THE NOTICE OF COMMENCEMENT: MORE IMPORTANT THAN YOU MIGHT THINK
Every construction project (should) begin with the recording of a Notice of Commencement. The notice is required to be signed by the owner of the project and recorded in the public records for the county in which the project is located. The notice should also be posted at the job location.
What does it tell you?
The notice typically contains the name and address of the owner, general contractor, surety and lender (if applicable). It may (but really must) contain a copy of any applicable payment and performance bond posted on the project.
Why is it important?
For the owner, any payments made to the contractor after the Notice of Commencement expires are improper and can result in the owner paying twice for the work furnished to the property. In addition, if there is project financing involved, the lender will want to make sure the Notice of Commencement is recorded after the date its mortgage is recorded. This is because a construction lien’s priority with respect to other mortgages/liens relates back to the recording date of the Notice of Commencement. Any interest recorded after that date, is inferior to that of the (timely recorded) construction lien.
For a potential lienor (contractor, subcontractor or supplier) the Notice of Commencement generally contains all the information needed to properly prepare and serve a Notice to Owner and Notice of Non-Payment (provided one is disclosed). A lienor has a right to rely on the accuracy of the information in the notice of Commencement if and when it seeks to record and perfect any lien or bond claim.
Always request a copy of the Notice of Commencement from the party you are contracting with or if possible, the general contractor. It is perhaps one of the most important documents to have in a project file. Not only does it contain needed information to prepare a proper Notice to Owner/Contractor, it can also alert you to the existence of a payment bond and the information needed to serve a Notice of Non-Payment should the need arise. When in doubt of what rights you may have to payment on a given project or what you should include in a Notice to Owner/ Contractor or Notice of Non-Payment, always consult with an attorney knowledgeable with Florida’s Lien and Bond Law.
[i] In fact, pursuant to Florida Statutes §713.245 a project on which a conditional payment bond has been posted (that is a bond in which surety’s obligation is triggered only to the extent the general contractor has been paid by the owner), the notice must list the bond as a conditional bond and attach a copy of it to the recorded notice.
[ii] Florida Statutes 713.23(c)
BY: JOSE A. RODRIGUEZ, ESQ.
The Soto Law Group, P.A.
2400 E. Commercial Blvd., Suite 400
Fort Lauderdale, FL 33308
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