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Florida Appellate Court Holds Properly Perfected Claim Of Construction Lien Could Relate Back To Date Of Filing Of Notice Of Commencement That Was Not Signed By Property Owner Pursuant To 713.13(1)(G), Florida Statutes

In Edwin Taylor Corp. v. Mortg. Elec. Registration Sys., Inc., the Florida District Court of Appeals, Third District, analyzed whether a subcontractor’s properly perfected claim of a construction lien could relate back to the date the general contractor recorded a notice of commencement that was not signed by the property owner for purposes of determining the priority of competing interests in lien foreclosure action. 2020 WL 3261177 (Fla. Dist. Ct. App. June 17, 2020). The issue was one of first impression for the Court.

The general contractor on the project was Griffin Contracting, Inc. (“Griffin”). Edwin Taylor Corporation (“Edwin Taylor”) was a subcontractor hired by Griffin to perform construction improvements. Griffin executed and recorded a notice of commencement on January 7, 2014, that was not signed by the property owner in accordance with section 713.13(1)(g), Florida Statutes, but was otherwise complete and accurate. The notice of commencement also did not list a lender. The property owner was aware of Griffin’s notice of commencement, but did not file an objection or terminate the notice of commencement. The following day, Branch Banking and Trust Company and Mortgage Electronic Registration Systems, Inc., as its nominee (collectively, “BB&T”), filed a mortgage against the property and also filed its own notice of commencement which listed BB&T as the lender and was signed by the property owner.

Edwin Taylor served notice to the owner pursuant to 713.06(2)(a), Florida Statutes, and thereafter recorded its construction claim of lien on September 25, 2014. However, Edwin Taylor’s attempts to collect the money it was owed under the lien were unsuccessful and it eventually initiated a construction lien foreclosure action. BB&T filed for summary judgment on the foreclosure suit claiming Edwin Taylor’s lien was inferior to its mortgage.

BB&T argued Griffin’s January 7, 2014 notice of commencement was invalid because it was not signed by the owner as required by section 713.13(1)(g), Florida Statutes. Therefore, it argued, Edwin Taylor’s lien priority should have been determined based on the date it recorded its claim of lien. The trial court agreed with BB&T’s argument and held Edwin Taylor’s claim of lien could not relate back to the date Griffin filed the unsigned notice of commencement. Applying the September 26, 2014 date that Edwin Taylor filed its claim of lien, the trial court determined Edwin Taylor’s lien was junior in priority to BB&T’s mortgage and granted BB&T’s motion for summary judgment. Edwin Taylor appealed.

On appeal, the Court discussed the purpose of the construction lien laws and its historically strict construction of compliance with the requirements. However, the appellate court noted an exception applies in situations where there is substantial compliance and another party is not adversely affected by an error or omission. The appellate court also noted it was the responsibility of the owner, rather than the lienor, to ensure the notice of commencement was accurate.

The appellate court held that a notice of commencement is not per se void when it is not signed by the owner but is, instead, signed by the general contractor with the owner’s authority. Further, a deficient notice of commencement cannot be used offensively against a subcontractor in a lien foreclosure action where the subcontractor strictly complied with the requirements of chapter 713, Florida Statutes, and relied upon a defective notice of commencement that otherwise substantially complied with section 713.07.

The appellate court held the trial court erred in finding, as a matter of law, that the unsigned notice of commencement was void and reversed the trial court’s grant of summary judgment. This decision is important because it clarifies that it is not the subcontractor who bears the duty to ensure the validity and accuracy of a notice of commencement. Further, it clarifies that a subcontractor will not be penalized for a property owner’s failure to ensure the accuracy of a notice of commencement if the subcontractor otherwise complies with the statutory requirements for its construction lien.