The Practical Impact of Changes in Floridad Lien Laws Since October 1, 2023 Impact on Claims Against Lawyers and Architects and Engineers Liens.

         Florida’s construction market remains hot, but the surge in activity has brought with it an increase in disputes and litigation. One particularly active area involves mechanics liens and professional liability claims arising from noncompliance with the revised statutory framework under Chapter 713, Fla. Stat. While most professional liability policies do not cover mechanics’ lien claims because they are statutory in nature, there are important practical overlaps that could give rise to a covered claim or defense obligation. The key is that the malpractice claim does not arise from the lien itself, but from how the lien was handled, advised on, or filed, resulting in damages to a third party.

Changes to Florida Lien Laws Effective October 1, 2023

         Effective October 1, 2023, Florida enacted sweeping changes to its lien laws. These changes expand lien rights, impose stricter compliance requirements, and create new avenues for defending against lien claims. Importantly, Florida courts enforce lien rights through strict statutory compliance, and excusable neglect or equitable arguments will not save a noncompliant lien. The major updates to Florida’s lien laws are as follows:

1. The definition of “Contractor” is broadened to include architects, landscape architects, and engineers. This definition also includes surveyors.  

2. The threshold for notice of commencement of filings was raised from $2,500 to $5,000 for building permit projects, (excluding repairs for AC systems of less than $15,000). 

3. Notice of nonpayment rules have been expanded, such that lien claimants must now notify both the contractor and its surety when filing nonpayment claim under payment bonds. 

4. Tighter lien satisfaction/release rules requiring releases to include lienor’s  notarized signature and recording details, or otherwise risk releases being unenforceable.

5. Bond amounts increased when a lien is transferred to bond security to includes three (3) years of interest plus the higher of $5,000 or 25% of the lien.

6. Prevailing party attorneys’ fees now explicitly allowed in lien enforcement cases  and in arbitrations related to payment of bonds. 

       There has also been a concerted effort to protect owners from unjustified liens, as seen in the clarification of the requirements for enforcement of liens. In our experience litigation of liens often focuses on strict compliance with deadlines and service requirements, which now include:

1.  Strict filing deadlines have been clarified to reflect that if a filing deadline falls on weekends, holidays or during clerk’s office closures, the deadline extends to the next business day. 

2. Multiple service methods are now permitted allowing hand-delivery, mail via certified methods, or posted on site notifications. 

3. The deadline for a contractor to file a lien has been reduced from 12 months to 60 days, otherwise the lien is extinguished.

4. Owners may now post a bond to clear title and shift disputes to the courts. 

Architects and Engineers: 

        Architects and Engineers seeking to assert a lien against a client’s project to pursue collection of outstanding fees are now covered by Florida’s new lien laws. The statute is clear that such rights only arise from the furnishing of “proper services,” defined as professional services directly related to the physical improvement of the property. Work such as pre-design feasibility studies, conceptual sketches, or preliminary evaluations does not qualify and cannot support a valid lien claim. Moreover, if the professional’s services never result in permitted construction, for example, when a developer abandons a project before breaking ground, lien rights may be severely limited or altogether nonexistent.

       Equally important is the requirement that an architect or engineer maintain a written contract with the property owner or contractor. Oral agreements, even if relied upon by both parties, do not create enforceable lien rights under Florida Law. Strict compliance with deadlines is also essential. A claim of lien must be recorded within 90 days of when services were last furnished. However, as with contractor liens, that time frame can be cut dramatically: once an owner files a Notice of Contest of Lien, the lienholder has only 60 days to file suit or risk having the lien discharged.

       Regarding attorney malpractice claims, the areas we see claims arise related to failure to meet statutory deadlines, improper notices, misadvising clients about lien procedures, documentation and enforceability as well as failure to defend against invalid liens resulting in damages to the owner. 

Lien Claim Scenarios from Actual Cases: 

        Our firm has seen an increase in all professional liability claims arising from non-compliance with the new requirements governing lien claims.  This includes claims against design professionals arising from fraudulent/erroneous liens for nonpayment of services as well as malpractice lawsuits against lawyers for failure to present defenses to lien validity issues before judgment, and not after a motion to vacate. Some other professional liability issues about which to be aware include:

1. Dismissing liens which appear to be fraudulent and engage in procedural due to avoid reopening a case to enforce prevailing party fees.

2. Parties threatening to file a lien but denied because liens have not been filed within the 60-day deadline.  

3. Work by unlicensed contractors, which is on the rise in Florida. Unlicensed contractors simply cannot assert a lien on a residence, yet we are seeing an increase in these actions which can give rise to felony criminal charges. 

4. Professional services by interior designers acting as an owner’s representative and overseeing renovations and a subsequent assertion that the interior designer did not perform necessary contractor duties to have lien rights. 

5. Final payment being withheld by owners over disputes concerning workmanship by contractors. 

6. Homeowners’ express confusion about encountering liens after paying general contractors due to subcontractors not being paid, which still encumber the property – i.e., “I never knew that subcontractor even worked on my house.”

7. Dismissing liens that appear to be fraudulent and engaging in procedural due care to avoid reopening a case to enforce prevailing party fees. 

8. Parties threatening to file a lien are precluded because the lien was not filed within the 60-day deadline.  

       Given these developments, the practical impacts of the October 2023 lien law changes are significant. Owners must now recognize that lien exposure extends beyond builders and contractors to include design professionals as well. Architects and engineers, in particular, must take greater care to structure their contracts in writing and to carefully document the dates on which services are performed in order to preserve their lien rights. At the same time, the revised statute imposes heightened responsibility on all parties to strictly comply with the clarified notice and deadline requirements, as courts are unlikely to excuse even minor deviations.

       As always, if you would like further information on the above topic, or a presentation on this and other topics, Shendell & Pollock would be pleased to do so for your group. For more about the firm, please visit www.shendellpollock.com.

       Shendell & Pollock is a full-service litigation and business law firm providing a comprehensive range of services to a wide variety of clients, including public traded companies, privately owned businesses, banks and insurance companies, financial institutions, private lenders & more.