[CLC-Discussion] Lender asserting rights under 713.21 and 713.31

Tue Jul 18 10:43:25 PDT 2023

I agree that the action under 713.21 is not the least expensive path.  I was saying the notice of contest of lien is the least expensive path at least for the first 60 days to see if lienor files suit.  If no suit is filed, the lender and the title insurer that issued the loan policy should be satisfied that title is clear and no further action is necessary to resolve the lien.  Lender can order a title update to reflect that in its file upon the expiration of the 60 days.  If I was repping the lender, I would want the owner to sign the notice of contest of lien in any event to avoid any challenge to the assignment or the validity of the notice.  Lenders are not typically looking to jump in and spend money so they may have been burned in another matter.  I would reach out and see if owner can start a discussion to lay out this plan and see if lender will agree knowing that they reserve their rights to take action if necessary.  It will always be less expensive for the borrower if they are able to finance the challenge directly through their own counsel instead of not having direct contact with lender’s counsel and being stuck with the fees and costs being added to the loan balance later. There is always the transfer to bond option to satisfy the lender and clear the cloud on title, but I would still try the notice of contest first.

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Sherry A. Lambson-Eisele
Partner- Business Litigation Practice Group Leader
Boyd & Jenerette, P.A.
2290 Lucien Way, Suite 260
Maitland, FL 32751
_________________________________________

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From: clc-discussion-bounces at lists.flabarrpptl.org <clc-discussion-bounces at lists.flabarrpptl.org> On Behalf Of RPPTL CLC-Discussion
Sent: Tuesday, July 18, 2023 12:21 PM
To: 'clc-discussion at lists.flabarrpptl.org' <clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Lender asserting rights under 713.21 and 713.31

I agree generally, but I don’t think an action under 713.21 is the least expensive path – probably the most, which is why I was wondering about the recording sequence. And I don’t know that the lender can assert the Owner’s rights under 713.21 absent some assignment from the Borrower – which may very well be in the loan documents and is suggested below, but just an assignment of the right to defend title may be insufficient. I think it would probably have to be explicit and specific. The lender has little collateral risk if the order is right (unless they’re very concerned about the borrower), but is at risk if the NOC was first. And if the order is wrong (NOC first), given the lender’s recording duty under 713.13(7), the cost of fixing it should be on the lender and not the borrower.

Bruce Partington | Shareholder
Board Certified Specialist in Construction Law
bpartington at clarkpartington.com<mailto:bpartington at clarkpartington.com> | (850) 432-1399

CLARK PARTINGTON
Office: (850) 434-9200 | Fax: (850) 432-7340
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
Sent: Tuesday, July 18, 2023 10:24 AM
To: 'clc-discussion at lists.flabarrpptl.org' <clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>>
Subject: Re: [CLC-Discussion] Lender asserting rights under 713.21 and 713.31

Notwithstanding the date of the NOC, the Lender is entitled and should be taking steps to protect the collateral pledged to secure the debt if necessary and to cure any clouds on title to its collateral.  The problem is that they will add all their fees and costs to the borrower’s balance.  I would encourage the Lender to first file a notice of contest of lien to keep the costs low because if the lienor does not file suit within 60 days, then the cloud on title is cured without the need to file suit. This is the least expensive approach.  The owner should separately send the demand for sworn statement to Lienor in the meantime.  I do not think the lender can send the demand for sworn statement but there may be a case that says Lender can do so when the CLA or other loan documents assign rights to the lender to challenge any liens.

If the NOC was recorded before the mortgage, I would argue for owner that the fees and costs are mostly the lender’s problem to protect their priority which is not the borrower’s problem.  There may be a title claim for lender if the NOC was really recorded earlier and fees should be borne by the title insurer if that is the case after Lender makes a title claim.  But it is more likely that Lender is simply taking action to protect their collateral so I would anticipate that fees and costs will be added to the borrower’s balance.  So, it is still in borrower’s best interest for Lender to take least expensive approach to eliminate the lien.

[cid:image005.jpg at 01D9B97B.9373B510]

Sherry A. Lambson-Eisele
Partner- Business Litigation Practice Group Leader
Boyd & Jenerette, P.A.
2290 Lucien Way, Suite 260
Maitland, FL 32751
_________________________________________

Office:  (407) 309-4760 x621
Direct:   (407) 309-4758
Cell:      (407) 405-8801
https://link.edgepilot.com/s/66b1d1b6/ng0DIJUrpkKO5DO8ceU7Lw?u=http://www.boydjen.com/
Download vCard<https://link.edgepilot.com/s/b306433c/6LLdAOXadEq84sSGG3fnCQ?u=http://www.boydjen.com/wp-content/uploads/2019/05/Sherry-A-Eisele.vcf>

From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
Sent: Monday, July 17, 2023 6:09 PM
To: 'clc-discussion at lists.flabarrpptl.org' <clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>>
Subject: Re: [CLC-Discussion] Lender asserting rights under 713.21 and 713.31

Was the notice of commencement recorded before the mortgage, perhaps? That would get the lender really interested.

Bruce Partington | Shareholder
Board Certified Specialist in Construction Law
bpartington at clarkpartington.com<mailto:bpartington at clarkpartington.com> | (850) 432-1399

CLARK PARTINGTON
Office: (850) 434-9200 | Fax: (850) 432-7340
125 East Intendencia Street, 4th Floor
Pensacola, Florida 32502
clarkpartington.com<https://link.edgepilot.com/s/a2b769b4/aGv3ZCTdG0uvSPKMsyhMrw?u=https://clarkpartington.com/>

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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of RPPTL CLC-Discussion
Sent: Monday, July 17, 2023 4:56 PM
To: clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: [CLC-Discussion] Lender asserting rights under 713.21 and 713.31

Hi everyone.  Hope all are well.

I have an issue that has come up that I have not encountered before that involves a construction mortgage lender asserting the rights of the owner under 713.21 and 713.31.

Lender and Owner / Borrower are not adverse (obviously, always the potential for conflict between a Lender and Borrower).

Lender was granted an assignment of Owner’s right to defend title to the real property to protect the lien granted under the Mortgage.

Contractor has filed a lien that is invalid on its face.  Contractor blew 90 days by a mile.

Lender wants to have the lien discharged under a 713.21 action and also include an action under 713.31.  I have handled these claims many times but the Plaintiff was always the Owner.

I have never seen a scenario where the Lender wanted to contest the lien on its own accord, which it has the right to do under the language in the mortgage.

Has anyone ever dealt with this.  Seems straight forward but again, first time I have done it from the context of a lender asserting claim.

Any insight would be greatly appreciated.

Thanks all.

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Michael J. Barker
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Partner
Quintairos, Prieto, Wood & Boyer, P.A.
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