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

Gibbons, Michael Michael.Gibbons at lowndes-law.com
Mon Mar 4 15:21:37 PST 2013


     A lender may (and not infrequently does) have an interest in the contract under which the lien is claimed.  It is common for a construction lender to bargain for (as a condition of making the loan) a conditional assignment of the borrower’s interest in the underlying prime construction contract.  Certainly, if that conditional assignment is triggered by a borrower default and the lender’s invocation of its rights under the conditional assignment, then that lender under those circumstances would have “the interest” in the contract under which the lien is claimed to support standing to post a 713.24 lien transfer bond (if it so desired).
      The more interesting question is whether the conditional assignment, by itself, creates enough of an “interest” to support the lender applying for a 713.24 lien transfer bond (admittedly hard to think of circumstances where this would occur in the real world).

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
Phone: 407-418-6378
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] On Behalf Of Larry Leiby
Sent: Monday, March 04, 2013 5:43 PM
To: David C. Agee; Dan Vega; fred.dudley at hklaw.com; blc at kirwinnorris.com; bkpa1 at aol.com; hroberts at carltonfields.com; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?[Scanned]

Agreed.  However if the lender signs as bond principal on a lien transfer bond purportedly under F.S. 713.24, the condition to payment under the bond (a form of contract) is proof of the statutory lien requirements, not priority.  The lender wins the priority battle against the property in a foreclosure, but may be ordered to pay on the lien transfer bond that it voluntarily gave ostensibly under 713.24.

If the lender wishes to clear the title and transfer the lien from the property to allow transfer of the property at an early stage the lender might seek judicial authority to transfer the lien to a bond on motion where the bond would be sought to be conditioned on proof of priority, not under 713.24, and if the judge so permits.  I would expect a lienor to defend such a motion as being without authority.  Depending on the situation the court may or may not agree to such a bond by a lender.  There is a non-discretionary obligation to transfer where the requirements of 713.24 are met (which a lender does not meet).


Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL  33323
Phone:  954-514-0984
Fax:      954-514-0985     e-mail:  leiby at mkpalaw.com<mailto:leiby at mkpalaw.com>

Board Certified in Construction Law
Fla. Supreme Court Certified Circuit Court Civil Mediator

Member, Leiby Alexander Brandt ADR Group, LLC
Member, JAMS Global Engineering and Construction Panel
Fellow, College of Commercial Arbitrators

[Description: JAMSadr.com.jpg]

From: David C. Agee [mailto:dagee at reidagee.com]
Sent: Monday, March 04, 2013 5:27 PM
To: Larry Leiby; Dan Vega; fred.dudley at hklaw.com<mailto:fred.dudley at hklaw.com>; blc at kirwinnorris.com<mailto:blc at kirwinnorris.com>; bkpa1 at aol.com<mailto:bkpa1 at aol.com>; 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?[Scanned]

When you say it doesn’t make practical sense, the lender’s priority can’t be affected by a lien that occurs later in the chain absent fraud or some other facts. The lender has a practical remedy, foreclose.

David C. Agee, Esquire

REID & AGEE, PLLC
RIGHT TITLE, LLC
3633 26th Street West
Bradenton, FL 34205
Tel 941.756.8791
Fax 941.755.7311


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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 Larry Leiby
Sent: Monday, March 04, 2013 3:53 PM
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Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?[Scanned]

Dan,

Did anyone ever say that it had to make practical sense?  ☺

It is written is what we can say about it.  It also doesn’t make practical sense for a lender to transfer a lien and eliminate its priority position.

Regards,

Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL  33323
Phone:  954-514-0984
Fax:      954-514-0985     e-mail:  leiby at mkpalaw.com<mailto:leiby at mkpalaw.com>

Board Certified in Construction Law
Fla. Supreme Court Certified Circuit Court Civil Mediator

Member, Leiby Alexander Brandt ADR Group, LLC
Member, JAMS Global Engineering and Construction Panel
Fellow, College of Commercial Arbitrators

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From: Dan Vega [mailto:DVega at taylorvega.com]
Sent: Monday, March 04, 2013 3:50 PM
To: Larry Leiby; 'fred.dudley at hklaw.com'; blc at kirwinnorris.com<mailto:blc at kirwinnorris.com>; bkpa1 at aol.com<mailto:bkpa1 at aol.com>; 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?

