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According to the AIA, the 2017 document set simplifies the payment provisions found in the older documents.  In order to simplify the payment provisions, the AIA merely reorganized the items to be listed in a payment application such that those that are to be included in the payment applications are listed first, followed by a list of those items that are to be deducted. The AIA also added an express retainage provision that provides an area to exclude certain common items from retainage, such as general conditions or insurance.

The revised AIA A101 language requires the Owner to pay the contract amount “allocable to the work.” The references to completed percentages of the work and a schedule of values are de-emphasized in contrast to the 2007 documents.

The A102 continues to use percentage of the work and schedule of values for billing purposes. Contractors are instructed to deduct from payment applications any amount that the Contractor does not intend to pay to a subcontractor.

W Mason is an partner with the law firm Fox Rothschild LLP. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and business litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

The new E204 Sustainable Projects Exhibit addresses the risks and responsibilities unique to projects involving sustainable design and construction. The AIA has taken many of the provisions
found in various AIA contract documents related to sustainable projects and has created a single exhibit. The procedures and terminology related to sustainable projects is identical the former provisions, but now those provisions are organized in a single exhibit. The E204 has been developed for use on projects in which the Sustainable Objective includes obtaining a Sustainability Certification, such as LEED® (Leadership in Energy and Environmental Design), or those in which the Sustainable Objective is based on incorporation of performance-based sustainable design or construction elements.

Contractors should make sure to review and understand the E204 as the Contractor is responsible for performing those Sustainable Measures assigned to the Contractor by the Sustainability Plan. While E204 does not require the Contractor to guarantee achievement of the Sustainable Objective, the Contractor will be responsible for failure to perform in accordance with the Contract Documents, including the Sustainability Plan.

W Mason is an partner with the law firm Fox Rothschild LLP. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and business litigation. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

The 2017 revisions to the A201 improves the Contractor’s ability to request and obtain financial information from the owner throughout the project. On most projects, Owner’s typically create a single purpose legal entity, usually an LLC, that owns the real property where construction takes place. The legal entity typically enters into the construction contract with the Contractor. The A201 recognizes that the entity entering in to the construction Contract on behalf of the Owner most likely has little or no assets. As such, it provides the Contractor with the ability to request reasonable evidence of the Owner’s ability to pay.

The 2017 revisions of Section 2.2 continues to allow the Contractor to request reasonable evidence (1) prior to commencement, (2) after failure to make a timely payment, (3) after a material change in the work that materially affected the contract sum, or (4) after identification of a reasonable concern over the Owner’s ability to pay. While the 2007 A201 did not impose an express timeline on the Owner or a consequence for the Owner’s failure to provide the reasonable evidence, the 2017 revision requires the Owner to provide the reasonable evidence within 14 days after the Contractor’s request. If the Owner fails to provide reasonable evidence within 14 days, the Contractor may stop work. If the request is made due to a change materially affecting the Contract sum, the Contractor may only stop the work related to the change. Significantly, the 2017 A201 expressly provides that the contract time and sum shall be increased by the amount of the Contractor’s reasonable costs and delay, plus interest. Given that Section 2.2 of the 2017 A201 has more “teeth” in favor of the Contractor, practitioners representing owners may want to consider revisions to Section 2.2 accordingly.

W Mason is an partner with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and commercial litigation throughout Florida. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

Because of advancements in the use of digital technology in the administration of construction contracts, the 2017 AIA documents now default to the AIA’s Digital Data Use and Transmission protocol established in 2013 as set forth in the E203. Section 1.8 of the A201 now provides that the contractor’s reliance on BIM modeling will be at its “sole risk and without liability of any other party” unless the parties use AIA E203 and G202 BIM Modeling documents. Clearly, this provision allocates significant risk to the contractor. Contractors’ and their attorneys should consider modifying this language if the AIA digital transmission documents are not agreed to and utilized by the parties.

