OWNERS SHOULD SERVE REQUEST FOR SWORN STATEMENT OF ACCOUNT ON LIENOR

Posted on August 6, 2017August 6, 2017 by Edward Garber

When an owner receives a construction lien, an owner should serve the lienor with a Request for Sworn Statement of Account. The Request for Sworn Statement is authorized by Florida Statute s. 713.16(2) and should be in the following form:

REQUEST FOR SWORN STATEMENT OF ACCOUNT

WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT, SIGNED UNDER OATH, WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR LIEN.

To: (Lienor’s name and address)

The undersigned hereby demands a written statement under oath of his or her account showing the nature of the labor or services performed and to be performed, if any, the materials furnished, the materials to be furnished, if known, the amount paid on account to date, the amount due, and the amount to become due, if known, as of the date of the statement for the improvement of real property identified as (property description) .

(name of contractor)

(name of the lienor’s customer, as set forth in the lienor’s Notice to Owner, if such notice has been served)

(signature and address of owner)
(date of request for sworn statement of account)

From both an owner and lienor’s perspective, the bolded, capitalized language is key. It states that if the lienor fails to respond under oath within 30 days, it will LOSE its lien. That is a very punitive measure for a lienor’s failure to respond, meaning a lienor should absolutely respond, no questions asked. Plus, a lienor’s response to a Request for Sworn Statement of Account is not a burdensome ordeal. It is pretty simple, as exemplified in the response form below.

RESPONSE TO REQUEST FOR SWORN STATEMENT OF ACCOUNT

To: [Owner]

[Lienor] performed _____________ at the Owner’s project.
[Lienor] has been paid $________ to date.
The principal amount remaining due and owing [Lienor] is $___________.
The amount to become due to [Lienor] is $______________.

____________________________

[Lienor], Authorized Representative

STATE OF FLORIDA

COUNTY OF ______

Sworn to and subscribed before me this ____ day of _______, by ________ of [Lienor], who is personally known to me and who did take an oath.

Again, a lienor’s failure to respond under oath will result in a LOSS of its lien and court’s have not been sympathetic to a lienor’s failure to properly or timely respond. See, e.g., Palmer Elec. Services, Inc. v. Filler, 482 So.2d 509 (Fla. 2d DCA 1986) (lienor lost lien by failing to respond to owner’s Request for Sworn Statement, even though request failed to recite statute or the bolded and capitalized warning); accord Stresscon v. Madiedo, 582 So.2d 158 (Fla. 1991) (affirming that lienor’s failure to respond under oath to Request for Sworn Statement of Account is fatal to its lien and cannot be cured after-the-fact); Gonas v. Home Elec. of Dade County, Inc., 537 So.2d 490 (Fla. 3d DCA 1988) (reversing summary judgment in favor of lienor because lienor failed to respond to Request for Sworn Statement of Account even though Request did not specify statute or include the bolded and capitalized warning) aff’d by Home Elec. of Dade County, Inv. V. Gonas, 547 So.2d 209 (Fla. 1989).

There are only two instances when a lienor does not have to respond to an Owner’s Request for Sworn Statement of Account: (1) the lienor has already filed its lien foreclosure lawsuit – the Request for Sworn Statement was served on the liener after the lienor filed suit or (2) the Owner has already served a Request for Sworn Statement of Account and the lienor’s response will be the same as a prior response. Even with these two instances, a lienor should always make it a habit to respond because, as shown above, the response is uncomplicated. And, it is always advisable for a lienor to work with counsel to ensure its response is perfected and served since the failure to do so will result in the punitive loss of its lien.

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.

LEARNING THE TRICKS OF THE TRADE / NUANCES UNDER FLORIDA’S LIEN LAW

Posted on October 23, 2014October 23, 2014 by Edward Garber

It is advantageous for all construction participants / lienors in Florida (e.g., owner, contractor, subcontractor, supplier, design professional) to learn the nuances under Florida’s Lien Law (and, in actuality, in any state the lienor performs work in). This way, the lienor can learn the tricks of the trade in order to put them in the best position possible to protect their interests under the lien law.

