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Notice to Owner Overview

Contractors and material suppliers in Florida who do not have a direct contract with the owner of the property must properly serve a notice to owner within 45 days of the first date they provide labor, services or materials for the improvement of the property. This is generally a prerequisite to obtaining the right to enforce a construction lien against the property. [1] This pertains to all non-bonded jobs and some bonded jobs (specifically, bonds under Florida Statutes Section 713.245). For bonded jobs, contractors and material suppliers who do not have a direct contract with the prime contractor must serve a “notice to contractor” to obtain a claim against the bond.[2] Bonds are basically a substitute for the real estate because it exempts the real estate from a construction lien. Bonds are outside the scope of this blog. I will touch on those in another blog post. One more thing, throughout this article you will see me use the term “prime contractor.” That simply means the contractor who has a direct contract with the owner, which is normally a general contractor, but not always.

The fundamental purpose of the notice to owner is to put the owner on notice that someone is providing labor or materials to the project, in which that the owner does not have a direct contract with. If you actually take the time to read the warning at the top of the notice to owner, it will tell you a lot. Essentially, the owner should make sure that every person who served a notice to owner is also paid prior to or at the time of making payment to prime contractor. If the prime contractor takes the owner’s money and doesn’t pay it over to the subcontractor or supplier, the owner will likely be responsible for payment again subcontractor or supplier if there is a valid construction lien placed on the property.

The best way to ensure that the subcontractor or supplier is paid is for the owner to obtain an unconditional lien waiver from the subcontractor or supplier up through and including the date of payment to the prime contractor. Florida Statutes Section 713.06 also allows the owner to demand a contractor’s payment affidavit prior to making each payment. This is yet another tool to determine exactly who is owed what for labor and materials provided to the property.

What If a Subcontractor or Supplier Fails to Serve a Notice to Owner within 45 Days? Does It Sound the Death Knell for the Subcontractor or Supplier?

I occasionally have a subcontractor or supplier who comes to me and it turns out that the notice to owner was not served at all or was clearly outside of the 45 day deadline. Even though Florida Statutes specifically require the service of a notice to owner, the Florida courts have created certain limited exceptions. I will briefly discuss each one below:

1. The Owner and Contractor Share a Common Identity or are Essentially the Same Legal Entity.

If the owner and prime contractor share a common identity, then the subcontractor or material supplier (who had a contract with the prime contractor) will be relieved of the obligation to serve a notice to owner. What exactly constitutes a “common identity?” The devil is in the details. Do the owner and prime contractor have the same ownership? Is it a joint venture? Do they share the same officers? Are they in the same office space? An answer of yes to one of the above does not automatically mean there is a common identity.

Fairly often an owner of property is also a developer who also owns a general contracting firm. This is a situation where an investigation into common identity is particularly useful.

This next area gets a bit complicated, but if the owner and prime contractor, from a legal perspective pertaining to service of a notice to owner, are alter egos of one another, then the subcontractor or supplier will not have to serve a notice to owner. An example is when the owner is a wholly owned subsidiary of the prime contractor.

2. Agency

Sometimes the owner will retain someone to act as its agent for the improvement to the property. That person will then enter into contracts with contractors and material suppliers for improvement of the property. In this instance, by virtue of agency law, those contractors and suppliers are relieved from serving a notice to owner because they essentially are directly contracting with the owner.

These exceptions will probably not apply to most situations, therefore, it is good practice for a subcontractor or supplier to never rely upon these exceptions. Always serve the notice to owner, even when you think you have a direct contract with the owner. A notice to owner does not affect title to property and there is absolutely no harm to an owner by receiving a document simply saying that someone is providing labor, services or materials to improve their property.

Should a Subcontractor or Material Supplier Prepare and Serve Their Own Notice to Owner?

There are some subcontractors and material suppliers that prepare a serve their own notice to owners for their projects. This requires an individual who is competent in researching chain of title, notices of commencement and is familiar with the laws concerning methods of service and those who are required to receive copies of the notice to owner. Further, this person must be dedicated to this task and there must be someone else who is also just as competent to take over those duties in the event of an absence. I generally recommend that the subcontractor or supplier retain a company who specializes in serving notices on construction projects. An example of a highly qualified service company is Contractors Notice Service located in Lutz, Florida. http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0713/Sections/0713.245.html

Heath Murphy

About the Author

Heath Murphy is a partner at Jones Law Group and focuses on personal injury law. He has been working as a lawyer for 18 years and routinely writes about auto accidents, wrongful death, and personal injury laws.

Read more: Heath’s Bio