Owners of real property in Florida can exempt their property from all future liens at the outset of construction by requiring their general contractor to post a payment bond pursuant to Fla. Stat. § 713.23 or 713.245 before construction begins. In general a payment bond is a contract among the surety, the owner, and the contractor. Generally speaking, if a contractor fails to pay a subcontractor, materialman, or laborer, the surety must assume this obligation thereby protecting the owner’s property from a lien.
In order to properly exempt their property from the lien law, the owner must attach and record a copy of the bond with the Notice of Commencement prior to the beginning of construction. As a result of the bond, an unpaid lienor is protected by the bond rather than an interest in the owner’s property. See Resnick Developers South, Inc. v. Clerici, Inc., 340 So. 2d 1194 (Fla. 4th DCA 1976).
A bond furnished by the contractor must be in at least the amount of the original contract price and the bond must be conditioned on the contractor promptly making payments for labor, services, and material to all lienors under the contractor’s direct contract. Fla. Stat § 713.23(1)(a). Any provision in the bond to the contrary will be disregarded.
Where a payment bond contains a condition limiting the liability of a surety to lienors, that provision of the bond will be disregarded by Florida courts. For example, Florida courts have held that a provision of bond would be invalid and disregarded where it provided that the surety would not be liable to lienors unless the owner has made payments to the contractor. See Cohen v. Lunsford, 362 So. 2d 383 (Fla. 1st DCA 1978).
W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on construction litigation. You can reach W at (561) 804-4432 or email@example.com. Below are some recent posts W has written on Florida Construction Lien Law:
- Florida Construction Liens: Insurance Proceeds and Construction Liens
- Florida Construction Liens: Construction Liens on Condominium Properties
- Florida Construction Liens: Construction Liens on Leased Property
- Florida Construction Liens: Property Subject To a Construction Lien
- Florida Construction Liens: Liens for Architects, Engineers, Design Professionals, and Surveyors