For instance, under Florida Statute s. 713.165 (set forth at the bottom of this posting), there is a trick of the trade that allows an owner to formally request from its contractor a list of the subcontractors and suppliers the contractor hired. “If the contractor fails to furnish the list, the contractor thereby forfeits the contractor’s right to assert a lien against the owner’s property to the extent the owner is prejudiced by the contractor’s failure to furnish the list or by any omissions from the list.” Fla. Stat. s. 713.165(2). Sure, it may be difficult for an owner to establish how it was “prejudiced” by the contractor’s failure to timely provide the list of subcontractors and suppliers (it would be an argument established on a case-by-case basis), it is still a defense to the contractor’s lien action that an owner can legitimately raise if the list is not timely furnished. And, from the contractor’s perspective, there is no reason to even deal with the risk that the trier of fact found it prejudicial that the list was not timely provided.

Further, under Florida Statute s. 713.16(1) (material portion set forth at the bottom of this posting), an owner can request from a lienor a copy that lienor’s contract. Likewise, the lienor can request a copy of the owner’s contract with the general contractor as well as a copy of the contract between the lienor’s customer and the customer’s customer. See 8 Fla.Prac., Constr. Law Manual s. 8:32 (2013-2014 ed.) (explaining application of s. 713.16). “For example, a sub-subcontractor can lawfully request a copy of the direct contract between the owner and the [general] contractor, as well as a copy of the contract between the subcontractor (sub-subcontractor’s customer) and the contractor (sub-subcontractor’s customer’s customer).” See id. “If the owner or lienor refuses or neglects to furnish such copy of the contract…any person who suffers any detriment thereby has a cause of action against the person refusing or neglecting to furnish the same…for his or her damages sustained thereby.” Fla. Stat. s.713.16(1).

As exemplified, there are tricks of the trade under Florida’s Lien Law that an unwary construction participant / lienor could fall trap to. This would apply to any state the lienor is performing work in. Don’t fall trap to the nuances of the lien law or tricks of the trade! Spend the time to understand the nuances and utilize the services of a knowledgeable construction attorney that will help you navigate around the lien law to best protect your interests!

Florida Statute s. 713.165:

(1) An owner of real property may request from the contractor a list of all subcontractors and suppliers who have any contract with the contractor to furnish any material or to perform any service for the contractor with respect to the owner’s real property or improvement to the real property. The request must be in writing and delivered by registered or certified mail to the address of the contractor shown in the contract or the recorded notice of commencement.

(2) The contractor must within 10 days after receipt of the property owner’s written request, furnish to the property owner or the property owner’s agent a list of the subcontractors and suppliers who have a contract with the contractor as of the date the request is received by the contractor. If the contractor fails to furnish the list, the contractor thereby forfeits the contractor’s right to assert a lien against the owner’s property to the extent the owner is prejudiced by the contractor’s failure to furnish the list or by any omissions from the list.

(3) A list furnished under this section shall not constitute a notice to owner.

Florida Statute s. 713.16(1):

(1) A copy of the contract of a lienor or owner…must be furnished by any party thereto, upon written demand of an owner or a lienor contracting with or employed by the other party to such contract. If the owner or lienor refuses or neglects to furnish such copy of the contract…any person who suffers any detriment thereby has a cause of action against the person refusing or neglecting to furnish the same…for his or her damages sustained thereby. …The person demanding such documents must pay for the reproduction thereof; and, if such person fails or refuses to do so, he or she is entitled only to inspect such documents at reasonable times and places.

SERVING REQUESTS FOR SWORN STATEMENTS OF ACCOUNT UNDER FLORIDA’S LIEN LAW

Posted on August 14, 2014August 14, 2014 by Edward Garber

Florida Statute s. 713.16 provides a useful vehicle under Florida’s Lien Law for parties on private projects to serve a Request for a Sworn Statement of Account on another party to potentially deprive: (a) a lienor (contractor, subcontractor, supplier, design professional) of lien / bond rights or (b) an owner of the right to recover attorney’s fees in an action to enforce a lien. An unsuspecting party that receives a Request for a Sworn Statement of Account could find itself in an undesirable position by failing to respond within 30 days after the Request.