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W Mason is an partner with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and commercial litigation throughout Florida. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

The form and contents of a claim of lien are set forth in Fla. Stat. § 713.08. The claim of lien must expressly state:

  • the name of the lienor and the address where notices or process under the Construction Lien Law may be served on the lienor. Fla. Stat. § 713.08(1)(a).
  • the name of the person with whom the lienor contracted or by whom he or she was employed. Fla. Stat. § 713.08(1)(b).
  • the labor, services, or materials furnished and the contract price or value thereof. Materials specially fabricated at a place other than the site of the improvement for incorporation in the improvement but not so incorporated and the contract price or value thereof shall be separately stated in the claim of lien. Fla. Stat. § 713.08(1)(c).
  • a description of the real property sufficient for identification. Fla. Stat. § 713.08(1)(d).
  • the name of the owner. Fla. Stat. § 713.08(1)(e).
  • the time when the first and the last item of labor or service or materials was furnished. Fla. Stat. § 713.08(1)(f).
  • the amount unpaid to the lienor for labor, services, or materials and for unpaid finance charges due under the lienor’s contract. Fla. Stat. § 713.08(1)(g).
  • if the lien is claimed by a person not in privity with the owner, the date and method of service of the notice to owner. If the lien is claimed by a person not in privity with the contractor or subcontractor, the date and method of service of the copy of the notice on the contractor or subcontractor. Fla. Stat. § 713.08(1)(h).

The claim of lien may be prepared by the lienor or the lienor’s employee or attorney and must be signed and sworn to or affirmed by the lienor or his or her agent acquainted with the facts stated. See Stunkel v. Gazebo Landscaping Design, Inc., 660 So. 2d 623 (Fla. 1995).

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W Mason is an partner with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W is Board Certified in Construction Law by the Florida Bar Association. W focuses his practice on construction and commercial litigation throughout Florida. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

A “contractor” is a person other than a materialman or laborer who enters into a contract with the owner of real property for improving it. A “contractor” can also be one who takes over from a prior contractor as so defined in order to complete the entire remaining work under such a contract. The term “contractor” includes an architect, landscape architect, or engineer who improves real property pursuant to a design-build contract. Fla. Stat. § 713.01(8).

For example, a pool company was a “contractor” for purposes of Fla. Stat. § 713.01(8) where it contracted separately with the homeowners to construct a pool, spa, and deck. See Cox v. Reed’s Swimming Pools and Service, Inc., 756 So. 2d 141 (Fla. 2d DCA 2000). In Cox, the homeowners attempted to argue that the pool company was not a “contractor” but rather a “subcontractor” who contracted with their general contractor pursuant to Fla. Stat. § 713.01(8). However, the court found sufficient evidence of an independent contract with the property owners and allowed the pool company to enforce its lien amount for the full amount of the contract with the owner.

In some instances, a property owner may contract with a contractor for improvements while overseeing and or supervising other work on his or her property. In those instances, the owner’s supervision of other work does not alter a contractor’s status pursuant to Fla. Stat. § 713.01(8). As such, even where the owner provides supervision and oversight to a project, a contractor would have difficulty arguing for subcontractor status pursuant to the lien law. The distinction is important where the person or entity has failed to file a contractor’s affidavit; a requirement imposed on contractors but not subcontractors under Florida’s lien law. See Sowers v. Hoenstine, 417 So. 2d 1137 (Fla. 5th DCA 1982).

When a contractor complies with all relevant provisions of Florida’s construction lien law imposed on contractors, the contractor is entitled to a lien on the real property improved for any money owed to the contractor by the owner for labor, services, materials, and/or other unpaid items required by, or furnished in accordance with the contract between the owner and contractor. See Grant v. Wester, 679 So. 2d 1301 (Fla. 1st DCA 1996). The owner is also responsible for any unpaid finance charges due under the contract. See Fla. Stat. § 713.05.

Typically, in order to enforce construction lien rights, a contractor must have substantially completed the work set forth in the parties contract. See Langley v. Knowles, 958 So. 2d 1149 (Fla. 5th DCA 2007). The “substantial performance” doctrine provides that a contractor is entitled to a construction lien even if the work of the contract is substantially, but not completely, performed. However, a contractor may be entitled to enforce lien rights where the work is not substantially performed if performance has been excused or waived by the property owner. For example, where an owner wrongfully terminates a contract, even substantial performance is not a prerequisite in order to enforce lien rights under the contract. See Langley, 958 So. 2d at 1051.

