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Construction Liens Are For Work Furnished in Accordance with the Direct Contract

If you are a contractor, Florida’s Construction Lien Law provides lien rights for “labor, services, materials, or other items required by, or furnished in accordance with, the direct contract . . . .”  Fla. Stat., §713.05 (1997).  The law defines a “direct contract” as one between the owner and any other person for improving real property.  If you are a subcontractor, sub-subcontractor, materialman or laborer, the lien law provides lien rights for “labor, services, or materials furnished in accordance with your contract and with the direct contract.”  Fla. Stat., §713.06(1).  If work is not furnished in accordance with the direct contract or the chain of contracts flowing from it, the person furnishing the work may not be eligible to enforce a construction lien.

But, what does it mean that the work must be furnished “in accordance with” the contract?  The statute does not define the phrase.

In one case, a court found that the services of securing the jobsite were “not in accordance with the direct contract” and could not support a lien claim. The contractor had stopped performing work and secured the site at the request of the construction lender, not the owner.  In re Twelve Oaks, Ltd., 59 B.R. 736 (Bankr. M.D. Fla. 1986).

In another case, the owner’s contract called for a Katolight generator.  The contractor furnished an Onan generator, which was less expensive.  When the contractor failed to pay for the Onan generator, the supplier asserted a lien claim.  The owner defended on the grounds that the Onan generator was not furnished in accordance with the direct contract.  The court rejected the owner’s argument because the owner had accepted the Onan generator along with a reduction in the contract price.  Keller v. Newman Sons, Inc., 756 So. 2d 120 (Fla. 3d DCA 2000).

It is not frequently a problem for contractors and subcontractors to determine whether work was furnished in accordance with the direct contract and following chain of contracts.  Usually, each higher-tier person in the chain of contracts usually delegates, in writing, to the person downstream a portion of the work that it owes to the person above.  Contractors typically use written subcontracts that incorporate the owner’s plans and specifications to delegate the exact work called for by the owner.  For material suppliers and laborers, the situation might be different.  They often do not receive the owner’s plans and specifications to ensure that they are furnishing in accordance with the direct contract.  This creates an obvious opportunity for unwanted deviations.

If a window installer orders the wrong size windows, then fails to pay the supplier who furnished them, will the supplier have lien rights?  While the question whether the supplier has lien rights will involve questions about proper notice and a timely recorded lien, it is easy to see that if the owner’s plans and specifications are part of the direct contract and provide correct dimensions, then any mistake by the general contractor or subcontractor in ordering materials could give the owner a defense that the supplier’s windows were not furnished in accordance with the direct contract.

Construction liens are powerful tools.  But, they can backfire when improperly asserted.  We assist owners, contractors, subcontractors, and material suppliers in the careful evaluation and preparation of their claims and defenses.  We provide representation in state and federal litigation, arbitration, and pre-suit efforts to avoid and resolve disputes.

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