1998 changes to public works bonds and construction lien law.

• Author: Leiby, Larry R.
• Position: Florida

Traditionally, lien changes are effective on October 1 of the year enacted; however, these changes became effective on July 1, 1998.

Changes to the Florida Construction Lien Law seem to follow each legislative session like the evening follows the day; 1998 was no exception. The changes relate to both construction liens under F.S. Ch. 713, and payment bonds for public works under F.S. [sections]255.05. As an example of compromise legislation addressing the competing interests in the construction industry, there will be questions to be resolved regarding the language in some of the changes. Having participated in changes to the lien law in prior years, it is difficult in the heat of the session to anticipate every application of the words chosen. Confusing items usually are addressed the following year with a "glitch" bill. The following is what happened to Ch. 713 and [sections] 255.05 in the 1998 session.

Amendments to F.S. [sections] 255.05

More information on first page of payment bond for public works. The contractor on a public works project has been required to record the bond given pursuant to F.S. [sections] 255.05 since 1988. The purpose of recording was to make the bond more accessible to potential claimants. The problem with what was enacted in 1988 was that there was no requirement for a legal description to be in the bond. Thus, if the bonds were recorded, the ability to retrieve them pursuant to a title search was questionable. Effective July 1,1998, the bond must include on its front page the name, principal business address, and telephone number of 1) the contractor; 2) the surety; 3) the owner; and, if the contracting entity is different from the owner, 4) the contracting public entity. The first page also must include (although there is qualifying language that says "if applicable") a legal description and street address of the property being improved as well as a general description of the improvement. Essentially the legislature is requiring information on the first page of the bond (to be recorded) as would be put in the notice of commencement in the setting of private work. There is no consequence addressed in the statute about the failure to include any of the required information. However, earlier cases had held that the failure to comply with the requirement of recording the bond rendered the bond a common law bond, excusing the claimants from the statutory notices, and leaving the parties to comply with the notices in the bond form itself, if any.[1]

Notice of contest of claim against payment bond. In the lien setting for private work, an owner or the owner's agent or attorney may shorten the time within which a lien claimant is required to file suit to enforce the lien to a period of 60 days from the date that the clerk of court certifies that a copy of the notice of contest of lien was mailed to the lien claimant at the address in the claim of lien.[2] There was no corresponding shortening procedure for a private or public works payment bond. Effective July 1, 1998, there is. In the public works arena with a payment bond pursuant to F.S. [sections] 255.05, the contractor or the contractor's agent or attorney may shorten the time within which to file suit on the payment bond by recording a notice of contest of claim against payment bond in the clerk's office.[3] This is authorized to be done only after the claimant "is no longer furnishing labor, services, or materials on a project." The time within which to file suit on the bond is limited to 60 days from the date that the clerk of court certifies that a copy of the notice of contest was mailed to the bond claimant "at the address shown in the notice of nonpayment or most recent amendment thereto." Thus, it appears that another precondition to recording the notice is the service of a notice of nonpayment. Remember that a claim of lien is recorded in the public records. A notice of nonpayment making claim against a payment bond is not. Note that the copy of the notice of contest of claim against payment bond is to be recorded in the clerk's office. It appears that the clerk of court for the county in which the improvement is located is the clerk intended, although that is not expressly stated. Someone will be arguing that the notice of contest of claim against payment bond may be recorded with the clerk of the county of the contractor's principal place of business, or the county where...