Determining whether one is a contractor or something else under the lien law is an important first step in determining the statutory prerequisites a party may need to fulfill before enforcing a lien. The most important factor in determining contractor status is whether there is an enforceable contract with a property owner. An owner’s supervision, or role as his/her own general contractor is not indicative of a reduction to subcontractor status. Moreover, while substantial performance of the contract work is typically required before a contractor can enforce lien rights, substantial performance can be waived or excused.

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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 wmason@foxrothschild.com.

Below are some recent posts W has written on Florida Construction Lien Law:

Florida law governs who can enforce a construction lien. Under the construction lien statute, a contractor, a subcontractor, a sub-subcontractor, a material man who contracts with an owner, a contractor, subcontractor, or sub-subcontractor; a laborer, or a “professional lienor” are entitled to enforce a construction lien under the statute. Fla. Stat. § 713.01(18).

A valid license is necessary in order for a contractor, subcontractor, or sub-subcontractor to enforce a construction lien. Fla. Stat. § 713.02(7). However, there is no license requirement with regard to providers of material. In Architectural Complements, Inc. v. R.G. Brown Properties, Inc., 686 So. 2d 678 (Fla. 2d DCA 1996), the Court found that issues of material fact precluded a summary judgment in favor of a developer where a cabinet maker claimed to have acted as a materialman rather than a subcontractor. The court held that if the cabinet maker was found to be a materialman rather than a subcontractor, Fla. Stat. § 713.02(7) would not bar the cabinet maker’s construction lien.

In order to be properly licensed for purposes of imposing construction liens, a contractor, subcontractor, or sub-subcontractor must apply for a certificate of authority pursuant to Fla. Stat § 489.119(2). When a construction company loses its sole qualifier, it may not engage in contracting until another qualifying agent is employed unless the company has been granted a temporary certificate. Fla. Stat. § 489.119(3)(a). If a contractor engages in work after the time it has lost its sole qualifier and without a temporary certificate, it may be subject to disciplinary sanction by the DPBR. However, pursuant to Fla. Stat. § 489.128, in the event a contractor obtains or reinstates his or her license prior to the filing of a construction lien, the construction lien will be valid. See Michnal v. Palm Coast Development, 842 So. 2d 927 (Fla. 4th DCA 2003).

For certain segments of the construction industry, maintaining a valid license is a threshold requirement before filing a construction lien against an owner. For those businesses, to the extent that there is any doubt regarding the validity of a license, any doubt should be resolved prior to filing a construction lien. Moreover, even if a license has inadvertently lapsed during a project, such a deficiency can be cured so long as appropriate steps are taken to reinstate the license prior to the filing of the construction lien.

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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 wmason@foxrothschild.com.

Below are some recent posts W has written on Florida Construction Lien Law:

Florida Construction Liens: Insurance Proceeds and Construction Liens

When an improvement covered by property damage insurance is damaged or destroyed and the owner, contractor, or subcontractor is paid for the destroyed improvement, the person or entity receiving the insurance proceeds holds those funds in trust for the lienors holding liens related to the destroyed or damaged improvement. The named insured who receives the policy proceeds is considered a trustee of the policy proceeds and such funds are deemed trust funds for the purposes of Fla. Stat. § 713.32 for one year from the date of receipt. Holders of liens perfected before the recording of a notice of commencement are specifically excluded from liability under this provision of Florida’s Construction Lien law.

While the provisions of Florida’s construction lien law relating to insurance proceeds are somewhat obscure, these provisions have seldom been litigated. As such, to the extent that an owner, contractor or subcontractor receives insurance proceeds that may be considered trust fund under this provision, caution should be taken with regard to use or distribution of the trust funds.

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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 wmason@foxrothschild.com.

 

When entering into a lease, especially for commercial property, the parties often contemplate that the tenant will make improvements to the leased premises. The question arises: is the property subject to a construction lien where the contract for improvements is with the tenant? The Florida Supreme Court answered this question with the following test:

If, as part of the consideration for the lease, the tenant is required to make improvements under circumstances that the landlord could enforce that promise, then the leased property should be subject to the liens of parties contracting with the tenant to perform such improvements. See Anderson v. Sokolik, 88 So. 2d 511 (Fla. 1956).

While this test is fairly restrictive, Florida courts only enforced construction liens prior to Anderson where the lease expressly required the tenant to make improvements. As such, Anderson actually reflects the Florida Supreme Court’s relaxation of the requirement that the tenant’s improvement be specifically mentioned in the lease.

