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THE RISKY BUSINESS OF DETERMINING HOW LONG A CONTRACTOR HAS TO RECORD AN EFFECTIVE CLAIM OF LIEN

Lien rights under §713.08(5) expire 90 days from the final furnishing of labor, services or materials on a job.  Figuring out that “final furnishing” date can be tricky under Florida law.  Don’t cut it close.  To be safe, start your 90-day calculation when the majority of your work has been completed on a project under the terms of the original contract – even before a “punch list” has been prepared.  It’s better to lien a little early than too late.  And when the customer complains, blame your lawyer.

Florida Statute § 713.08(5) (2014) generally provides that a “claim of lien may be recorded at any time during the progress of work or thereafter but not later than 90 days after the final furnishing of the labor or services or materials by the lienor.”[1]  Armed with the relatively clear language of § 713.08(5), one would think that the determination of the timeliness of Claims of Lien would be a simple application of the 90-day “final furnishing” rule.  Unfortunately, that is not the case, because the Florida appellate courts have managed to take fairly straightforward statutory language and muddy the waters on what constitutes a “final furnishing” of labor, services or materials.

For instance, a “final furnishing” does not necessarily coincide with a contractor’s substantial completion of the work.[2]    Instead, a “final furnishing” generally occurs on “the last date that the lienor furnishes labor, services or materials.”[3]  Furthermore, the “final furnishing” date cannot simply be determined by the certificate of occupancy date or the date of issuance of a certificate of final completion.  One other common misnomer is that the return to the job site to address customer issues extends the “final furnishing” date.  That is not true.[4]  Moreover, preliminary design work, submittals, “punchlist” work or the like are also not considered in determining when a “final furnishing” has occurred.[5]

Scared yet?  You should be.  What’s even more frightening is that when there is doubt as to when the “final furnishing” occurred, the courts turn to the “finder of fact” (which invariably means after protracted and expensive litigation).  Have no fear, though.  The lawyers, judges and juries will likely be required to use what is called the “good faith” test to determine the “final furnishing” date.[6]

Under the “good faith” test, a “final furnishing” is determined by the finder of fact’s consideration of the following elements:

(1) whether the work was done in good faith;

(2) whether the work was done within a reasonable time;

(3) whether the work was done in pursuance of the terms of the contract;  and

(4) whether the work was necessary to a “finished job”.

As straightforward as those elements might appear, the “shades of grey” in any well-lawyered factual narrative can make it expensive and difficult to apply even so reasonable a standard as the “good faith” test.

In light of all of the above, rather than “cutting it close” on the “final furnishing” date and thereby leaving the determination of that date in the hands of a bunch of lawyers and some “finder of fact”, the Best Practice is for contractors, laborers, suppliers or material-men to file claims of lien well within 90 days from the date that the contractor, laborer, supplier or material man provided labor, services or material which constituted the majority of what was to be provided to the client under the terms and conditions of the original contract.  Do not rely on punch list work or minor “clean up” type visits to the site to re-start the clock.

It goes without saying that the recordation of liens can cause strained relationships with clients and others.  Unfortunately, neither the legislature nor the courts give much “wriggle room” regarding the 90-day timeframe.  It would be nice if the legislature would allow potential lienors and their clients to enter into agreements to extend the 90-day deadline to allow for longer payment plans or other settlement solutions.  That, however, is not the case, which leaves a very clear tension between good lien recordation policy and good client relationships.

As lawyers, we tend to err on the side of not waiving valuable rights.  We are strange like that.  Therefore, we highly recommend that liens be timely recorded and that some relational methods be used to address client concerns/”feelings” about the lien.  In the end, you can always blame your lawyer for making you file the lien; that is, of course, if your lawyer recommends such a course of action.

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[1] Please be advised that this blog post does not address the situation where the original contract is terminated.

[2] See, e.g. York Corp. v. Brock, 405 F.2d 759 (5th Cir. 1969).

[3] F.S. § 713.01(12) (2014).

[4] Id.

[5] F.S. § 713.01(13).  But see, Michnal v. Palm Coast Dev., 842 So.2d 927 (Fla. 4th D.C.A. 2003) (holding that under the specific circumstances presented in that case, a facsimile by which a contractor attempted to resolve an outstanding issue related to his work called for under the original contract constituted a “final furnishing”).

[6] Aronson v. Keating, 386 So.2d 822 (Fla. 4th D.C.A. 1980).

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