The old adage “time is money” is truer perhaps in the construction industry than anywhere else. Delays can cause significant economic damages for everyone involved on a construction project. But are those delay damages lienable? It depends.
Such damages may be lienable if the contract provides for the recovery of delay damages and if those contract provisions for recovery are followed. Otherwise, including delay damages in a lien may render it fraudulent under § 713.31, Florida Statutes. If a construction lien is found to be fraudulent, it operates as a complete defense to any action to enforce the lien and also exposes the lienor to a claim for damages under the statute.
For instance, in In re Hayes, 305 B.R. 361, 366 (M.D. Fla. 2003), the contractor entered into a stipulated sum contract with the owners to build a restaurant. The contract provided that any changes to the contract price or time were to be done by written change orders signed by both parties or by way of a formal claim. The estimated completion time for the project was extended during the course of the project and the contractor submitted a change order based on some of the delays which included a delay cost. The owner refused to sign the change order.
Then, the contractor submitted a substitute change order which listed the additional days to be added to the completion time but omitted the charges for those days. Although the contractor verbally warned the owner that the contractor would assess the charges at the end of the contract, it never made a formal claim. In other words, the contractor did not properly employ either method provided in its contract for the recovery of delay charges.
At the end of the project, the contractor filed a lien against the owner’s property which included an amount for delays. The court found the contractor’s lien to be fraudulent and noted that, while the contractor was entitled to be paid for its work, such payment was “subject to its own contractual obligations and limitations.” The court determined that the contractor had failed to comply with the contractual provisions for the recovery of delay damages, and therefore, the contractor’s lien was fraudulent and unenforceable.
So before you include amounts for delay damages in your lien, take a look at your contract. You should also consult with an attorney experienced in construction matters to help you determine what portions of your claim are lienable as well as to navigate Florida’s lien laws.