Post Anderson, in order for a construction lien to arise out of a work perfromed or material provided pursuant to a contract with a teant, the work must have been performed and improvements made in accordance with an enforceable contract between a landlord and a tenant. However, the contract does not need to be incorporated in the lease itself and it may be subject of subsequent negotiations and agreements between parties and may be oral as well as written.  See Tim Joyce Realty Corp. v. Popkin, 111 So. 2d 707 (Fla. 3rd DCA 1957).

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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 wmason@foxrothschild.com.

As a threshold matter, it is often important to determine whether Florida law permits a construction lien to be placed on a particular property. In order for Florida lien law to be applicable to a property, there must be a contract between a person performing services and/or providing materials and a nongovernmental owner of property before the Florida construction lien laws apply. A construction lien cannot encumber governmental property. However, the statute leaves open the possibility that a construction lien could encumber leaseholds within governmental property; i.e. a vendor’s property in an airport or bus terminal.

While the cleanest construction liens will be based on an express written agreement, a construction lien can be based on a contract-implied-in-fact under Florida law. This is because a contract-implied-in-fact is an enforceable contract “that is inferred in whole or in part from the parties’ conduct, not solely from their words.” Commerce Partnership 8098 Ltd. Partnership v. Equity Contracting Co., 695 So.2d 383, 385 (Fla. 4th DCA 1997). The Supreme Court of the United States defined a contract-implied-in-fact as “an agreement ‘implied in fact'” as “founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding. Baltimore & Ohio R. Co. v. United States, 261 U.S. 592 (1923)

A construction lien in Florida cannot be based on a contract-implied-in-law because a contract-implied-in-law does not require an agreement. CDS & Associates of Palm Beaches, Inc. v. 1711 Donna Rd. Associates, Inc., 743 So. 2d 1223, 1224 (Fla. Dist. Ct. App. 1999). Rather, a contract-implied-in-law, such as a claim pursuant to a theory of quantum meruit, is “an obligation created by the law without regard to the parties’ expression of assent by their words or conduct.” Id.

Florida Statute defines “improve” to mean to build, erect, place, make, alter, remove, repair, or demolish any improvement over, upon, connected with, or beneath the surface of real property, or excavate any land, or furnish materials for any of these purposes, or perform any labor or services upon the improvements, including the furnishing of carpet or rugs or appliances that are permanently affixed to the real property and final construction cleanup to prepare a structure for occupancy; or perform any labor or services or furnish any materials in grading, seeding, sodding, or planting for landscaping purposes, including the furnishing of trees, shrubs, bushes, or plants that are planted on the real property, or in equipping any improvement with fixtures or permanent apparatus or provide any solid-waste collection or disposal on the site of the improvement. Fla. Stat. § 713.01.

An “owner” is a person who is the owner of any legal or equitable interest in real property, which interest can be sold by legal process, and who enters into a contract for the improvement of the real property. The term includes a condominium association pursuant to chapter 718 as to improvements made to association property or common elements. The statute specifically excludes any political subdivision, agency, or department of the state, a municipality, or other governmental entity from the definition of “owner.” Fla. Stat. § 713.01.

An “improvement” is defined as any building, structure, construction, demolition, excavation, solid-waste removal, landscaping, or any part thereof existing, built, erected, placed, made, or done on land or other real property for its permanent benefit. Fla. Stat. § 713.01.

When the person who contracted for an improvement on real property is not the owner of the improved land, the lien law is generally inapplicable. However, if removal of such an improvement from the land is practicable, the lien of a lienor shall attach to the improvement on which he or she has performed labor or services or for which he or she has furnished materials rather than the land itself. Courts do not consider the health of the residents for determining whether removal of an improvement is “practicable.” Dargel Const. Co. v. DeSoto Lakes Corp., 172 So. 2d 849 (Fla. 2d DCA 1965).

In sum, an analysis of the viability of validity of a lien begins with an examination of the character of the owner of the property (public versus private) and whether the person who contracted for the subject improvement is an owner in fact. Once it is determined whether the property can be subject to a lien, a further examination of whether the more technical procedural requirements of Florida’s lien law should take place in the process of enforcing or defending against a construction lien in Florida.

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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 wmason@foxrothschild.com.