On June 12, 2023, Governor De Santis signed into law House Bill 331 that makes changes to the notice of termination statute, effective October 1, 2023. Although these changes may seem complicated, the changes protect lienors that do not have a direct contract with the owner and serve a timely notice to owner even after an owner has recorded a notice of termination. The statutory framework is discussed below.
Section 713.132, Florida Statutes, permits a notice of commencement to be terminated within thirty (30) days after an owner records a sworn notice of termination, a copy of which was served prior to its recording in the public records (in the county where the improvement is located), on each lienor who has a direct contract with the owner and on each lienor who has previously served a timely notice to owner, unless the lienor has previously executed a waiver and release of lien upon final payment. The notice of termination cannot be recorded until all lienors have been paid in full or pro rata (from unpaid funds) in certain situations.
A 2023 amendment to Section 713.132, Florida Statutes, requires that a lienor who began work under the notice of commencement before its termination and does not have a direct contract with the owner and who has timely served his or her notice to owner after the notice of termination has been recorded, must be served with a copy of the notice of termination. The termination of the notice of commencement as to this lienor becomes effective thirty (30) days after the notice of termination is served on that lienor. Without proper service, the notice of termination is not effective as to that lienor, unless the lienor has previously executed a waiver and release of lien upon final payment.
Section 713.132, Florida Statutes, mandates that the recorded notice of termination contain the following information:
- The same information that is contained in the notice of commencement;
- The official reference numbers and recording date of the notice of commencement;
- A statement of the date as of which the notice of commencement is terminated, which date may not be earlier than thirty (30) days after the notice of termination is recorded;
- A statement specifying that the notice applies to all the real property subject to the notice of commencement or specifying the portion of such real property to which it applies;
- A statement that all lienors have been paid in full; and
- A statement that the owner has, before recording the notice of termination, served a copy of the notice of termination on the contractor and on each lienor who timely served notice and will serve a copy of the notice of termination on each lienor who timely serves a notice to owner after the notice of termination has been recorded. The owner is not required to serve a copy of the notice of termination upon any lienor who has executed a waiver and release of lien upon final payment.
There is a right to recover damages by a lienor who is damaged by an owner and/or contractor who knowingly makes a fraudulent statement in a notice of termination. Section 713.132(4), Florida Statutes. Even more important to lienors is the fact that, notices of termination are not effective unless they have been served on each lienor who has a direct contract with the owner and on each lienor who has timely served a notice to owner. Section 713.132(4), Florida Statutes. However, pursuant to Section 713.132(1)(f), Florida Statutes, “the owner is not required to serve a copy of the notice of termination on any lienor who has executed a waiver and release of lien upon final payment in accordance with s. 713.20.”
An owner may record a notice of termination at any time after all lienors have been paid in full or pro rata in certain situations.
NOTE: Should a lienor receive a copy of a notice of termination relating to an improvement on which he or she is still owed funds for the provision of labor, services or materials, he or she should immediately record his or her Construction Lien. Otherwise, the notice of termination may become effective to terminate the notice of commencement and his or her lien may not relate back to the date of recordation of the notice of commencement. Even if the lien is recorded within ninety (90) days of the lienor’s final furnishing of labor, services and materials to the site of the improvement, it will not have priority over interests acquired in the property prior to the construction lien being recorded after the notice of commencement is terminated.
This information presents the general scheme of Florida’s Construction Lien Law as of November 2022. The Construction Lien Law is constantly being amended; therefore, this material should not be relied upon in place of experienced legal advice in specific situations. This material is copyrighted and cannot be reproduced without written permission from Barry Kalmanson, Esq.