Larry, so a subcontractor can transfer its supplier’s lien to a bond but not a mortgage holder?

This result does not make practical sense.






Daniel R. Vega, Esq.
Board Certified in Construction Law
Taylor Vega, P.A.
2555 Ponce De Leon Blvd., Suite 220
Coral Gables, Florida 33134
Telephone: (305) 443-2043
Facsimile:  (305) 443-2048
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From: Larry Leiby [mailto:Leiby at mkpalaw.com]
Sent: Monday, March 04, 2013 3:46 PM
To: Dan Vega; 'fred.dudley at hklaw.com'; blc at kirwinnorris.com<mailto:blc at kirwinnorris.com>; bkpa1 at aol.com<mailto:bkpa1 at aol.com>; 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?

Dan,

The GC has an interest in the contract under which the lien is claimed, the other basis justifying transfer in 713.24.

Regards,

Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL  33323
Phone:  954-514-0984
Fax:      954-514-0985     e-mail:  leiby at mkpalaw.com<mailto:leiby at mkpalaw.com>

Board Certified in Construction Law
Fla. Supreme Court Certified Circuit Court Civil Mediator

Member, Leiby Alexander Brandt ADR Group, LLC
Member, JAMS Global Engineering and Construction Panel
Fellow, College of Commercial Arbitrators

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From: Dan Vega [mailto:DVega at taylorvega.com]
Sent: Monday, March 04, 2013 3:44 PM
To: 'fred.dudley at hklaw.com'; blc at kirwinnorris.com<mailto:blc at kirwinnorris.com>; bkpa1 at aol.com<mailto:bkpa1 at aol.com>; Larry Leiby; 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?

I just read below and for what it is worth,  if a GC can transfer a lien to a bond per 713.24, why would a lender not be able to do it?

GC’s transfer liens to bonds all of the time.  Practically speaking, every decent owner/gc contract requires the gc to do so.

It can hardly be argued that a GC has an “interest” in the property greater than a mortgage holder/lender.

Dan


Daniel R. Vega, Esq.
Board Certified in Construction Law
Taylor Vega, P.A.
2555 Ponce De Leon Blvd., Suite 220
Coral Gables, Florida 33134
Telephone: (305) 443-2043
Facsimile:  (305) 443-2048
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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 fred.dudley at hklaw.com<mailto:fred.dudley at hklaw.com>
Sent: Monday, March 04, 2013 3:15 PM
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Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?

This is the statute that makes Florida a "lien theory" state rather than a "title theory" state like California. The lien (mortgage or construction) is NOT an interest in real property.

Frederick Dudley | Holland & Knight
Board Certified Construction Lawyer
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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 Bryan L. Capps
Sent: Monday, March 04, 2013 12:53 PM
To: Barry Kalmanson; Leiby at mkpalaw.com<mailto:Leiby at mkpalaw.com>; 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?

Just to kick this dead horse one more time, note that Florida Statute Section 697.02<http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0697/Sections/0697.02.html> says, in its entirety, “Nature of a mortgage.—A mortgage shall be held to be a specific lien on the property therein described, and not a conveyance of the legal title or of the right of possession.”  So, whether a lender has an interest in real property sufficient to support a transfer-of-lien bond is apparently not a function/subject of case law alone.  Who knew.

Best regards.

Bryan Capps

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: Wednesday, February 06, 2013 1:48 PM
To: Leiby at mkpalaw.com<mailto:Leiby at mkpalaw.com>; 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 lenderbond off aconstruction lien?

Maybe some legislative clarification is in order.
Barry Kalmanson
bkpa1 at aol.com<mailto:bkpa1 at aol.com>

-----Original Message-----
From: Larry Leiby <Leiby at mkpalaw.com><mailto:Leiby at mkpalaw.com>>
To: 'Roberts, Hardy L.' <hroberts at carltonfields.com><mailto:hroberts at carltonfields.com>>; 'Construction Law Discussion' <clc-discussion at lists.flabarrpptl.org><mailto:clc-discussion at lists.flabarrpptl.org>>
Sent: Wed, Feb 6, 2013 11:27 am
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
I agree with those who noted that a lender does not have an interest in property, instead it has a mortgage lien, and thus is not covered under 713.24.  However that is the tip of the iceberg and begs the question.

