Confusing Lien DecisionsIn a recent Florida lawsuit, an engineering company and condominium association found themselves arguing over whether a mechanics lien was properly filed.  The two parties had executed 9 different, independent contracts to perform work on the condominium complex. When unpaid, instead of filing 9 different liens, the engineering company filed a single blanket lien against the project. After all, the work was commissioned on a single piece of property.

The condominium association asked the courts to invalidate the mechanics lien claim. They argued that the engineering company had to file 9 separate mechanic liens: one for each contract. The immediate legal question before the court, therefore, wasn’t whether the engineering company was due any money. The question was, was the lien valid?.  

Read below to learn what the court decided.

Explaining The Problem: Performing Work On A Single Property Under Multiple Contracts

Pistorino & Alam Consulting Engineers was hired to perform engineering services at the Mirasol Ocean Towers, a single property. The services were commissioned by the Mirasol Ocean Towers Condominium Association, a single entity. In other words, though working on a condominium complex is often confusing because of multiple-owner and multiple-land parcels, that doesn’t appear to be relevant here. The situation was surprisingly clean. A single entity hired the engineering company to do work on a single property.

The important detail here is that the two parties — the engineering firm and the association hiring the firm — signed multiple contracts to complete work on the single property.

The engineering company and the association, for whatever reason, decided to engage in 9 separate contractual agreements for 9 different scopes of work. Thereafter, the engineering company found themselves unpaid $107,090 for their services across the 9 contracts.

Pistorino & Alam filed a single lien.

This type of problem usually presents itself in reverse. Instead of having multiple contracts to do work on a single property, contractors oftentimes find themselves doing work under a single contract across multiple properties. This is specifically addressed in California’s mechanics lien laws, which we discuss in “You Can File A Single Mechanics Lien Against Multiple Properties in California in Some Circumstances.” It’s also addressed by Florida Statute §713.09, (addressed below), which allows that a single lien be filed “even though the improvement is… located on several lots, parcels, or tracts of land.”

The seemingly simpler circumstances in this case yielded a surprising result. The Florida court invalidated this single lien claim on the single property, determining that the law required the engineering company to file 9 separate claims because there were 9 separate contracts. Keep reading to learn why.

Florida Court Holds That Engineering Company Should Have Filed 9 Separate Liens Against The Same Property

Pistorino & Alam Consulting Engineers v. Mirasol Ocean Towers Condominium Association (2014-01857-CA-32) came before Miami-Dade Circuit Judge Lisa Walsh. Walsh invalidated the lien claim in what the association’s attorneys termed a rookie-type filing mistake. In fact, the association’s attorney was quoted by the Daily Business Review saying that the case law on this topic was “not controversial by any means.”

Though the opinion is not published, Judge Walsh and the association’s attorneys likely relied upon Florida Statute §713.09, which provides as follows:

A lienor is required to record only one claim of lien covering his or her entire demand against the real property when the amount demanded is for labor or services or material furnished for more than one improvement under the same direct contract. The single claim of lien is sufficient even though the improvement is for one or more improvements located on separate lots, parcels, or tracts of land. If materials to be used on one or more improvements on separate lots, parcels, or tracts of land under one direct contract are delivered by a lienor to a place designated by the person with whom the materialman contracted, other than the site of the improvement, the delivery to the place designated is prima facie evidence of delivery to the site of the improvement and incorporation in the improvement. The single claim of lien may be limited to a part of multiple lots, parcels, or tracts of land and their improvements or may cover all of the lots, parcels, or tracts of land and improvements. In each claim of lien under this section, the owner under the direct contract must be the same person for all lots, parcels, or tracts of land against which a single claim of lien is recorded.

While the association’s attorneys claim that the case law is clear on the question decided by Judge Walsh, I think there is a bit more uncertainty than first meets the eye.  Most importantly, there is a question of whether §713.09 even applies.

The news reports about this case are not clear on whether the engineering company’s improvements spanned across multiple properties (i.e. multiple condo units), or if it was all against the same underlying property.  A straight-forward reading of the news reports and commentary, however, suggest that the engineering company’s single lien was filed against a single property.

Multiple Liens Are Required If There Are Multiple Contracts…If There Were Multiple Properties

If the engineering company was performing work across multiple properties, lots, parcels, or tracts of land, it’s pretty clear that §713.09 would apply and require 9 different liens in the circumstance when they performed the work under 9 different contracts.

Generally speaking, in every state including Florida, when construction work is done on multiple properties, a contractor or supplier must file an unique lien against each unique property.  However, Florida’s §713.09 provides an exception to this general rule.  This statute creates an exceptional situation when a claimant can file a single lien across multiple properties. It applies only when the work is done at the request of a single contracting party, and done under a single contract.

