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.
