In Florida, when an owner terminates a Notice of Commencement (NOC) and records a new NOC, subcontractors and suppliers are obliged to serve a new Notice to Owner (“NTO”), even if they are continuing work under the same contract and have previously served a NTO.
- Understanding the Notice to Owner (NTO):
The NTO is a document in Florida’s construction industry, serving as a formal notice from subcontractors and suppliers to the owner. It is sent when these entities are working under the direct contract but did not directly contract with the owner. By serving the NTO, subcontractors protect their lien rights and establish a legal foundation for potential future claims.
- Significance of the Notice of Commencement (NOC):
The NOC, on the other hand, is a document recorded by the owner to comply with Florida’s lien law. It provides information about the project, including the owner’s name, description of the property, and the general contractor. It helps protect contractors’ lien rights, by allowing these claims to relate back to the date of the NOC.
- New Financing, New NOC
Owners may choose to terminate an original NOC and record a new NOC during a construction project for various reasons, with obtaining new financing being a common one. Financial dynamics of a project can change, leading owners to secure additional funds or revise existing financial arrangements. Consequently, the old NOC is terminated and a new NOC is recorded to reflect these changes and ensure legal compliance.
- Obligation to Serve New NTOs with Updated NOCs:
When an owner terminates an NOC and records a new NOC, this effectively “restarts” the job in the eyes of Florida’s lien law. Therefore, subcontractors and suppliers who are not in privity with the owner must serve a new NTO, regardless of whether they have already served one, and are merely continuing work under their existing arrangements. Failing to serve a new NTO within the required time frame could jeopardize their lien rights with drastic consequences.
Takeaways
Subcontractors should stay vigilant and informed throughout the project’s duration. Regularly reviewing notices and recordings relating to the property is essential. This information is available through the public records online, and should be checked monthly, at a minimum, as construction progresses. Failing to stay informed about these developments and respond accordingly could jeopardize your lien rights.
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READY LEGAL 