Notice of Commencement
So you’ve decided to improve your real property by adding on a new addition or possibly building a new home. There are a few duties under Section 713 Florida Statutes that you as a homeowner should be aware of before breaking ground. This article examines your duty to record a Notice of Commence and its purpose. Future articles will examine other aspects that you need to be aware of that are inherent when improving your real property.
Whenever you begin the task of improving your real property, you as the property owner have a duty to record a Notice of Commence with the Clerk of Court in the County where the property is located unless you have obtained a Construction Loan for such improvements. In that case, your lender assumes the duty to record the Notice of Commencement. There are some general exceptions to when a Notice of Commencement is not required, such as subdivision improvements; when the prime contract is less than $2,500.00; and, when a prime contract for HVAC repair or replacement has a total value of less than $5,000.00.
A Notice of Commencement contains the following general information:
- the names and addresses of the owners of the property;
- the legal description of the property;
- the name, address, and phone number of your General Contractor;
- the general improvement to be made to the property;
- the name and address of the company who is bonding the work and the amount and type of bond;
- the name, address and phone number of the Lender;
- the name, address and phone number of the person within the State of Florida where notices (e.g. Notice to Owner) can be sent;
- the name, address and phone number of an additional person (other than the owner) who can receive Notices; and,
- the expiration dated of the Notice of Commencement if different than one year.
Once the Notice of Commencement is recorded, the homeowner has a duty to post a copy of it at the site where the improvements are to take place.
Prior to commencing the improvements to your real property, a permit is required from the County Building Department. The Building Department will likely require that a notice of commencement be recorded unless you fall into one of the exceptions previously mentioned.
One of the primary purposes of the Notice of Commencement is to inform individuals who may will be working on your property with the information necessary to serve notice to you, your contractor, surety and lender that they are entering your property to make improvements and if they are not paid, will have a right to place a lien on your property. In essence, the Notice of Commencement serves as a means of providing the addresses of the relevant people who must be notified when problems arise and making those persons aware of which property is the subject the problem (e.g failure to promptly pay).
The other purpose of a recorded Notice of Commencement is assure that the Building Department will inspect your property. It also serves as one of many factors used by a Homeowner to protect themselves from having to pay an amount greater than their contracted price in the event disputes occur and an individual who performed improvements on your property was not paid. This is commonly referred to as the proper payments defense.
In essence, before improving your real property, make certain that you first complete and record a Notice of Commencement and post it on the site where the improvements will be completed.
Next week we’ll cover the aspects of a form called “Notice to Owner.”