Major changes to Florida’s Construction Lien Law occurred in 2023. Governor Ron DeSantis signed a bill amending it in June and the new law went into effect in October.
This law made changes that affect developers, contractors, and other stakeholders in the construction industry.
Notice of Termination Requirements
Florida House Bill 331 introduced stringent requirements for recording a notice of termination. Before owners can record such a notice, they now must serve a copy on each lienor who had a direct contract and served a timely notice to the owners.
Definition of Contractor
One month before the law took effect, there were 6,999 general contractors in Florida. Pursuant to the law, however, a licensed contractor is now a person who does any of the following:
- Coordinates and schedules a project’s preconstruction and construction phases
- Controls costs
- Manages the project schedule
- Coordinates project planning, design, and construction
Thus, the definition of contractor now includes those who provide management as well as construction services.
Contractual Amount for Notice of Commencement
The monetary threshold for filing a notice of commencement for building permit applications is now $5,000, an increase from the previous level of $2,500. Consequently, jurisdictions issuing building permits for contracts exceeding $5,000 must mandate the filing of a certified copy of the notice of commencement before the first inspection.
Notices of Nonpayment
The amended law introduces new requirements for notices of nonpayment in payment bond claims. Notices must go to both the contractor and the contractor’s surety, with specific guidelines for equipment rental notices, requiring service within 90 days of the equipment being on the project site and available for use.
Calculations for Lien Transfer Bonds
There are also changes in the calculation of lien transfer bonds. The law stipulates an amount equal to the lien amount, interest for three years, plus $5,000 or 25% of the claimed amount, with a new minimum threshold of $5,000.
Arbitrators are now empowered to award attorney’s fees in payment bond claim arbitration proceedings, offering a new dimension to dispute resolution. Recorded satisfactions and releases of construction liens must also now include the official record’s reference number, recording date, and the lienor’s notarized signature.
Proponents of the new law praised the increased revenue for laborers in the private sector. Critics, however, pointed out that it may now cost more to transfer a lien to a payment bond.