Construction Liens – Notice of Commencement

A Notice of Commencement is a recorded document which notifies the world, including potential lienors, that construction is taking place at a particular property.  Under Florida Statutes Section 713.13, an owner (or the owner’s authorized agent), before actually commencing to improve any real property, or recommencing completion of any improvement after default or abandonment, must record a notice of commencement in the county clerk’s office and post either a certified copy or a notarized statement that the notice of commencement has been recorded along with a copy of the notice.  An owner of property doing only subdivision improvements is exempt from the requirement for a notice of commencement.
Pursuant to the statute, a notice of commencement must contain the following information:
1. A description sufficient for identification of the real property to be improved. The description should include the legal description of the property and also should include the street address and tax folio number of the property if available or, if there is no street address available, such additional information as will describe the physical location of the real property to be improved.
2. A general description of the improvement.
3. The name and address of the owner, the owner’s interest in the site of the improvement, and the name and address of the fee simple titleholder, if other than such owner. A lessee who contracts for the improvements must be listed as the owner together with a statement that the ownership interest is a leasehold interest.
4. The name and address of the contractor.
5. The name and address of the surety on the payment bond, if any, and the amount of such bond.
6. The name and address of any person making a loan for the construction of the improvements.
7. The name and address within the state of a person other than himself or herself who may be designated by the owner as the person upon whom notices or other documents may be served; and service upon the person so designated constitutes service upon the owner.
The owner may designate a person in addition to himself or herself to receive a copies of notices to owner, and if he or she does so, the name and address of such person must be included in the notice of commencement.
The statute provides that if the contract between the owner and a contractor named in the notice of commencement expresses a period of time for completion for the construction of the improvement greater than 1 year, the notice of commencement must state that it is effective for a period of 1 year plus any additional period of time. Any payments made by the owner after the expiration of the notice of commencement are considered improper payments.
A notice of commencement must be notarized and must be substantially in the form set forth in the statute.
If there is a payment bond on the project, a copy of the payment bond must be attached at the time of recordation of the notice of commencement. The failure to attach a copy of the bond to the notice of commencement when the notice is recorded negates the exemption of the property from liens which is ordinarily applicable when a bond exists.  However, if a payment bond exists but was not attached at the time of recordation of the notice of commencement, the bond may be used to transfer any recorded lien of a lienor except that of the contractor by the subsequent recordation and service of a notice of bond pursuant to Section 713.23(2). The notice requirements of Section 713.23 apply to any claim against the bond; however, the time limits for serving any required notices shall, at the option of the lienor, be calculated from the dates specified in Section 713.23 or the date the notice of bond is served on the lienor.
According to Section 713.13(1)(f), the giving of a notice of commencement is effective upon the filing of the notice in the clerk’s office.  The owner (or its agent) must sign the notice of commencement and no one else may be permitted to sign in his or her stead.
If the improvement described in the notice of commencement is not actually commenced within 90 days after the recording thereof, the notice is void and of no further effect.
The recording of a notice of commencement does not constitute a lien, cloud, or encumbrance on real property, but it gives constructive notice that claims of lien under this part may be recorded and may take priority as provided in Section 713.07.
A notice of commencement that is recorded may be amended within the effective period to extend the effective period, change erroneous information in the original notice, or add information that was omitted from the original notice. However, in order to change contractors, a new notice of commencement or notice of recommencement must be executed and recorded.  The amended notice must identify the official records book and page where the original notice of commencement is recorded, and a copy of the amended notice must be served by the owner upon the contractor and each lienor who serves notice before or within 30 days after the date the amended notice is recorded.
Unless otherwise provided in the notice of commencement or a in new or amended notice of commencement, a notice of commencement is not effectual in law or equity against a conveyance, transfer, or mortgage of or lien on the real property described in the notice, or against creditors or subsequent purchasers for a valuable consideration, after 1 year after the date of recording the notice of commencement.
A lender must, prior to the disbursement of any construction funds to the contractor, record the notice of commencement in the clerk’s office; however, the lender is not required to post a certified copy of the notice at the construction site. The posting of the notice at the construction site remains the owner’s obligation. The failure of a lender to record the notice of commencement renders the lender liable to the owner for all damages sustained by the owner as a result of the failure. Whenever a lender is required to record a notice of commencement, the lender must designate the lender, in addition to others, to receive copies of notices to owner. The statute does not give any person other than the owner a claim or right of action against a lender for failure to record a notice of commencement.