What is a Notice to Owner?
A Notice to Owner (NTO) is a written notice prescribed by Florida Statute (713.06) that officially advises the owner of an improvement that the sender, usually a subcontractor or supplier not dealing directly with the owner, is looking to the owner to be sure the sender is paid before payment is made to the contractor on the job.
Florida Statute (713.06), requires that a Notice to Owner be served on the improvement owner not later than 45 days from the date of first
labor, services, or materials delivered to the job site as a prerequisite to secure the sender’s right to lien the property in the event the sender is not properly paid for work done at the property.
This notice gives the owner the opportunity to verify that the sender is paid, usually by obtaining a “release of lien” by the sender of the notice when payments are made to the contractor, so that the owner monitors downstream payments and is not later surprised with a lien against the property from someone with whom the owner does not have a contract.
Actual/verbal notice to the owner by the non-privity party working on the job is NO substitute for the written notice to owner.
Serving a Notice to Owner on every job is just good business. Viewed as a basic “cost of doing business”, a Notice to Owner will: improve cash flow by helping to be sure you get paid, establish good communication between your business and those making/securing the payments, and protect your right to payment by securing your right to lien a property should the need arise.
We offer both Full-Service
(Self-Serve) Notice to Owner services. With over 35 years of experience, Builders Notice will work to protect your right to get paid.Who Should Serve the Notice to Owner?
Any potential lienor who is not dealing directly with the property owner, such as a subcontractor or supplier, must serve a notice to owner with three exceptions. A laborer, a professional lienor, and a person who is working only on subdivision improvements need not serve a Notice to Owner to secure the right to lien. All other potential lienors who are not dealing directly with the owner must timely serve a Notice to Owner as a preliminary step to obtaining lien rights. This notice must be timely served, as a precautionary measure, even where no problem has yet developed, if one wants to be able to later claim lien rights. If this preliminary step is not taken, the right to later claim a construction lien against the property will be gone.What Does "Served" Mean?
The Florida Construction Lien Law (Fla. Stat. 713.18) provides specific methods for delivery of the Notice to Owner. The statute uses the terms “serve” and “service,” defined as “delivery in a particular way” and provides the following options:
(a) Actual Delivery:
By actual delivery to the person to be served; if a partnership, to one of the partners; if a corporation, to an officer, director, managing agent, or business agent; or, if a limited liability company, to a member or manager.
(b) Certified or Registered Mail:
By sending the same by registered or certified mail, with postage prepaid, or by overnight or second-day delivery with evidence of delivery. which may be in an electronic format.
(c) Posting at the Jobsite:
If the method specified in paragraph (a) or paragraph (b) cannot be accomplished, by posting on the premises.What is a Release of Lien?
A potential lienor will be required to give releases on most, if not every, job. In general, a Release of Lien is a release of the lienor’s right to lien the property in accordance with the terms of the release. A release may be for a specific dollar amount, for all lien rights through a specific period, or for both. Understanding the language and details within releases is VERY important.Is There a Standard Release of Lien Form?
Yes, Florida Statute 713.20 provides “standard” release forms. However, releases are permitted to contain wording different from the Florida Statutory language. Be very careful when giving or obtaining releases of lien to be sure that you understand the language and the terms recited. Be sure that you are not giving away more (or less) than is intended. Likewise, if you are making payment and getting a release, be sure that you are getting a release to the full extent of payment made. This may include payment amounts, and/or payment for services or materials through a specific date.What Is a Claim of Lien?
As described in Florida Statute 713.08, a claim of lien is a verified document that is recorded in the public records among other documents affecting title to real estate (e.g. deeds, mortgages) to give notice to the world of the lienor's claim against the property for the amount claimed unpaid in improving the property. The claim of lien must be recorded not later than 90 days from the last performance of work or delivery of materials at the site, excluding warranty work. Note that 90 days is not exactly three months. A copy pf the claim of lien must be served (see definition of “served” above) on the owner within 15 days of recording. Failure to serve the copy is a defense only to the extent that the owner can show harm resulting from failure to timely serve the copy.How Long Does This Lien Last?
