FILLING OUT THE CONTRACTOR’S FINAL PAYMENT AFFIDAVIT

Posted on November 9, 2019November 9, 2019 by Edward Garber

When preparing a contractor’s final payment affidavit, I always suggest for a contractor (or anyone in privity of contract with the owner) to identify the undisputed amounts their accounting reflects is owed to ALL subcontractors, etc., regardless of whether that entity preserved their lien rights. If the contractor provided a payment bond, I footnote this simply to support that none of the lower-tiered subcontractors have lien rights or are the traditional “lienor.” (Thus, there is no prejudice to the owner if an entity is inadvertently omitted from the affidavit.)

There are times, however, where a contractor does not identify a subcontractor that did not serve a notice to owner and, therefore, has no valid lien rights. Or, a contractor omits a lienor that actually did serve a notice to owner and preserve its lien rights; this happens.

There was an older First District Court of Appeals case that harshly (and, quite, unfairly) held that the contractor must identify everyone in the final payment affidavit regardless of whether that entity timely served a notice to owner or their lien is invalid. This case, however, predated, a 1998 statutory change to Florida’s Lien Law.

Today, the statute (in Florida Statute s. 713.06) currently provides:

(d) When the final payment under a direct contract becomes due the contractor:

1. The contractor shall give to the owner a final payment affidavit stating, if that be the fact, that all lienors under his or her direct contract who have timely served a notice to owner on the owner and the contractor have been paid in full or, if the fact be otherwise, showing the name of each such lienor who has not been paid in full and the amount due or to become due each for labor, services, or materials furnished….

The contractor shall have no lien or right of action against the owner for labor, services, or materials furnished under the direct contract while in default for not giving the owner the affidavit; however, the negligent inclusion or omission of any information in the affidavit which has not prejudiced the owner does not constitute a default that operates to defeat an otherwise valid lien. The contractor shall execute the affidavit and deliver it to the owner at least 5 days before instituting an action as a prerequisite to the institution of any action to enforce his or her lien under this chapter, even if the final payment has not become due because the contract is terminated for a reason other than completion and regardless of whether the contractor has any lienors working under him or her or not.

Fla. Stat. s. 713.06(d)(1).

The Fourth District Court of Appeals in Fetta v. All-Rite Paving Contractors, Inc., 50 So.3d 1216 (Fla. 4^th DCA 2010), claimed that the purpose of the statute is for the contractor to identify all lienors who have timely served a notice to owner that has not been paid in full. (Hence, you do not need to identify those that did not timely serve a notice to owner even though, from a practical standpoint, identifying all makes sense as a just-in-case.). Further, even if there was an omission, that would not render a lien invalid unless the owner can prove prejudice and prejudice is not so easy to prove.

When in doubt, consult counsel when finalizing or filling out a contractor’s final payment affidavit. Rights can be preserved and items footnoted as appropriate for clarification purposes, such as the fact that the amount in the affidavit may not include amounts that are not available under the lien law (i.e., delay damages).

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.

ARE YOU A CONSTRUCTION LIENOR?

Posted on November 11, 2017November 11, 2017 by Edward Garber

When it comes to construction lien rights, not everyone that touches the project is a proper lienor. Forget about timely serving a Notice to Owner or recording a claim of lien, if you are not a proper lienor, it does not matter if you properly perfected your lien rights. If you are not a proper lienor, you have NO lien rights under the law!

Florida Statue s. 713.01(18) defines a lienor as follows:

(18) “Lienor” means a person who is:

(a) A contractor;

(b) A subcontractor;

(d) A laborer;

(e) A materialman who contracts with the owner, a contractor, a subcontractor, or a sub-subcontractor; or

(f) A professional lienor under s. 713.03;

and who has a lien or prospective lien upon real property under this part, and includes his or her successor in interest. No other person may have a lien under this part.

Let’s break this down.

A contractor is one other than a materialman (supplier) or laborer that enters into a contract with the owner to improve the owner’s property. A contractor can be a design-builder. Fla. Stat. s. 713.01(8).

A subcontractor is one other than a materialman (supplier) or laborer who is hired by the contractor. This definition would include a labor company that furnishes skilled or unskilled labor. Fla. Stat. s. 713.01(28).

A sub-subcontractor is one other than a materialman (supplier) or laborer who is hired by the subcontractor. Fla. Stat. s. 713.01(29). This definition would also include a labor company.

A laborer is a person (excluding a professional) that enters into a contract to personally perform improvements to the property. Fla. Stat. s. 713.01(16). This definition would not include a labor company. See V L Orlando Bldg. Corp. v. Skilled Services Corp., 769 So.2d 526 (Fla. 5th DCA 2000).

A materialman (supplier) furnishes materials to an owner, contractor, subcontractor, or sub-subcontractor but does not perform labor. Fla. Stat. s. 713.01(20). This includes a supplier of rental equipment. Fla. Stat. s. 713.01(13).

A professional lienor is an architect, landscape architect, engineer, interior designer, or surveyor and mapper who has a direct contract with the owner or performs professional services that improves the real property. Fla. Stat. s. 713.03.

You can also check out this chart for guidance. Make sure to consult with counsel if you have questions regarding your lien rights. There is no reason not to.

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.