The trial court order entered late last year discharged a $253,584.00 lien because it failed to meet several requirements of Florida’s Construction Lien law, including being prepared by either the lienor or its attorney. The case is a cautionary tale of the risks of using third-party services to prepare construction liens.

In Company Partners LLC dba Lamm & Company Partners v. Newline WP Services, a contractor recorded a $253,584.00 construction lien against the project over unpaid bills. The owner of the property subsequently transferred the lien to a bond in the amount of $349,311.96. The owner then sued to discharge the lien under 713.21, Florida Statutes.

After the contractor filed an answer to the discharge complaint, the owner filed a motion to discharge the lien. Following a hearing an order was entered discharging the lien, and making the following findings:

The lien was “riddled with irregularities and fail[ed] to meet the basic requirements of 713.08, Fla. Stat.”
The lien stated that it was prepared by New Line (misspelling the lienor’s name), but was to be returned to a processing center in Oregon that appeared to belong to LevelSet.
The lien was executed by a person on New Orleans and states on its face that the person is an agent of New Line, only for the purposes of signing and presenting this claim of lien.
The person signing the lien does not swear the information is accurate, nor is it based on verified information, the personal knowledge of the signer, or information that the signer knows to be true and correct. Rather, the signer disclaims specific knowledge about the facts in the lien.

The court also found that the action of signing the lien by the agent, constitued the unlicensed practice of law.

While the court found that the above was a sufficient reason to discharge the lien, the court also found that the contractor’s answer to the complaint was not an action to enforce the lien, and therefore discharge was also appropriate for failure to comply with 713.21, Florida Statutes.

There are several key takeaways from this ruling. Florida’s construction lien laws require strict compliance, including where they require liens to be prepared by certain people. Further, law suits involved liens also have specific requirements, and contractors should be familiar with, and use attorneys’ who are familiar with, those requirements to ensure that technical issues are addressed fully.

Finally, and perhaps less obviously, is the dramatic financial impact of this ruling. Assuming this order is not reversed on appeal, the contractor has lost a quarter million dollar lien. This also makes the property owner the prevailing party for the purposes of that claim, entitling it to an award of attorneys’ fees and costs. Thus, even if the contractor has a breach of contract claim or unjust enrichment claim it could prevail on, it is starting that fight in a hole and may never reach the point of being made whole.

Construction liens are serious business, so take them seriously, use them appropriately, and consult with counsel early and often.

You can click here to view a copy of the order referenced above.