Be Careful: How to Sign Construction Liens to Avoid Personal Liability

Last Friday, Florida’s Second District Court of Appeal issued an opinion that again confirmed the importance of making sure construction liens are executed appropriately to avoid personal liability. While most contractors operate through companies—LLCs or corporations—that must also be correctly reflected in the construction lien in order to retain the protections of the LLC or corporation.

In Witters Contracting Company v. West, a construction company and homeowner entered into a contract for renovations to their home totaling approximately $245,000.00. When the project went sideways, the construction company ultimately filed two liens against the homeowners property.

The first lien was for $75,000.00 and was a pre-printed form filled out by the contractor. With respect to the company filing the lien, the construction company filled out the form with the following language:

“I, David John Witters pres Witters Contracting Company 8725 Placidard Suite 7 Placida FL 22946, being duly sworn state the following . . . .” The claim of lien stated that the unpaid balance was $75,000 for the work completed between August 1, 2015, and June 3, 2016. Under the signature line are printed the words “Name of Person Claiming Lien.” Above the signature line appears the handwritten signature of “David Witters pres.” In the portion entitled “Notary Certification for Claim of Lien,” the name of claimant is handwritten as “David Witters.” The Certificate of mailing states the following, the underlined portion of which is handwritten: “I, David John Witters pres Witters Contracting Co, certify that on this date, June 20, 2016, I have mailed a copy of this Claim of Lien . . . .” Under the signature line appears the words “Name of Person Mailing Claim of Lien.” Above the signature line appears, handwritten, “David John Witters pres Witters Contracting Co.”

A month later, the construction company filed an amended claim of lien in the amount of approximately $87,000.00. This amended lien included the following signature block:

Witters Contracting Co.

By: ______________________

David Witters, President

Lienor

Ultimately, the homeowners sued both the construction company, and its president, individually, claiming that the first claim of lien was executed and filed by the individual and the second lien was executed and filed by the company. Following a hearing on the homeowner’s motion for summary judgment, the trial court entered an order finding both liens fraudulent, and entering judgment against the construction company in the amount of $87,000.00 and against its president, individually, in the amount of $75,000.00.

The Second District Court of Appeal reversed the judgment against the president in his individual capacity, finding that an issue of fact remained as to whether the president had signed the first lien as an individual or on behalf of the company. Specifically, the court looked to the fact that the president had added “pres” after his name in various parts of the first lien as creating an issue that required resolution by the jury.

While the result of the case wiped away the $75,000.00 judgment against the president individually, it does not preclude a jury from finding later that the lien was recorded by him individually. Further, the individual had to invest a significant amount of time and money to get out from underneath the $75,000.00 judgment. Florida’s case law is clear that a signature block like the one used on the second lien is the clearest way to demonstrate who is recording a lien and who will be liable in the event of a fraudulent lien. You should make sure that any lien you file makes clear that the lienor is your company and not you individually.

Further, this case demonstrates the risk of using online lien forms. While Florida’s construction lien law sets forth the form for a construction lien, that form can and should be modified as needed to ensure that the right entity is signing and recording the lien. Construction liens are important and powerful documents that can have significant consequences for property owners when used correctly and for contracts when used improperly. If you have any questions about your construction lien, you should consult with an attorney.