What to do when you receive a Notice to Owner

One of most common questions I receive from owners who are in the middle of a construction project is what to do when you receive a notice to owner.  The first thing I always say is don’t panic the service of a notice to owner is a routine procedure and it doesn’t necessarily mean there are problems with your contractor.  Under Florida law, any party who does not have a direct contract with the owner is required to serve a notice to owner in order to preserve their lien rights.

The notice to owner is submitted by any subcontractor, sub-subcontractor, supplier, or material men notifying the owner that they are providing labor, services or materials on the construction project.  The notice to owner is sent by certified mail to the owner but it is not recorded and does not create any type of lien on the property.  The notice contains the following statutory warning:

IMPORTANT INFORMATION FOR YOUR PROTECTION

Under Florida’s laws, those who work on your property or provide materials and are not paid have a right to enforce their claim for payments against your property.  This claim is known as a construction lien.  If your contractor fails to pay sub-contractors or material suppliers or neglects to make other legally required payments, the people who are owned money may look to your property for payment for payment.  EVEN IF YOU HAVE PAID YOUR CONTRACTOR IN FULL.

PROTECT YOURSELF

RECOGNIZE that this Notice to Owner may result in a lien against your property unless all those supplying a NOTICE to Owner have been paid.  LEARN more about construction lien law, Chapter 713, Part 1 Florida Statutes, and the meaning of this notice by contacting an attorney or the Florida Department of Business and Professional Regulation.

This statutory warning is usually what causes the owner to become alarmed.  However, this warning is actually designed to protect the owner by providing information about potential lienors.  The first thing you should do if you receive a notice to owner is to contact your contractor and confirm that the subcontractor that sent the notice is actually working on the project and confirm the status of any payments owed to the subcontractor.  Next, you should request that the contractor provide a written list of any other subcontractors, sub-subcontractors, suppliers, or materialmen that are working on the project.  Finally, and most important, under no circumstances should you make any further payments to the contractor until you have received a release from all subcontractor that sent a notice to owner.  If you do not obtain this release you face the possibility of a subcontractor placing a lien on your property because they were not paid by your contractor.  The subcontractor’s lien is valid even if you have paid your contractor in full.  Therefore, the only way to properly protect yourself from subcontractor liens is to obtain proper releases for every payment you make on the project.

 

 

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