Whether you’re a developer taking on a multi-million dollar condominium project or a homeowner finally adding that extra bedroom on your house, you should be aware of the laws impacting your property interests. The importance of hiring an experienced contractor and having regular communication cannot be understated. At PJ Callaghan, we receive questions and calls about Notice to Owner (NTO) letters on a regular basis.
This month we took a few minutes to sit down with Ryan Griffin, a partner with Johnson, Pope, Bokor, Ruppel & Burns, LLP. Johnson Pope is a premier regional law firm in Tampa Bay. Ryan breaks down the legal jargon around Notice to Owner (“NTO”) and what to do if you find yourself with a NTO letter. Haven’t signed a contract yet? Stay tuned, next month we’ll highlight best practices to protect both parties when structuring contracts…
“Under Florida law, those who perform work on your property or provide materials and are not paid-in-full, have the right to enforce their claim for payment against your property in the form of a construction lien. While you may talk to your general contractor (GC) daily, you may not know what subcontractors or material suppliers (collectively: “Subcontractors”) are being hired and paid by the GC to complete every aspect of your project.
“In an ideal world you pay your GC and they turn around and pay their Subcontractors promptly. Unfortunately, that does not always happen. Even if you pay your GC in full, if the GC fails to pay its Subcontractors, under Florida law they can look to your property for payment via a construction lien. While the thought of a lien on your property can be daunting, there are some simple things to remember and precautions to take to ensure the construction project does not become a nightmare.”
Step One: Identify yourself and others working on your project
“Florida law provides a number of mechanisms to assist an owner in identifying the GCs, and Subcontractors that will be working on your project. One of these mechanism is filing a Notice of Commencement at the outset of your project. This also notifies the GC and Subcontractor of who you are and how they can contact you if there is an issue (i.e. non-payment by the GC). You should also be aware that you have the right to request in writing from the GC a list of all Subcontractors who have a contract with the GC. This is a great way to keep track of and verify whether all subcontractors have been paid when it’s time to pay your GC.”
Step Two: Obtain releases before paying your GC
“To best protect yourself, get the GC to have the Subcontractors issue you a Release of Lien before making any final payments for work performed. A Release of Lien is a written statement that removes your property from the threat of lien. If your contract with the GC calls for partial payments before the work is completed, get a Partial Release of Lien covering all Subcontractors’ work and materials used to that point. Upon completion of the project, and before you make the last payment to your GC, obtain an affidavit from your GC that specifies all unpaid parties who performed labor, services or provided services or materials to your property. Make sure that your GC provides you with final releases from these parties before you make the final payment.”
Step Three: Save all documentation
“In order for a Subcontractor to attempt to obtain a lien, it must go through many steps (i.e. send a proper Notice to Owner, perform work on your property, file a Claim of Lien, etc.). Each of these steps has a proper procedure and technical requirements. If the Subcontractor has not taken the appropriate steps, they may not have a valid Claim of Lien. The notices, receipts, releases, copies of payments, etc. that you have saved will be critical to your defense against a Claim of Lien.”
Step Four: Contact a lawyer/Contesting A Lien
“In the event that you need to contest a lien or defend a lien foreclosure, due to the complexity and time sensitivity involved, I would advise you to immediately contact a lawyer that specializes in this area of the law.”
About Ryan Griffin:
Ryan has a B.S.B.A. from the University of Florida and a J.D. and M.B.A. from Stetson. He is certified as a Florida Supreme Court Civil Court Mediator to practice in the Eleventh Circuit Court of Appeals and the Southern, Middle & Northern Districts of Florida. Ryan is a state and federal trial lawyer and certified court mediator. Ryan’s practice areas include: construction litigation, real estate law, commercial litigation and other business disputes.
Based in St. Petersburg, Ryan’s civic involvements include: Past President of the ARC of Tampa Bay (formerly UPARC), Board of Governors of the St. Petersburg Chamber of Commerce, Lawyers for Literacy and Partners in Self-Sufficiency (which assists low-income families in achieving economic self-sufficiency).
About Johnson Pope:
Founded in 1973, Johnson Pope is a premier Tampa Bay regional law firm with offices in St. Petersburg, Clearwater and Tampa. The full-service firm employs 50+ attorneys and a total staff of over 200. Johnson Pope is AV-Rated by Martindale-Hubbell, and is consistently recognized by the Best Lawyers in America, as well as Florida Trend’s Legal Elite, among other honors.