In this case, if the engineering company performed work across multiple parcels within the condominium complex, they clearly wouldn’t qualify for the single lien exception because they did the work under multiple contracts.

However, what is the work wasn’t performed on multiple parcels.  What if the work was done on a single parcel, as the news articles on this case suggest?

If The Work Was On A Single Property…Judge Walsh May Be Wrong

The news coverage of this case, as well as at the Mirasol Ocean Towers monthly newsletter describing the work, suggests that Pistorino & Alam Consulting Engineers was hired to do work on the condominium complex’s common elements.  Accordingly, the work would have been furnished to a single parcel of property.

If this is the case, I would disagree with Judge Walsh that §713.09 is applicable.

The statute clearly refers to the circumstances when work is performed across multiple properties.  The first sentence of the statute, for example, specifically limits itself to situations when “the amount demanded is for labor or services or material furnished for more than one improvement…”

Sure, the statute distinguishes between work done under a single or multiple direct contracts, but it’s discussion is relevant only to those circumstances when the work is done across multiple properties.  When work is performed on a single property, there is really no reason to refer to the statute for any guidance.  It’s irrelevant to such a circumstance.

When work is not done across multiple properties, more standard language would be applicable.  As in the case of an engineering company, §713.03’s provisions would apply, which provides:

Any person who performs services as …engineer…has a lien on the real property improved for any money that is owing to him or her for his or her services used in connection with improving the real property…rendered in accordance with his or her contract and with the direct contract.

This provision establishes a broad lien right for “his or her services used in connection with improving” the property, and does not get bogged down on the number of contracts executed to provide those services.  It makes sense for the law to have a “singe contract” requirement when enabling claimants to file a lien across multiple properties, but taking that “single contract” requirement and applying it to other circumstances really doesn’t make much sense, and it is certainly not supported by the statutes.

Judge Lisa Walsh Miami Florida Judge
Circuit Judge Lisa Walsh, who invalidated a mechanics lien, holding that an engineering company needed to file 9 different liens against the same property. Photo from 11th Judicial Court of Florida.

Judge Walsh may not have made her decision in a vacuum, however.  Nevertheless, the case law on the subject is substantially flawed.

In Lee v. All Fla. Constr. Co., a 1995 district court confronted this exact situation, and §713.09 invalidated the mechanics lien “because the two contracts were distinct [and therefore] the contractor was required to file two claims of lien even though the work was done on the same structure.”  This comment by the court, however, relied upon another case — Kettles v. Charter Mortg. Co. — and that case dealt with work performed across multiple properties, not work done on the “same structure.”

§713.09, accordingly, has been bastardized in a bit.  The statute sets forth an exception to the a general rule which requires multiple liens be filed against multiple properties, whereby a single lien is allowed if work is done across the multiple properties under a single contract.  It has been twisted to disallow single liens on a single property when work is done under multiple contracts.  The statute, however, has absolutely no relevance to that situation.

And since “the mechanic’s lien statute is to be interpreted favorably to the lienor in order to achieve the beneficial purpose of the statute which is the protection of those entitled to receive the fruits of their labor” (from Kettles), it’s a shame that §713.09 is being interpreted as something it is not, to achieve the result of invaliding lien claims that may otherwise be valid.

Conclusion

This is a very interesting case out of Florida that relates to fairly common situations.  In the construction world, projects get done in all sorts of ways.  Sometimes contracts are neat and clean, but other times, there are contracts, change orders, followup contracts, ongoing pay-as-you-go type contracts, and work done without written contracts at all.  Unfortunately, the contracting process can sometimes be quite messy.

When things get messy and payment is due, lien claimants can get confused about how to practically file their mechanics lien claim. In Florida, there is a statute specifically designed to clear up how to file a lien under a specific situation: when work is done under a single contract across multiple properties.  However, there is now some case law that twists this specific statute to cover other circumstances, which are clearly not contemplated by the statute’s language.

How should potential lien claimants in Florida think about this case law?  How does it impact their lien filing decision?

Unfortunately, I think this recent Judge Walsh decision creates a complicated and head-scratching precedent.  Hopefully it goes up and gets reversed on appeal, but more likely, the decision will be stuck in the circuits for a while leaving lien claimants with an ambiguous situation.

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Can You File a Lien While Working Under Multiple Contracts?
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Can You File a Lien While Working Under Multiple Contracts?
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If you're working under multiple contracts, it may be complicated to file a single lien on a project in Florida, according to a new case.
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zlien
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