Construction Liens – Application of Payments to Accounts

When making payment to someone with a running account or more than one contract, certain rules must be followed to ensure payments are properly allocated.  Under Florida Statutes Section 713.14(1), an owner, contractor, subcontractor, or sub-subcontractor, in making any payment under, or properly applicable to, any contract to one with whom she or he has a running account, or with whom she or he has more than one contract, or to whom she or he is otherwise indebted, must designate the contract under which the payment is made or the items of account to which it is to be applied. If she or he shall fail to do so or makes a false designation, she or he is liable to anyone suffering a loss in consequence for the amount of the loss.
Pursuant to Florida Statutes Section 713.14(2), when a payment for materials is made to a subcontractor, sub-subcontractor, or materialman, the payee (subcontractor, sub-subcontractor, or materialman) must demand of the person making the payment a designation of the account and the items of account to which the payment is to apply. In any case in which a lien is claimed for materials furnished by a subcontractor, sub-subcontractor, or materialman, it is a defense to the claim, to the extent of the payment made, to prove that a payment made by the owner to the contractor for the materials has been paid over to the subcontractor, sub-subcontractor, or materialman, and to prove also that when such payment was received by such subcontractor, sub-subcontractor, or materialman she or he did not demand a designation of the account and of the items of account to which the payment was to be applied or, receiving a designation of its application to the account for the materials, she or he failed to apply the payment in accordance with the designation.