Recently a Miami-Dade court entered judgment in favor of a property owner and dismissed a general contractor’s lien claim because the general contractor failed to include disclosures required under Florida state law and Miami-Dade county codes. The case is a reminder to periodically check your contracts to make sure they are compliant with the laws where you do business!
In Poinciana Development Group, LLC v. Marchetta a contractor entered into a contract with a property owner to construct certain driveway alterations, a ramp, and a fountain, for a property owner in Miami-Dade County. The general contractor submitted an invoice for a progress payment on the project, which the homeowner failed to pay. Ultimately the general contractor recorded a construction lien against the project and sued the property owner for breach of the contract and foreclosure of the lien.
The property owner sought judgment in its favor on the construction lien arguing that the construction lien was invalid because the general contractor failed to include certain disclosures required by state, county, and local law. Specifically, the property owner argued that the contract failed to include the disclosures required by section 713.015, Florida Statutes, section 10-33.1, Miami-Dade Code, and section 14-82, City of Miami Beach Code.
As an aside, those laws require the following disclosures:
Section 713.015, Florida Statutes, requires the following to be included in contracts greater than $2,500.00:
ACCORDING TO FLORIDA’S CONSTRUCTION LIEN LAW (SECTIONS 713.001-713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR PROVIDE MATERIALS AND SERVICES AND ARE NOT PAID IN FULL HAVE A RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE ALREADY PAID YOUR CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF A LIEN IS FILED YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY. TO PROTECT YOURSELF, YOU SHOULD STIPULATE IN THIS CONTRACT THAT BEFORE ANY PAYMENT IS MADE, YOUR CONTRACTOR IS REQUIRED TO PROVIDE YOU WITH A WRITTEN RELEASE OF LIEN FROM ANY PERSON OR COMPANY THAT HAS PROVIDED TO YOU A “NOTICE TO OWNER.” FLORIDA’S CONSTRUCTION LIEN LAW IS COMPLEX, AND IT IS RECOMMENDED THAT YOU CONSULT AN ATTORNEY.
The failure to include this disclosure is fatal to a lien against anyone who has been adversely affected by it.
Section 10-33.1, Miami-Dade Code requires contracts over $5,000 to include the following language:
(i) YOU ARE ADVISED THAT THE COUNTY CONSTRUCTION TRADES QUALIFYING BOARD AND THE BUILDING AND ZONING DEPARTMENT OF MIAMI-DADE COUNTY, AND THE STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION MAY HAVE INFORMATION ON FILE CONCERNING THE FINANCIAL RESPONSIBILITY AND ANY COMPLAINTS AND INVESTIGATIONS PERTAINING TO THE WORK OF THIS CONTRACTOR. THE PUBLIC RECORDS OF THE COUNTY ARE AVAILABLE FOR INSPECTION AND COPYING.
(ii) YOU ARE ALSO ADVISED THAT THIS CONTRACTOR HAS PUBLIC LIABILITY INSURANCE AND WORKERS COMPENSATION INSURANCE THROUGH [NAME OF INSURERS] UNDER POLICY NUMBERS [NUMBERS], WITH EXPIRATION DATES OF [DATES] AND LIMITS OF LIABILITY IN THE AMOUNTS OF [NUMBERS].
(iii) YOU ARE ADVISED THAT IN ORDER TO PROTECT YOURSELF, YOU MAY REQUEST THAT THIS CONTRACT ALLOW FOR PAYMENTS TO THE CONTRACTOR TO BE CONDITIONED UPON THE CONTRACTOR OBTAINING AND PASSING MANDATORY INSPECTIONS.
(iv) YOU ARE ADVISED THAT YOU MAY PAY THE COST OF PURCHASING A CONTRACTOR'S PAYMENT BOND OR OTHER SECURITY, TO COVER PAYMENTS TO SUBCONTRACTORS AND MATERIAL SUPPLIERS, IN THE EVENT THIS CONTRACTOR FAILS TO DO SO, A COPY OF THOSE DOCUMENTS WHICH PROTECT YOU WILL BE FURNISHED UPON REQUEST, IF YOU SO WISH TO PURCHASE SUCH PROTECTION.
(v) YOU ARE ADVISED THAT IN ORDER TO PROTECT YOURSELF, YOU MAY REQUEST THAT THIS CONTRACT CONTAIN A WORK COMPLETION DATE, IN THE ABSENCE OF A COMPLETION DATE, YOU MAY REQUEST THAT INTERIM MILESTONES OR TIME PERIODS BE ESTABLISHED FOR COMPLETION OF PORTIONS OF THE WORK.
(vi) WITH LIMITED EXCEPTIONS PROVIDED BY LAW, THE WORK YOU ARE CONTRACTING FOR MUST BE PERFORMED BY A STATE OF FLORIDA CERTIFIED CONTRACTOR OR A MIAMI COUNTY CERTIFIED CONTRACTOR WHO IS ALSO REGISTERED WITH THE STATE.
(vii) YOU ARE FURTHER ADVISED THAT IF, AFTER OBTAINING A PERMIT FOR THE WORK, YOUR CONTRACTOR TERMINATES THIS PROJECT WITHOUT JUST CAUSE OR FAILS TO PERFORM WORK WITHOUT JUST CAUSE FOR 30 CONSECUTIVE DAYS, THE PROJECT MAY BE CONSIDERED ABANDONED. ABANDONMENT CONSTITUTES A PENALTY FOR WHICH A CONTRACTOR MAY BE DISCIPLINED BY THE STATE OR BY THE COUNTY.
Section 14-82, City of Miami Beach Code does not require specific disclosures, but prohibits violations of Chapter 10 of the Miami-Dade Code, which would include failing to include the above-listed disclosures.
In response, the general contract argued that (1) the two code provisions cited to did not include language that eliminated its lien for non-compliance, and (2) the property owner had not established any adversity as a result of the failure to include the disclosure required by state statute.
Relying on decisions interpreting and applying section 713.015, Florida Statutes, the court concluded that the general contractor’s failure to include the county code disclosures was fatal to its lien claim and entered judgment in favor of the property owner on that count. In reaching this decision that court determined that the general contractor had not proven that the homeowner had not been adversely affected by the lack of disclosure. Notably, the property owner also did not provide any evidence to establish that it had been adversely affected by the lack of disclosure.
While I think the court got it wrong on this decision and improperly shifted the burden to the contractor and misapplied the county codes at issue, I think the critical takeaway from this case is to make sure your contract contains all the required disclosures. It is simple to have a one or two page form that lists the statutory disclosures required for construction contracts in Florida and problems like the one encountered by the general contractor in this case are completely avoided. Take this opportunity to review you contract and the local codes and make sure you’re fully compliant. Whatever the cost now, it will be well worth it in the long run.