[CLC-Discussion] Can a construction lender bond off a construction lien?

Tue Feb 5 10:55:29 PST 2013

The counter to Jeff's argument is that, if I am representing a lien claimant, I might challenge the lender's standing if either or both of the following are true:  (1) the transfer bond amount is insufficient to cover my client's claim amount and a realistic amount of attorney's fees (which would be the case if the lien is for, say, $20,000 or less); and (2) the notice of commencement got recorded BEFORE the mortgage and my lien therefore primes the mortgage.  In short, there are valid scenarios where my client's lien on the real estate provides greater leverage for settlement purposes than an action for a money judgment against a lien transfer bond surety.  And as to Jeff's argument there is no prejudice from transfer of the lien, I disagree to the extent that the lien transfer bond amount is too small or the financial wherewithal of the surety is in question.  Certain surplus lines sureties aren't exactly bastions of financial strength and security.  And let's not forget that you can transfer a lien with a mere cash deposit.  If said cash deposit only covers $2,500 worth of attorney's fees on my client's $10,000 lien, you better believe my client is prejudiced!

That said, I agree that a decent argument can be made that the lender's interest in protecting its security in the property is a sufficient "interest in the real property" to support filing a lien transfer bond.  It will be interesting to see when or if this issue ever gets litigated.

From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Jeff Price
Sent: Tuesday, February 05, 2013 1:21 PM
To: clc-discussion at lists.flabarrpptl.org
Subject: [CLC-Discussion] Can a construction lender bond off a construction lien?

I have had lenders bond off the lien in the past when we were representing the lien holder on commercial jobs.

In those instances I have never had an objection because I would rather have a fight over a "bucket of money" than over the possibility of having to go through a foreclosure fight.

>From a statutory standpoint, what "interest" the lender has is not well defined (allowing them to secure the transfer bond). But it would be rather difficult to argue that the lender had no recognizable interest. The question I have  anticipate from the Court has been, "Mr. Price, how has your lien holder-client been prejudiced?" Well, he hasn't.

I would think the only person who could object would be the Owner. But if the Owner doesn't object, then what standing do I have? I'm simply saying with my lien that my client did the work and didn't get paid. I have to prove that whether there is a transfer bond or not.

Jeffrey L. Price, Esq.
Florida Bar Board Certified - Construction Law

Niesen|Price|Worthy|Campo|Blakey, PA
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> [mailto:clc-discussion-bounces at lists.flabarrpptl.org]<mailto:[mailto:clc-discussion-bounces at lists.flabarrpptl.org]> On Behalf Of Gibbons, Michael
Sent: Tuesday, February 05, 2013 12:32 PM
To: 'Barry Kalmanson'; hroberts at carltonfields.com<mailto:hroberts at carltonfields.com>; clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?

  The term "interest" may be construed narrowly as referring to different forms of ownership interest (e.g., leasehold, fee simple, ground lease etc.).  It may, however, be interpreted more broadly to include persons interested in the real property by virtue of a legal tie to the property through a recorded mortgage lien or other record encumbrance.  I am unaware of any legislative history or case on the subject but it strikes me that neither the property owner nor the lienor may have an issue with substituted security of a bond.  I also doubt that the Clerk would hesitate to accept such a Lien Transfer Bond and issue and record a Certificate of Transfer officially transferring the Claim of Lien to the security of the Bond.

Michael R. Gibbons  (Bio<http://lowndes-law.com/our-people/michael-r-gibbons>)
Shareholder
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 N. Eola Drive
Orlando, FL 32801
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Fax: 407-843-4444
email: michael.gibbons at lowndes-law.com<mailto:michael.gibbons at lowndes-law.com>
website: http://www.lowndes-law.com<http://www.lowndes-law.com/>

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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Barry Kalmanson
Sent: Tuesday, February 05, 2013 12:02 PM
To: hroberts at carltonfields.com<mailto:hroberts at carltonfields.com>; clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?

You need to determine if the "lender" has an interest in the real property upon which the lien is imposed.
Barry Kalmanson
bkpa1 at aol.com<mailto:bkpa1 at aol.com>

Reese J. Henderson, Jr.
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From: Roberts, Hardy L. <hroberts at carltonfields.com<mailto:hroberts at carltonfields.com>>
To: 'Construction Law Discussion' <clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>>
Sent: Tue, Feb 5, 2013 11:56 am
Subject: [CLC-Discussion] Can a construction lender bond off a construction lien?
Anyone have any thoughts on this?

Hardy L. Roberts
Attorney at Law / Board Certified in Construction Law by the Florida Bar
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