A lienor needs to record its construction lien within 90 days of its final furnishing date. This final furnishing date excludes punchlist, warranty, or the lienor’s own corrective work. A lien recorded outside of ths 90-day window will be deemed invalid.
The opinion in In re: Jennerwein, 309 B.R. 385 (M.D. Fla. 2004) provides a good discussion of this 90-day window. This matter dealt with a debtor / owner’s bankruptcy where the owner was contesting the validity of a construction lien by its pool contractor. The owner contended that the lienor’s lien was recorded outside of this 90-day window thus rendering the lien invalid. The bankruptcy court was determining the validity of the lien.
In this matter, the owner hired a swimming pool contractor to construct a pool. On October 25, 2002, the pool contractor installed pavers around the pool. After this was performed, the pool contractor realized the owner was unable to obtain the financing to pay for the pool. As a result, the pool contractor ceased doing any more improvements. But, neither the pool contractor nor the owner terminated the contract. Then, on November 27, 2002, the pool contractor sent a supervisor to the property to inspect the pool (work-in-place), the pool equipment, the installed pavers, made a list of the unfinished work, and remove any debris. On January 27, 2003, the pool contractor recorded its lien.
The issue is that if the last day the pool contractor did work was on October 25, 2002 which is when it installed the pavers (the final furnishing date), then the lien it recorded on January 27, 2003 was not timely. The lien was recorded more than 90 days from October 25, 2002. However, if the last day the pool contractor did work was on November 27, 2002 when it sent a supervisor to inspect the work and remove debris, then the lien was timely as it was recorded within the 90-day window.
“In Florida, the test to determine whether labor, services, or materials were furnished is whether the work was: (i) performed in good faith; (ii) within a reasonable time; (iii) in pursuance of the terms of the contract; and, (iv) whether the work was necessary to a “finished job.”… The application of this fairly straight- forward four step test is fact driven, and the facts of each construction project vary widely.
In re: Jennerwein, 309 B.R. at 388.
The Bankruptcy Court applied this four step test to determine whether the pool contractor’s inspection / visit on November 27, 2002 constituted its final furnishing date. Based on the facts, the Court held that November 27, 2002 did constitute a final furnishing date meaning the lien was valid. Although the pool contractor’s visit on this day was limited, the contract was still in effect (i.e., it was not terminated). The pool contractor was operating in good faith and the supervisor was conducting his normal job duties by checking on the status of the work. This visit was also deemed to occur within a reasonable time after the pavers were installed. Although the project remained idle after the pavers were installed, this was because the owner was trying to find financing to pay for the work. Further, the supervisor’s inspection was performed in pursuance of its work and the contract. Without a list as to the work that remained to be completed, the contractor would not have a schedule of work and materials needed to finish its job.
This factual-based finding is favorable to a lienor. Between the October 25, 2002 date the pavers were installed and the November 27, 2002 date the supervisor visited the property, there was no work. The pool contractor stopped work because it was not getting paid and it obviously did not want to perform more work knowing that work was not going to get paid for. However, neither party formally terminated the contract. The supervisor’s visit was nothing more than confirming the work it performed versus the work it did not perform and remove any debris, etc., that remained on the job. In other words, the pool contractor was leaving based on the non-payment. However, the Court deemed the visit to be in good faith and pursuant to the contract allowing this date to be deemed a final furnishing date. That is a favorable finding when, in reality, the last date the lienor physically improved the property was a month earlier when the pavers were installed.
The final furnishing date, as you can tell, will be a fact-based determination. And, the four step test will be applied to determine the merits of the final furnishing date. However, I always try to operate conservatively; it is always safer to record the lien sooner than later to take away any close-call argument that the lien should be invalid because it was recorded outside of the 90-day window.
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.