Substantial Compliance and Florida Mechanics Liens

Lien laws can be strict. That’s why it’s so important to understand lien and notice deadlines and requirements. As we’ve previously noted, Florida is not always lien-ient with these regulations. Substantial compliance is available in some cases, though. A few months ago, another Trump lien made this readily apparent.

For more on Florida mechanics liens, head over to our Florida Construction Payment Resources.

The Facts

Trump Endeavor 12 LLC v. Fernich, Inc. d/b/a The Paint Spot was a pretty classic case of substantial compliance. The Paint Spot was a supplier to a subcontractor (M&P) for a project at the Trump National Doral Miami. At the outset of the project, The Paint Spot sent its notice to owner in order to preserve its lien rights. To avoid using incorrect information, The Paint Spot picked up its notice of commencement from a representative of Trump Endeavor (“Endeavor”).

The Paint Spot’s notice to owner, which was based on the information provided in the notice of commencement, named the incorrect general contractor. Luckily, the correct GC noticed and informed The Paint Spot of the mistake. The Paint Spot later claimed that the issue had been fixed, but the discrepancy was not resolved. Later on in the project, payments stopped making their way to The Paint Spot and they filed a lien.

The Case

Endeavor claimed that The Paint Spot’s lien was invalid because The Paint Spot’s notice named the wrong GC. However, the court noted that the notice requirements for Florida mechanics liens allow for substantial compliance.

Substantial Compliance

In order to substantially comply, a claimant (a) must strictly adhere to the time and content restrictions; (b) if the owner has designated an additional person to receive notice, that person must be served a copy of the required notice; and (c) must follow the form requirement.

The Paint Spot had adhered to all of the notice requirements but had named the wrong general contractor. Further, the general contractor who was omitted was the one who found the error in the first place. Thus, the notice requirements had been substantially complied with and the party who was incorrectly omitted had actual notice of The Paint Spot’s presence on the project.

That’s a pretty rock-solid basis for substantial compliance, but there were some other factors that really drove the point home. Throughout the project, the (correct) general contractor exchanged partial waivers for payments to The Paint Shop, thus ratifying their ability to lien. If that’s not enough, here’s a direct quote from the GC:

[T]he decision not to pay [Paint Spot] had nothing to do with a defective Notice to Owner . . . . They weren’t paid because Mr. Trump had already paid M&P a decent amount of money of the contract . . . and there was still a lot of work that needed to be completed, so we used the money, M&P’s remaining balance, plus additional funds to pay to get the work done.

It comes as no surprise that the court found in favor of The Paint Spot. The court noted that all of the requirements were met, other than the incorrect GC information. The court also noted that the source of the error was when The Paint Shop relied on Endeavor’s notice of commencement. The GC had actual, express, and timely notice. Thus, the notice requirements had been substantially complied with.

Takeaway

Lien laws are not particularly flexible, so it’s good to see that substantial compliance is alive and well in Florida. Endeavor was not prejudiced in any way but still attempted to avoid payment due to a clerical error. Ultimately, the purpose of lien laws is to provide protection for unpaid construction work. By allowing substantial compliance, the court provided The Paint Shop with the protection of Florida lien laws without disadvantaging anyone else.

Florida mechanics liens, and Florida construction cases in general, keep in interesting . We’ve discussed scams, anti-corruption laws, and surety bond fraud all in the past year.

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Substantial Compliance and Florida Mechanics Liens
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Substantial Compliance and Florida Mechanics Liens
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Notice and lien requirements should always be strictly complied with, but sometimes substantial compliance is good enough. A few months ago, another lien against Donald Trump tested Florida substantial compliance.
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Lien Law News
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