[CLC-Discussion] 713.04 Subdivision Improvements
Larry Leiby
Leiby at mkpalaw.com
Wed Mar 12 10:58:33 PDT 2014
First, 713.04(1) says that “The total amount of liens allowed under this section shall not exceed the amount of the direct contract under which the lienor furnishes labor, materials or services.” Thus as to subdivision improvements, before we even look at the proper payments defense (which effectively is a mechanism to add back into the lien exposure sums that are “improperly paid”), we have a limit of the contract price for subdivision improvement liens.
The proper payments defense contemplates a scheme:
1) A non-erroneous NOC, which does not apply to subdivision improvements. F.S. 713.04, says that there shall NOT be a NOC. (I am puzzled by the number of NOC’s that still get recorded for subdivision improvements.) So the NOC is not a factor for subdivision improvements.
2) Releases from senders of NTO to the extent of payments made to the contractor after a timely NTO has been received. Otherwise the payment is improper as to the sender of the NTO to the extent of such payment and can be brought back into the limit of the contract price.
3) For final payment, the owner must obtain (and the contractor must give) a FKA before final payment is made. The owner can rely on the FKA but for those who have served NTO.
With those conditions, the owner’s exposure for liens is limited to the direct contract price. You protect the owner with progress payment affidavits that expressly address laborers, releases from senders of NTO, and releases from those listed in an FKA.
There are some other sentences in 713.06(3) that bear mentioning.
With respect to progress payments in (c) it says: “The owner shall be under no obligation to any lienor, except laborers, from whom he or she has not received a NTO at the time of making the payment.”
With respect to the final payment in (d)4. It says that the owner can rely on the FKA as to any lienors who have not given notice (and thus cannot rely on the FKA as to lienors who have given notice.)
Thus, but for laborers (who should be handled by requiring an affidavit from the contractor that they have all been paid, which affidavit will be relied upon in making any payment) unless there are unpaid contract sums after proper payments I don’t see where a non-privity lienor who has not served NTO has a lien in excess of unpaid contract funds.
The potential surprise exposure would be laborers of subs and sub-subs who never must serve a NTO, but that exposure is rarely if ever significant because if laborers don’t get paid they don’t keep working for months.
Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL 33323
Phone: 954-895-9198 Assistant: 954-514-0984
Fax: 954-514-0985 e-mail: leiby at mkpalaw.com
Board Certified in Construction Law
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From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Troy Smith
Sent: Tuesday, March 11, 2014 6:26 PM
To: Weintraub, Lee; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] 713.04 Subdivision Improvements
Thanks Lee,
Agreed but I get the same list, maybe even more accurate, at the beginning with the contract clause. I have only used 713.065 when the project was in trouble, but it could be a monitoring aid as well. I understand the lien angle on 713.065 but I am not worried about a lien from the site work prime contractor. In this case it is the multiple (20+) unpaid lienors that did not give notice.
So it seems getting the sub list, either via contract or the 713.065, and checking down the payment to the subs is the safest way to monitor payments for subdivision improvements.
Troy Smith | Shareholder
Board Certified Construction Lawyer
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Rogers Towers, P.A. | 818 A1A N., Suite 208 | Ponte Vedra Beach, Florida 32082
Direct 904.346.5770 | Fax 904.473.1399 | TSmith at rtlaw.com<mailto:TSmith at rtlaw.com> | www.rtlaw.com<http://www.RTlaw.com>
From: Weintraub, Lee [mailto:lweintraub at bplegal.com]
Sent: Tuesday, March 11, 2014 6:17 PM
To: Troy Smith; clc-discussion at lists.flabarrpptl.org
Subject: RE: 713.04 Subdivision Improvements
The owner can request a list of subs and suppliers under 713.165
Lee A. Weintraub
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Chair, Public Private Partnerships Practice Group
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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 Troy Smith
Sent: Tuesday, March 11, 2014 6:11 PM
To: clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: [CLC-Discussion] 713.04 Subdivision Improvements
Couple questions on subdivision improvement and proper payments.
As we all know, non-privity subdivision lienors are not required to serve a NTO as a condition precedent to their right to record a valid lien. The 2nd and 4th DCA were split on whether the proper payments procedures of 713.06 applied to this work. 713.04 was subsequently amended and it is my understanding that this work is now subject to the proper payment provisions. A non-privity subdivision lienor may choose to serve a NTO and, upon such service, the Owner has an affirmative to duty (under 713.06(3)(c)) to cause said subcontractor giving notice to be paid. Those are the easy ones. However, the non-privity subdivision lienor is not required to serve the NTO. Presumably, if proper payments are otherwise made, and final payment is made in reliance upon a CFA that does not disclose said lienor, that non-privity subdivision lienor, that has not served a NTO, but which lienor is still within its 90 days to record a lien, is barred if the owner makes final payment in accordance with the CFA prior to the lienor recording its lien.
First, in this scenario, is this non-privity lienor’s lien barred by the owner’s proper payments? This is clearly true if we are talking NTO’s at the end of a job but a NTO is not required in this situation. Still if the Owner makes proper payments, it cannot be required to pay more than the contract balance and it can rely on the final CFA unless lienors giving notice are not listed on the affidavit.
Second, does anyone have any recommendations for complying with the proper payment procedures when constructing horizontals. This owner does not have a super on site to monitor and prepare a list of the active subs. I can only think of getting a list of the subs (at least the major ones) in advance pursuant to a contractual requirement and checking down the sub list with each payment app.
Thanks in advance. Tsmith at rtlaw.com<mailto:Tsmith at rtlaw.com>
Troy Smith | Shareholder
Board Certified Construction Lawyer
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Rogers Towers, P.A. | 818 A1A N., Suite 208 | Ponte Vedra Beach, Florida 32082
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