts of Miller Act payment bonds, check out the below ebook:

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Construction Liens Don’t Last Forever!

I had a contractor with a construction lien call me up the other day wanting to take action on its lien. However, I could not assist this contractor with its lien.  The lien expired by operation of law…for two different reasons…if you can believe that.

First, the lien was stale in that it was recorded more than one year ago.  Construction liens do not last forever.  They must be foreclosed on within one year from its recording date unless an owner does something to shorten this one year period.  After this one year period, you cannot foreclose on the lien.

Second, the owner recorded a Notice of Contest of Lien to force the contractor to foreclose on the lien within 60 days. An owner can record this to shorten the one year period discussed above. However, the owner recorded the Notice of Contest of Lien late in the game such that the expiration of the 60-day period closely coincided with the expiration of the one year period.  Thus, the owner really did not need to record the Notice of Contest of Lien as the lien was going to expire anyway.  If you are interested in the Notice of Contest of Lien, you want to record one sooner than later.

So the opportunity to foreclose on the lien which collateralized the non-payment against the property was lost. It should not have been lost.  And, unfortunately as the case may be, you snooze, you lose.  In this instance, the opportunity to collect was leveraging the lien which now expired.  Don’t let this happen to you.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Lienor in Direct Privity of Contract with Owner MUST Serve Contractor’s Final Payment Affidavit

I have had a few cases as of late representing an owner where the contractor in direct privity of contract with the owner failed to serve its contractor’s final payment affidavit on the owner prior to foreclosing on its construction lien.  The contractor’s final payment affidavit is not a meaningless form.  It is a statutory form required to be filled out by a lienor in direct privity of contract with an owner and served on the owner at least 5 day s prior to the lienor foreclosing its construction lien.  Stated differently, a lienor (e.g., contractor) hired directly by an owner must serve the contractor’s final payment affidavit as a condition precedent to foreclosing its construction lien.  Failure to do so means the lienor failed to satisfy a statutory condition precedent to foreclose its lien thereby warranting a dismissal of the construction lien foreclosure lawsuit.  A dismissal can (and should) likely mean that the lienor will be responsible for paying for the owner’s legal fees and that any re-filing of the lawsuit will be outside of the statute of limitations to foreclose a construction lien.  There is no reason for this statutory, procedural technicality to occur!

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Timely Recording Lien within 90 Days From Lienor’s Last Day / Final Furnishing Date

For construction liens to be valid, the lien must be recorded within 90 days from the lienor’s last day performing work–this is known as the lienor’s final furnishing date.   A lienor’s final furnishing date is largely a factual based determination.

There is a four part test a court will apply, particularly in close call situations where the date the lienor is relying on as its final furnishing date is iffy.

This test is: 1) whether the work was performed in good faith; 2) whether the work was performed within a reasonable time; 3) whether the work was performed in pursuance of the lienor’s contract; and 4) whether the work performed was necessary for a completed project.

Check here for more information on this test and the factual determination of a final furnishing date.

It is imperative that lienor’s remember this 90-day window to record a lien from its final furnishing date.  A lien recorded outside of this 90-day window will be no good; the lien will be deemed invalid.  Clearly, this should never occur.

From an owner’s standpoint, you always want to consider whether the lien was recorded timely and, if not, your arguments to support that the lien should be deemed untimely.  Although the final furnishing date is fact-based, this does not mean you don’t have an argument to declare the lien invalid if the facts warrant the argument.

When dealing with a lien, it is always smart practice to consult a lawyer that has experience dealing with the nuances of construction liens.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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