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PART III – FRAUDULENT FLORIDA CONSTRUCTION LIENS
As powerful as Florida’s construction lien laws are for contractors and subcontractors seeking to protect their rights to payment for services rendered, said laws can provide pitfalls to the overzealous, unscrupulous or otherwise ignorant construction professionals who try to utilize the lien laws inconsistent with their requirements. This article addresses the problem of fraudulent construction liens under Florida law.
According to Florida’s construction lien law, an unpaid general contractor or sub-contractor is entitled to enforce a claim for payment against the property owner by way of recording a construction lien on the Florida homeowner’s property. If properly recorded, strictly consistent with the requirements of Chapter 713, such liens secure the right of a construction professional to be paid by placing a foreclosable lien against the property improved by the construction work.
However, there are certain defenses that a Florida homeowner may raise when a Florida construction lien is recorded on the homeowner’s property. Florida Statute Section 713.31 provides a complete defense to a Florida construction lien when the Florida construction lien is deemed fraudulent. Florida Statute Section 713.31 defines a fraudulent construction lien as a lien where the lienor: 1) has willfully exaggerated the amount of the lien; 2) has willfully included in its lien amounts for work not performed or materials not furnished at the property; or 3) where the lien has been compiled with willful and gross negligence.
By way of example, if a contractor willfully includes amounts in his lien for materials purchased for the project but not yet provided to the property or incorporated into the improvement, then such a lien is overstated and may well be determined to be fraudulent. On the other hand, a minor mistake or error in a claim of lien, or a good faith dispute as to the amount due does not constitute a willful exaggeration that operates to defeat an otherwise valid lien.
The determination that a Florida construction lien is fraudulent results in a complete defense to any action brought to enforce the Florida construction lien, and the Florida court will have the power to declare the Florida construction lien unenforceable. In addition, the contractor and/or sub-contractor may be held liable for actual damages, attorneys’ fees and costs, the amount of any bond premium required to discharge the lien, and any punitive damages resulting from the fraudulent lien.
Finally, Florida Statute 713.31 further provides that any person who willfully files a fraudulent lien commits a felony of the third degree.
Boatman Ricci represents construction industry professionals as well as property owners and others in the construction industry in litigation and transactional matters. If you are in need of guidance regarding a Florida construction lien, please contact Boatman Ricci for a consultation.
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