The lien will remain effective against the property for a period of one year. There is only one way to extend that time. The lienor must file suit to enforce or foreclose the lien within the time that it is effective to keep it alive in excess of one year. A lienor cannot just file a renewal or extension of lien.
There are two ways to shorten the one-year period, aside from voluntary release. If a notice of contest of lien is recorded, the lien's effective time is shortened to 60 days from the date the clerk serves a notice of contest of lien on the lienor.
The second shortening device is a summons to show cause filed by any interested party. When a lienor receives such a summons, he or she should consult legal counsel familiar with the construction lien law. Generally, the lienor must file a counterclaim within 20 days of service of the summons or the court will enter an order discharging the lien.
A transfer of the lien to bond or cash deposit does not affect the duration of the lien.How Is The Lien Enforced?
The lien is enforced by a suit as specified in Fla. Stat. Chapter 85. Normally the suit seeks a judgment recognizing the lien; and in many instances ordering a sale of the property free and clear of the interests in and claims on the property inferior to the claim of the lienor. The owner's interest in the property may be sold at judicial sale subject to prior liens and mortgages, but free and clear of inferior liens and mortgages if the inferior parties are joined in the suit. Attorney's fees are recoverable by the prevailing party. The definition of prevailing party is not precise and is determined by court decision. Generally it is the party who prevails on the major issues in the case. If your lien is not established due to a failure to prove your case (e.g. bad notice, untimely lien, improper work), and you do not otherwise obtain a judgment against the owner, then the lienor may be required to pay your opponent's attorney fees.Who Can Lien?
The following have lien rights for labor, services or materials furnished in improving the real property. These persons are defined in Fla. Stat. 713.01:
- a person furnishing his/her own labor only.
- a person furnishing materials or rental equipment only, with no labor for installation of materials. This person must be selling to an owner, contractor, subcontractor, or a sub-subcontractor. A person furnishing materials does not fall within the definition if the person is selling to another materialman or to a sub-sub-subcontractor. The materials must be delivered to the site or sold for direct delivery to the site (as distinguished from being sold for inventory without a particular job in mind).
- a person who furnishes more than one individual's labor and/or more than just materials who contracts with an owner.
- a person who furnishes more than one individual's labor and/or more than just materials who contracts with a Contractor.
- a person who furnishes more than one individual's labor and/or more than just materials who contracts with a Subcontractor.
f. Professional Lienors
- Architects, Landscape Architects, Engineers, Surveyors and Mappers, and Interior Designers.What Is Lienable?
The interest in the property of the owner who contracts for the improvements is lienable. Most often the landlord's interest is not lienable where the tenant contracts for the work unless the improvements are a significant undertaking in the lease. There are limited exceptions. This should be addressed by legal counsel.Who must Serve Copies of the Notice to Owner?
If there is a party between your customer and the owner, you must serve that party with a copy of the Notice to Owner. If you are a material supplier to a subcontractor, or if you are a sub-subcontractor, then you must serve a copy of the Notice to Owner on the prime contractor. If you are a materialmen to a sub-subcontractor, then you must serve a copy of the Notice to Owner on the contractor. If the material supplier to the sub-subcontractor knows who the subcontractor is, then a copy must also be served on the subcontractor who is dealing with your customer (who already knows you are there because of your direct dealing). It is a good practice to give your customer a copy, but not legally required.What if I don't want to keep track of all of these procedures and time periods myself?
That’s where we come in. Builders Notice Corp. has over 35 years of experience in property search, and preparation and serving of Notices to Owner. We are not attorneys and do not give legal advice.
Give us a try today with a Full-Service test NTO. Just give us your information and we will thoroughly research and prepare a real Notice to Owner for one of your jobs which you may view without any obligation to you.
Then, if you’re ready to continue and serve the Notice to Owner, we will create your billing account and take care of the rest.