A Lien Has Been Recorded on Your Property: What Now?

As a homeowner, having a construction lien recorded on your property might cause you a great deal of anxiety. Aside from paying the lienor (the person or entity that recorded the lien) to satisfy the lien, there are other options you can take to extinguish the lien.

1. Notice of Contest of Claim of Lien – This option is often the most efficient strategy to determine whether a lienor actually intends to foreclose (enforce) the lien. A Notice of Contest of Claim of Lien, pursuant to Florida Statute 713.22, shortens the lienor's ability to foreclose on the lien (from one year to 60 days). Upon service of the Notice, the lienor must seek to foreclose the lien within 60 days; failure to do so automatically extinguishes the lien. Alongside this option, Florida statute also allows the homeowner to request certain information from the lienor, such as accounting records and contracts for services or materials furnished to the property. See Fla. Stat. 713.16; 713.165.

2. Filing a Lawsuit to Show Cause – Another approach, which also shortens the period of time the lienor has to take action, is to file a lawsuit with the appropriate court. The clerk of court will issue a special summons to the lienor to "show cause within 20 days why his or her lien should not be enforced by action or vacated and canceled of record.” Fla. Stat. 713.21. Typically, a lawsuit is accompanied with a fraudulent lien claim against the lienor. Due to the court costs associated with this action, this is not the most cost-effective approach. However, there are circumstances in which filing this lawsuit may be the most appropriate option.

3. Transferring the Lien to Security – If a homeowner prefers to take immediate action to remove the lien from the property, the lien may be transferred to alternate security. Essentially, cash or a surety bond is posted with the court “in an amount equal to the amount demanded in such claim of lien, plus interest thereon at the legal rate for 3 years, plus $1,000 or 25 percent of the amount demanded in the claim of lien, whichever is greater, to apply on any attorney’s fees and court costs that may be taxed in any proceeding to enforce said lien.” Fla. Stat. 713.24. Ordinarily, no one wants to hold cash in the amount of the claimed lien, plus 3 years of interest and another 25% of that lien amount to cover potential fees and costs. It's important to note, however, that this option of a payment bond is available at any time during a pending lawsuit. This means that in electing option 1 or 2, if the lienor does timely seek to foreclose on the lien, you would still have the option of transferring the lien to a bond. However, depending on when the lien transfer takes place, this option involves certain implications to the statute of limitations--which may likely provide the lienor with additional time to seek foreclosure of the lien and/or bond.

If a lien has been recorded on your property, contact us for a free consultation to determine the best strategy for you.