[RPPTL LandTen] FW: 713.10 Bill

Mon Mar 14 11:18:44 PDT 2011

In furtherance of our discussion law week, please find the Construction Law Committee's response to a newly proposed option to "fix" 713.10 as was previously circulated to the Committee.

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Neil B. Shoter
Partner / LEED Accredited Professional
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Shutts & Bowen LLP
1100 CityPlace Tower, 525 Okeechobee Boulevard | West Palm Beach, FL 33401
Direct: (561) 650-8535 | Fax: (561) 822-5525
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________________________________
From: Reese J. Henderson, Jr. [mailto:Reese.Henderson at atritt.com]
Sent: Monday, March 14, 2011 12:48 PM
To: Arthur J. Menor; deborahlawson at aol.com
Cc: Martha J. Edenfield; Peter M. Dunbar; Michael J. Gelfand; Neil B. Shoter; Lloyd Granet; Frank, Scott A.; Margaret A. Rolando; Meyer, George J.; Wolf, Brian
Subject: RE: 713.10 Bill

Deborah,

On behalf of the Construction Law Committee (CLC) of the RPPTL Section (as the legislative chair of the CLC), I appreciate your  effort to come up with a more simplified approach to the issues addressed in HB 941, which is the RPPTL Section's initiative.  In general, I think there is merit to the approach of providing a mechanism to attach the lien prohibition language to the Notice of Commencement (NOC) in lieu of recording a separate lien prohibition notice.  Lienors (at least those well versed in lien law) already know to look for an NOC and therefore putting the information regarding the lien prohibition in (or attached to) the NOC would provide the information in a readily accessible format for most lienors.  That said, there are problems with the proposal you presented, as follows:

1.       Landlords, for competitive reasons, oppose any requirement that the entire lease, as opposed to the lien prohibition language, be recorded.  As a Section, we have adopted a proposal that balances that concern of landlords against the lienors' need for early warning of a possible lien prohibition.  We do not believe it is necessary to require the entire lease to be recorded to protect the lienors' interest.  Your proposal refers to a "short form" of the lease in one place but then refers to the "attached lease" later on.  It's therefore unclear whether your proposal intends to require the entire lease to be recorded or whether the recording of the lien prohibiting language alone would suffice.

2.       Your proposal does not require the lessor to sign or record the NOC.  Under current law, the NOC may be signed and recorded by the lessee as the "owner" as defined in 713.01 as the person with a legal or equitable interest in the property that is contracting for the improvements.  See Sec. 713.01(23).  If the lessee signs and records the NOC, but fails to attach the required documentation, it appears under your proposal that the landlord's ownership interest would not be effectively exempted from liens.  Art's proposal attempts to address this risk to landlords by providing for an exemption for landlords whenever the landlord does not execute the NOC.  That would leave lienors still vulnerable because they would be required to research the ownership of the property to ascertain if the party executing the NOC is the "fee" owner and would not provide lienors with the lien prohibiting language of the lease, if such exists.  One suggestion to address this is to leave in place a blanket notice procedure as a fail-safe for landlords to employ to protect themselves (and lienors) from the negligence of their tenants.  This would require, of course, that lienors search for such blanket notices.  If you have another suggestion for dealing with this "negligent tenant" issue, please let us know.

3.       The "gives any consideration to the lessee for any part of the cost of the improvements" is a departure from existing law which requires the improvements to be the "pith of the lease" in order for the landlord's interest to be subject to liens.  The legal and practical effect of your proposal would be to nullify any lien prohibition language in most leases because, as a practical matter, almost all commercial leases (especially in the current market environment) that involve space requiring tenant improvements include concessions of some kind to the tenant in consideration for the improvements.  As a Section, we will have to oppose any such departure from existing law.

I hope you find these comments helpful and constructive.  Thanks again for your input and suggestions.

Regards,
Reese

Reese J. Henderson, Jr.

Board Certified Construction Attorney

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707 Peninsular Place
Jacksonville, Florida 32204

Phone (904) 354-5200
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From: Arthur J. Menor [mailto:AMenor at shutts.com]
Sent: Thursday, March 10, 2011 3:18 PM
To: 'deborahlawson at aol.com'
Cc: 'Martha J. Edenfield'; 'Peter M. Dunbar'; Michael J. Gelfand; Neil B. Shoter; 'Lloyd Granet'; Frank, Scott A.; Margaret A. Rolando; Meyer, George J.; Reese J. Henderson, Jr.
Subject: 713.10 Bill

Deborah, per our telephone conversation yesterday, attached is my mark up of your proposed bill.  These comments are mine alone and are subject to further input from other members of the RPPTL Section.

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Arthur J. Menor
Partner
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Shutts & Bowen LLP
1100 CityPlace Tower, 525 Okeechobee Boulevard | West Palm Beach, FL 33401
Direct: (561) 650-8510 | Fax: (561) 822-5510
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