Summary – Florida Statute 713.06

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Required Notices
  • Subcontractors who provide timely notice have the right to a lien for improvements provided in accordance with their subcontract and the prime contract.
  • The total amount of all liens covered by a prime contract must not exceed the amount fixed by the prime contract, with few exceptions.
  • Subcontractors must serve a notice on the owner (“NTO”) in order to be able to claim a lien. Sub-subcontractors must also serve a notice to contractor (“NTC”).
  • NTOs and NTCs must be served not later than 45 days after commencing work or deliveries. They must always be served before the date of the owner’s final payment following the contractor providing a final payment affidavit (“CFPA”).
  • The failure to serve a required NTO on time is a complete defense to a lien.
  • Persons designated in the owner’s notice of commencement (“NOC”) must also be provided with a copy of the NTO. However, failure to do so does not necessarily bar a lien.
  • Florida Statute 713.06 provides a form for NTOs and NTCs which must be used. A NTO can be combined with a NTC in one form. 
  • Lenders designated in a NOC must also be given a copy of the NTO by subcontractors.
  • Lenders who are served with an NTO and who pay a contractor on behalf of an owner must make “proper payments” as provided by statute.
  • If the owner does not provide a NOC, lienors can rely on the information contained in the building permit application for purposes of their NTOs/NTCs.
  • Lienors who generally comply with the NTO/NTC requirements may be able to enforce their lien, despite errors, against a person who has not been prejudiced by the errors. However, lienors must strictly comply with the NTO/NTC timing requirements.
Proper Payments
  • A lender who fails to make proper payments is liable to the owner for damages caused by this failure. However, only the owner is given a claim against a lender for this type of failure.
  • Alternatively, a lender is always allowed to disburse construction funds directly to the owner, relieving the lender of the obligation to make “proper payments” to contractors.
  • If the description of the property in the NOC is incorrect and the error prejudices a lienor, payments made under the prime contract are improperly paid to that lienor. This does not apply to clerical errors if the listed description covers the improved property.
  • The owner can pay laborers directly for amounts due to them for labor and services performed under the prime contract and can deduct these amounts from the balance due the contractor.
  • When a non-final payment is due to the contractor under the prime contract, the owner must ensure timely payment of amounts due to every lienor who has given an NTO as of the time of payment.  
  • The owner is under no obligation to lienors, except for laborers, who have failed to provide a NTO by the time the owner makes the payment.
  • Before the contractor can require payment to himself from the owner directly, the owner can demand the contractor provide a CFPA relating to any past or future payment under the prime contract.
  • The receipt of a CFPA does not excuse the owner of his responsibility to ensure all lienors who have provided NTOs are paid.
  • When the amount currently due under the prime contract will not cover the bills of all lienors, the owner must prorate the amount then due under the prime contract, paying lienors pro rata as provided using the Proration Method below. Lienors must execute partial lien releases to the extent they are paid in this manner.
  • When a CFPA discloses outstanding bills to subcontractors, the owner can pay the subcontractors directly as long as the balance then due on the prime contract is sufficient to pay these bills. The owner must deduct the amount paid from the balance then due to the contractor.
  • A person who provided improvements, but who did not timely provide a required NTO/NTC, should not be paid by the owner merely because he is listed in a CFPA by the prime contractor.
Final Payment
  • When the final payment is due to the contractor under the prime contract, or when the prime contract is terminated before completion, the contractor must provide the owner with a CFPA.
  • The CFPA must state that that: (a) all lienors under his or her prime contract who timely served a NTO/NTC been paid in full, or (b) showing each lienor who has not been paid in full and the amount due or to become due. The affidavit must comply with the statutory form.
  • The contractor has no lien or right of action against the owner while in default for failing to give the owner the CFPA.
  • The contractor must deliver a CFPA to the owner at least 5 days before filing a lawsuit to enforce his or her lien (even if final payment is not due because the contract was terminated). 
  • A negligent error in the CFPA which has not prejudiced the owner does not bar an otherwise valid lien.
  • If a CFPA states any outstanding bills, following 10 days notice to the contractor, the owner can pay subcontractors directly as long as the balance due on a prime contract at the time the CFPA is given is sufficient to pay the bills and lienors giving notice. The owner must deduct the amounts so paid from the balance due the contractor.
  • Lienors listed in the CFPA who have not given an NTO, and whose 45-day notice time has not expired, must be paid in full or pro rata, as appropriate, from any balance then remaining due the contractor. A lienor whose notice time has expired should not be paid by the owner or any other person except for the person who hired that lienor.
  • If the balance due under the prime contract is not sufficient to pay all lienors listed in the CFPA who are entitled to payment from the owner (as well as other lienors giving notice), the owner must pay no one until the contractor pays the owner the difference.
  • If the contractor fails to provide the difference within 10 days from delivery of CFPA or the owner’s request for the CFPA, the owner must determine the amount due to each lienor and then disburse the amount due under the prime contract in the manner provided by statute.
  • An owner is entitled to rely on a CFPA in making the final payment unless there are lienors who have provided an NTO who are not listed in the affidavit. Lienors not listed in the CFPA can be paid by the owner directly (along with other persons listed in the CFPA that are entitled to payment from the owner). Upon making these payment, the owner is relieved of responsibility under the prime contract except for balances owed to the prime contractor.
  • The owner must retain the final payment due under the prime contract until the prime contractor provides its CFPA. If the owner fails to make such withholding, when final payment becomes due, the improved property is subject to all valid liens of which the owner had notice of as of the time of receiving the CFPA.
  • If a project is abandoned before completion, the owner must determine the amount due to each lienor who has given an NTO and pay the same in full or prorate in the manner provided in the Proration Method.
  • A prime contractor does not have the right to require the owner to pay any money to him if that money cannot be properly paid in accordance with the procedures in F.S. 713.06.
  • Before paying any money directly to a lienor other than the prime contractor or a laborer, the owner must give the contractor 10 days’ written notice of his intention to do so, including the amount to be paid. This requirement can be waived with the prime contractor’s written consent.  
  • If the owner has retained all amounts required under F.S. 713.06, but has otherwise made improper payments, the owner’s property is subject to liens of subcontractors who have given notice but only for the amount of the retentions and the improper payments.
  • Money paid by the owner under a prime contract, which does not cause a detriment to a lienor is treated as though properly paid for that lienor. If any money is found to not be properly paid as in relation to other lienors, the benefit of this finding goes to those other lienors.
Proration Method
  • In determining the amount that lienors under a prime contract should be paid (within the total amount fixed by the prime contract), the owner shall pay such liens in the following order:
    • Priority Class 1: liens of all laborers.
    • Priority Class 2: liens of all persons other than the contractor.
    • Priority Class 3: the lien of the contractor.
  • If the total amount of all liens under the prime contract is more than the amount allowable under the prime contract, all liens in a Priority Class shall be allowed in their full amounts before any liens shall be allowed in any lower Priority Class.
  • If the amount applicable to a Priority Class is insufficient to permit all liens within that class to be allowed for their full amounts, each lien shall be allowed for its pro rata share of the total amount applicable to liens of that class.
  • If the same improvements are covered by liens of more than one Priority Class, those improvements are allowed only in the highest Priority Class covering them.
  • If the same improvements are covered by liens of two or more lienors of the same class, the improvements are allowed only in the lien of the lienor farthest removed from the prime contractor.
  • This section does not affect the priority of liens derived under separate prime contracts.

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