The concern that I have experienced is where the lender seeks to transfer the lien to bond but the bond form is not conditioned only on proving the lien claim it is also conditioned on proving priority.  That is not what 713.24 is about, and the clerks aren’t real students of 713.24 as they have many duties.  If that happens the lienor should challenge any certificate of transfer.

So a lender is a little nuts wanting to transfer a lien under 713.24 without added language (which would not meet the requirements of 713.24), because then the lienor need only prove its lien claim and the condition of the bond is performed where the principal and surety on the bond are on the hook (assuming they didn’t sneak in any added language to the 713.24 bond form).  The lender loses its argument about the lien not having equity and being inferior to the mortgage by bonding it off and taking the property equity out of the equation.  The lienor should be ecstatic about not being worried about the lender’s priority any more, but must watch carefully the language in the bond.  If the lender is looking to clear title for some reason of its own, it should not be the principal on the bond – only someone with an interest.  If the lender gets cute and adds language to the bond, we have some new issues to address, which I believe are not yet resolved.

Thus if the lender uses a 713.24 bond to transfer it off, the question is:  Is the lien really transferred off, or is the lien still there along with the bond because the lender cannot meet the requirements of 713.24 by not having an interest in the property?


Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL  33323
Phone:  954-514-0984
Fax:      954-514-0985     e-mail:  leiby at mkpalaw.com<mailto:leiby at mkpalaw.com>

Board Certified in Construction Law
Fla. Supreme Court Certified Circuit Court Civil Mediator

Member, Leiby Alexander Brandt ADR Group, LLC
Member, JAMS Global Engineering and Construction Panel
Fellow, College of Commercial Arbitrators

[Description: JAMSadr.com.jpg]

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:clc-discussion-bounces at lists.flabarrpptl.org?>] On Behalf Of John Campo
Sent: Tuesday, February 05, 2013 2:41 PM
To: 'Matthew Belcastro'; 'Raymond L. Robinson'; 'Gibbons, Michael'; 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?

As a practical matter, I would welcome a Lien Transfer Bond knowing that a pile of money is readily available for the taking should my client prevail on its lien.

John D. Campo, Esq.
Florida Bar Board Certified - Construction Law
john at npw-law.com<mailto:john at npw-law.com>

Niesen|Price|Worthy|Campo|Blakey, PA
5216 SW 91st Drive  Gainesville, FL 32608
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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:clc-discussion-bounces at lists.flabarrpptl.org?>] On Behalf Of Matthew Belcastro
Sent: Tuesday, February 05, 2013 2:16 PM
To: Raymond L. Robinson; Gibbons, Michael; Roberts, Hardy L.; Construction Law Discussion
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?

I'm not sure I understand why the construction lender wants to bond off the lien?  Are they trying to convert to permanent financing and unable as a result of the construction lien?



Matthew Belcastro
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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 Raymond L. Robinson
Sent: Tuesday, February 05, 2013 2:02 PM
To: Gibbons, Michael; Roberts, Hardy L.; Construction Law Discussion
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
One could make the argument that Florida is considered a “lien” state and case law has held that a mortgage is not a transfer of “interest” in real property and therefore does not need two subscribing witnesses.  Good question though.  Let me know if you find the answer.


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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 Gibbons, Michael
Sent: Tuesday, February 05, 2013 12:19 PM
To: 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?


Yes.  The lender has “an interest” via its mortgage in the real property on which the lien is imposed.

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
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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 Roberts, Hardy L.
Sent: Tuesday, February 05, 2013 11:55 AM
To: 'Construction Law Discussion'
Subject: [CLC-Discussion] Can a construction lender bond off a construction lien?

Anyone have any thoughts on this?

[Carlton Fields]
Hardy L. Roberts
Attorney at Law / Board Certified in Construction Law by the Florida Bar
4221 W. Boy Scout Blvd., Ste. 1000
Tampa, Florida  33607-5780
Direct:  813.229.4105 | Fax:  813.229.4133

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