Notice to Owner
So you’ve decided to improve your real property. You’ve just finished recording your Notice of Commencement (“NOC”) with the Clerk of Court and shown the recorded NOC to the building department to obtain a building permit. You’ve signed the contract with a builder, handed your contractor a deposit, posted your NOC outside the area being improved and now the fun of improving your property begins. It will be fun provided you don’t pay for the same work or materials twice.
It should be no surprise to anyone that the traditional contractor does not possess all of the skilled workmen to make all the improvements you desire to your property. To offset this lack of personnel, your contractor will hire outside tradesmen to come onto your property during the building stages. These persons are generally known as subcontractors and in some cases are called sub-subcontractors. In addition, your contractor most likely does not manufacture the goods used to improve your property (e.g. plywood, insulation, copper wire) and thus must rely on suppliers to provide those products. The suppliers are generally referred to as materialmen.
Whenever a contractor, subcontractor, sub-subcontractor or materialman enters your property to provide goods and services for the improvement to your property, he or should be paid for the value of the services or goods provided. When they are not paid, their only recourse is to place a lien on your property and ask a court of law to sell your property on the courthouse steps and recover the value of the work or materials supplied by means of the sale.
To avoid having a lien placed on your property for lack of payment, you will need to know who is providing such services so that you can prepare to pay them. The problem is that you may not know when a person has entered your property to make improvements because your contractor is the one who hired them. You certainly should be aware of your contractor entering your property, after-all you signed a contract with that person or entity. But you did not sign a contract with any subcontractor, sub-subcontractor or materialman. So how do you know that someone other than your contractor has entered your property and will be looking to you to make good on paying him or her for the value of their work or materials supplied. It’s called a Notice to Owner.
Chapter 713 of the Florida Statutes provides that a subcontractor, sub-subcontractor or materialman who begins working or providing materials for the improvement of your property are required to let you know of their presence. They are not required to itemize the specific nature or cost of services or materials supplied. The Notice to Owner is to be served on the owner and the alternative person who can receive the Notice to Owner at the address contained in your Notice of Commencement. In some cases the Notice to Owner must also be served on the Contractor, Lender and subcontractor if a sub-subcontractor has been hired to perform improvements to your property. The provider of services and materials generally obtains the information to serve the Notice of Owner on you and others from the Notice of Commencement (which explains why a Notice of Commencement must be posted on the property where the improvements are being made).
A Notice of Owner is your only form of knowledge that the individual who served it on you performed some service or supplied materials to your property and will need to be paid. Under normal circumstances the amounts you’ve paid your contractor will be used to pay the individual who served you with the Notice of Owner. To make certain that such payment has been made, you should request a Release of Lien or equivalent document signed by the subcontractor, sub-subcontractor or materialman prior to making any further draws or payments to your contractor. The consequences of not obtaining a Release of Lien or equivalent may cause you to pay for the same work twice.
Subcontractors, sub-subcontractors and materialman must serve the Notice to Owner within 45 days of beginning work or they will be prevented from recording and enforcing a claim of lien on your property. Your contractor does not have to serve you with a Notice to Owner because you are aware of their presence on the property. In essence, those individuals who you are not in direct contract with must serve you with a Notice to Owner within the statutory timelines dictated by Chapter 713 of the Florida Statutes.
In conclusion, a Notice to Owner lets you know who is or has performed work on your property. It also gives you a reason to verify that the subcontractors, sub-subcontractors and materialmen who provided improvements to your property have been paid prior to making your next payment to your contractor. By making certain that each subcontractor, sub-subcontractor and materialman has been properly paid, the fun of improving your property will be a rewarding experience for both you and your contractor.
Next week we’ll cover some of the issues you should be looking for prior to executing a contract for the improvement of your property.