A. An Owner Serving a Request for Sworn Statement of Account

Section 713.16(2) authorizes an owner to serve a Request for Sworn Statement of Account:

“The owner may serve in writing a demand of any lienor for a written statement under oath of his or her account showing the nature of the labor or services performed and to be performed, if any, the materials furnished, the materials to be furnished, if known, the amount paid on account to date, the amount due, and the amount to become due, if known, as of the date of the statement by the lienor. Any such demand to a lienor must be served on the lienor at the address and to the attention of any person who is designated to receive the demand in the notice to owner served by such lienor and must include a description of the property and the names of the owner, the contractor, and the lienor’s customer, as set forth in the lienor’s notice to owner….The failure or refusal to furnish the statement under oath within 30 days after the demand, or the furnishing of a false or fraudulent statement, deprives the person so failing or refusing to furnish such statement of his or her lien….The failure to furnish a response to a demand for statement of account does not affect the validity of any claim of lien being enforced through a foreclosure case filed before the date the demand for statement is received by the lienor.”

This is a useful tool for an owner that wants to obtain accounting information of a lienor that served it with a notice to owner or recorded a lien on the owner’s property. The statutory form for this Request is set forth below. If the lienor neglects to respond within 30 days after the Request, the owner has the argument that the lienor lost its lien rights by failing to respond. The Request needs to be served via certified mail, return receipt requested, or by a common carrier delivery service such as FedEx where the receipt of the Request is tracked.

REQUEST FOR SWORN STATEMENT OF ACCOUNT

WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT, SIGNED UNDER OATH, WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR LIEN.

To: (Lienor’s name and address)

(name of contractor)

(name of the lienor’s customer, as set forth in the lienor’s Notice to Owner, if such notice has been served)

(signature and address of owner)

(date of request for sworn statement of account)

B. A Contractor Furnishing a Payment Bond Serving a Request for Sworn Statement of Account

Section 713.16(4) authorizes a contractor that furnished a payment bond on a private project to serve a Request for Sworn Statement of Account on a lienor (sub-subcontractor or supplier that served a notice to owner / notice to contractor):

“When a contractor has furnished a payment bond pursuant to s. 713.23, he or she may, when an owner makes any payment to the contractor or directly to a lienor, serve a written demand on any other lienor for a written statement under oath of his or her account showing the nature of the labor or services performed and to be performed, if any, the materials furnished, the materials to be furnished, if known, the amount paid on account to date, the amount due, and the amount to become due, if known, as of the date of the statement by the lienor.”

Florida Statute s. 255.05(8) (governing Florida public projects) similarly authorizes a contractor that furnished a payment bond on a Florida public project to serve a Request for Sworn Statement of Account on a claimant not in privity of contract with the contractor when the contractor receives payment from the public body.

The requirements for a contractor serving the Request are ultimately the same as the owner, except the contractor can only serve the Request when it furnishes a payment bond (since the owner’s property is exempt from liens) and the owner makes a payment to the contractor or a lienor (bond claimant). The failure to respond within 30 days after the Request should deprive the bond claimant of its rights under the payment bond.

C. A Lienor that Recorded a Lien Serving a Request for Sworn Statement of Account

Section 713.16(5) authorizes a lienor that recorded a lien to serve a Request for Sworn Statement of Account on the owner:

“Any lienor who is perfecting a claim of lien may serve with the claim of lien or thereafter a written demand on the owner for a written statement under oath showing:

1. The amount of the direct contract under which the lien was recorded;

2. The dates and amounts paid or to be paid by or on behalf of the owner for all improvements described in the direct contract;

3. The reasonable estimated costs of completing the direct contract under which the lien was claimed pursuant to the scope of the direct contract; and

4. If known, the actual cost of completion.”

The form of this request is different than the request served by the owner and needs to include the below warning on the top along with a request for the 4 categories (referenced above) taken from the statute. An owner that does not provide the statement within 30 days after the Request is not deemed the prevailing party for purposes of attorney’s fees.

WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR RIGHT TO RECOVER ATTORNEY FEES IN ANY ACTION TO ENFORCE THE CLAIM OF LIEN OF THE PERSON REQUESTING THIS STATEMENT.

