Sometimes it is good to review the basics. For instance, with Florida’s Construction Lien Act, it is easy to remember that a lienor may obtain a lien for any unpaid “contract price” related to the permanent improvement of privately owned real estate. But what does the law consider to comprise that category of permanent improvements? The list includes most services used to improve a property and most identifiable materials incorporated into a project whether the work was performed pursuant to a written contract or an oral agreement. (See §§ 713.04, 713.05, 713.06 and 713.08 Fla.Stat.)
The term “improvement” includes construction, placement, repair or alteration over, beneath, upon or connected with the real property. But it also includes activities that are destructive such as any demolition or removal of existing structures and may even include restitution of property after a flood or fire.
The Act excludes certain work; however, just because of the status of the owner or the lack of identifying materials with a location. Thus, government owned property is exempt from liens and so are liens for materials sold to a contractor in bulk without specification for a particular job site. Extra work which is not acknowledged by written change order and made a part of the contract has been held to not be lienable; however, updated statutory language now provides that the “contract price” includes “extras” or amounts attributable to changes in the scope of work authorized by the Owner. (§713.01(5) Fla.Stat.)
The modifier for improvement, “permanent,” also plays a role. Thus, services provided which do not result in a “permanent” benefit to real property, such as lawn care, are not lienable. Similarly, the installation of personal property, such as lockers or refrigerators, is not lienable. The work may also be exempt from liens due to its value or who performed the work. When the total value of the direct contract between the Owner and the Contractor is less than $2,500, the work performed by subcontractors, or suppliers to subcontractors, is not lienable. Also, any work performed by a sub-sub-subcontractor or material suppliers to a sub-sub-subcontractor is not lienable.
The good news is most other services and materials provided to a construction project are lienable if the statutory procedures are followed. Interest and finance charges may also be added to a lien claim.
As with almost any issue concerning the Florida Construction Lien Act, whether you are a contractor, an owner, an architect, or an engineer, we suggest you review your contract provisions that address payment and any pending claims on existing projects with your attorney.