September 21, 2018
Author: H. Wesley \"Wes\" Reeder
Organization: Emmanuel, Sheppard & Condon
I. PROPERTY INTERESTS SUBJECT TO CONSTRUCTION LIENS.
A. Privately Owned Property.
Under Florida law, any real property that is not owned by a governmental entity may be subject to a construction lien. § 713.01(26), Florida Statutes. If property is owned by an owner in fee simple absolute, then the entire interest of the owner may be subject to a construction lien. An owner of private property undertaking improvements may exempt the property from liens through having the general contractor provide a payment bond in an amount equal to the amount of the contract for such improvements. § 713.23, Florida Statutes.
1. Jointly Owned Property
Whether or not a lien will attach to jointly owned property depends upon the nature of the joint ownership. If property is owned by two or more tenants in common, who under the law own undivided interests in the property, the interest of the tenant or tenants contracting for an improvement to the property is subject to a construction lien. Florida case law also appears to indicate that such a construction lien may not extend to the interest of the other co-tenants who did not contract to have the improvements undertaken on the jointly held property. Browne v. Park, 198 So. 462 (Fla. 1940). (If the improvements benefit all joint owners, however, the tenant in common contracting for the improvements, and paying for same, might have a claim of contribution against the other joint tenants.)
2. Property Owned By Husband and Wife.
Under Florida law, property owned by a husband and wife is owned jointly, with a right of survivorship. The entire interest of the husband and wife in such property is generally subject to a construction lien in the State of Florida, with one exception. § 713.12, Florida Statutes.
In most instances, both the husband and wife will contract to have the improvements performed. In such instance, clearly the entire ownership of the husband and wife in the property may be subject to a construction lien. Additionally, under § 713.12, Florida Statutes, the Florida Construction Lien Law, the entire joint interest of a husband and wife is subject to a construction lien even if only the husband or the wife contracts to have the work performed. Under § 713.12, such contracting spouse is considered the agent of the noncontracting spouse, thereby subjecting the entire property to a construction lien. Section 713.12, however, provides the exception to this general rule. If the property is jointly held, but the husband and wife are separated and living apart, then a contract by either the husband or the wife cannot subject the other's interest to a construction lien. Second, § 713.12 also provides a non-contracting spouse with a ten day objection period within which to object to a contract, and thereby limit the non-contracting spouse's liability for a construction lien.
B. Leased Property.
Leased property may be subjected to a construction lien in Florida. Whether the construction lien extends to the ownership interest of the lessor, the leasehold interest of the lessee, or both, depends upon the particular facts and circumstances.
If a lessor as owner of the property contracts to have work performed on leased property, then the lessor's interest as owner is subject to a construction lien. If a lessee enters into a contract for construction of improvements on the leased property, the lessee's leasehold interest is subject to a construction lien. § 713.10, Florida Statutes. In certain instances, however, the lessor's interest may also be subjected to a construction lien arising out of a contract entered into by the property's lessee. Under § 713.10, Florida Statutes, if an improvement is undertaken by a lessee in accordance with an agreement between the lessee and his or her lessor, then a construction lien extends also to the interest of the lessor. A lessor may exempt his or her ownership interest from such a lien, however, by expressly providing in the lease that the interest of the lessor shall not be subject to liens for improvements made by the lessee. Under § 713.10, the interest of a lessor may be exempted from any liens arising out of improvements contracted for by the lessee, if the lessor: (1) records the lease or a short form thereof in the Clerk's office, and the terms of the lease expressly prohibit such liability, or (2) all the leases entered into by a lessor for the rental of a premises on a parcel prohibit such liability and a notice which sets forth such limitation is recorded by the lessor in the public records of the county in which the property is located.
NOTE: The interest of a lessor of a mobile home lot is not subject to liens for improvements made by the lessee of such lot.
Companies or individuals providing construction services or materials on leased property should be careful to confirm prior to providing the services or materials the extent of potential lien rights available to them. If such lien rights are limited to solely the leasehold interest of the lessee, then such rights may be extinguished by a termination of the lease.
C. Property Under Contract For Sale.
Under § 713.11, Florida Statutes, if a person contracting for improving real property has no interest as an owner in the land, no lien may attach to the land. As a result, if a purchaser contracts to have improvements performed on land owned by a seller, and the purchaser never becomes the owner of the property, then the property cannot be subjected to a construction lien for work performed at the request of the purchaser. (If it can be shown, however, that the purchaser was acting as the agent of the seller (property owner), then the seller/property owner's interest in the property can be subjected to a construction lien.)
In certain limited instances, an equitable lien may be claimed against the seller's interest. For example, if the seller authorizes the purchaser to undertake certain improvements on the property, and thereby receives the benefit of such improvements, then the seller's interest in the property may be subject to an equitable lien in favor of those persons supplying such improvements. Such an equitable claim would lie, however, only if the purchaser did not ultimately purchase the property. If the contract purchaser did purchase the property, and become the owner of same, then those persons providing labor or materials at the request of the purchaser could pursue their construction lien rights against the property then owned by the purchaser.
Section 713.11 also allows in certain instances for the removal of improvements performed for a party not having an ownership interest in the real property on which the improvements are constructed, in order to protect the interest of the persons providing such improvements.
D. Public Property.
Under Florida law, public property may not be subjected to a construction lien. Instead, Florida law generally requires that improvements undertaken on publicly owned property be secured by payment and performance bonds in the amount of the contract for improvements. Individuals and firms providing services and/or materials for such public construction may then look to protection under these bonds. §255.05, Florida Statutes. One exception to this general rule relates to leases of publicly owned property to persons for the purposes of operating a private business. In such instance, a construction lien may attach to such private person's leasehold interest in the publicly held property.