Serving a Request for Sworn Statement of Account is a useful vehicle in an impending construction dispute. As shown above, this vehicle can be served by an owner, a contractor, or a lienor depending on the circumstances. Do NOT neglect the utility of serving a Request; and, do NOT ignore a Request if in receipt of one!

OWNERS DON’T FORGET ABOUT SERVING A REQUEST FOR SWORN STATEMENT OF ACCOUNT

Posted on July 17, 2011July 17, 2011 by Edward Garber

Owners undertaking a construction project are always concerned about construction liens from subcontractors, sub-subcontractors, and suppliers that preserved their lien rights by serving a notice to owner in accordance with Florida’s Lien Law (Florida Statutes Chapter 713) (“Lienors”). One way an owner alleviates this concern is by requiring the contractor to obtain a payment bond so that its property is exempt from construction liens from Lienors. See Fla. Stat. §713.23. However, payment bonds do not protect the owner’s property from the general contractor’s lien.

Unfortunately, payment bonds are not always feasible or economical. While the contractor procures the payment bond, it is the owner that pays the premium for the bond. Sometimes an owner does not want to or is not in a position to pay this premium, which could be substantial depending on the cost of the project. In these circumstances, the owner’s property is subject to construction liens from Lienors. Anyone involved in construction knows that it is very difficult to construct a project without there being some form of a payment dispute involving Lienors.

When an owner receives a lien, or if it presumes a lien could be forthcoming from a Lienor, the owner should serve a request for a sworn statement of account BEFORE the lienor forecloses on its lien. Florida Statute §713.16 provides in material part:

“(2) The owner may serve in writing a demand of any lienor for a written statement under oath of his or her account showing the nature of the labor or services performed and to be performed, if any, the materials furnished, the materials to be furnished, if known, the amount paid on account to date, the amount due, and the amount to become due, if known, as of the date of the statement by the lienor…The failure or refusal to furnish the statement under oath within 30 days after the demand, or the furnishing of a false or fraudulent statement, deprives the person so failing or refusing to furnish such statement of his or her lien….

(3) A request for sworn statement of account must be in substantially the following form:

REQUEST FOR SWORN STATEMENT OF ACCOUNT

WARNING: YOUR FAILURE TO FURNISH THE REQUESTED STATEMENT, SIGNED UNDER OATH, WITHIN 30 DAYS OR THE FURNISHING OF A FALSE STATEMENT WILL RESULT IN THE LOSS OF YOUR LIEN.

To: (Lienor’s name and address)

The undersigned hereby demands a written statement under oath of his or her account showing the nature of the labor or services performed and to be performed, if any, the materials furnished, the materials to be furnished, if known, the amount paid on account to date, the amount due, and the amount to become due, if known, as of the date of the statement for the improvement of real property identified as (property description) .”

Besides getting verification as to how much the Lienor swears they are owed as of the date of the sworn statement of account, importantly, a Lienor that does not timely provide this sworn statement of account within thirty days could be deprived of its lien. In other words, this tool allows an owner to catch an unsuspecting Lienor (or even the contractor if served on the contractor) off guard that neglects to treat this request for a sworn statement of account seriously. The loss of a construction lien to a Lienor is a huge loss!

The owner is not limited to serving only one request for a sworn statement of account. The law simply provides that if the owner serves more than one request on the same Lienor “and none of the information regarding the account has changed since the lienor’s last response to a demand, the failure or refusal to furnish such statement does not deprive the lienor of his or her lien.” Fla. Stat. 713.23. For this reason, there is nothing wrong with an owner serving a request for a sworn statement to those Lienors that served a notice to owner at some point or points during the course of the construction project, and in most cases, this is very good practice. While the owner could technically serve one upon its receipt of each of the contractor’s applications for payment, this could be an administrative burden and not always practical. (There are other methods an owner can utilize to ensure it is protected from liens from Lienors by requiring the contractor as a condition precedent to payment to provide releases of lien through the date of the application for payment from those entities that served a notice to owner.) With that said, an owner should certaintly take advantage of this tool by serving a request for sworn statement of account upon immediately receiving a lien and before the Lienor forecloses on the lien. Ideally, before the owner tenders final payment, it should serve the sworn statement of account to Lienors to best protect its interests.