||The Work Village Legal Corner
|James C. Washburn, Esq.
Board Certified in Construction Law
Pohl & Short, PA
280 W. Canton Avenue
Winter Park, FL 32790
|Download the PDF
||What is a
Notice to Owner?
A Notice to Owner (NTO) is a formal document notifying
the owner that you will be working on the owner’s project and
that if you are not paid for your work that you intend to record
a Claim of Lien against the property to assist collect those unpaid
sums. The NTO must be in the form provided in §713.06, Florida
Statutes, and provide following information:
name and address of the project owner as reflected in the Notice
of Commencement (which
should be posted at the job site);
description of the work that you will be providing;
property description, as reflected in the
Notice of Commencement; and
name of the person or entity that hired you to work on the project.
The form warns the owner that if
the general contractor fails to pay you that you will record a Claim
of Lien against the owner’s property – even if the owner
has already paid the contractor in full, i.e. the owner could end
up paying twice for the labor, materials and services that you provided
on the project.
What is the purpose of the Notice to Owner?
From the lienor’s perspective, the purpose of the NTO is
to preserve its right to lien the property in case of non-payment.
However, the Florida Legislature’s reason for requiring a
NTO is to help the owner protect the property from liens. The NTO
lets the owner know who is working on the project and, therefore,
who could potentially lien the project if they do not get paid.
The fear is that the owner pays the general contractor, but the
general contractor fails to flow that money down-stream and pay
subcontractors and suppliers. If that happens, the subcontractors
and suppliers could lien the project, and the owner could end up
paying twice for their work. Recognizing this risk and having a
list of potential lienors (i.e. those who served a NTO), the owner
can protect the property from liens by refusing to pay the general
contractor monthly and final payments until the general contractor
provides the owner lien releases from all the potential lienors,
releasing the project from any right to lien the property for work
provided through the date of payment or sometime earlier. (Note
that lien release for future work is unenforceable under Florida
Lien Laws.) If the owner follows these procedures (and some other
procedures at the end of the job) the owner can limit the total
lien liability to the price of the prime contract.
What if there is no Notice of Commencement?
As previously stated, you should look first to the Notice of Commencement
for all of the information that you need for completing your NTO.
However, if there is no Notice of Commencement, the Florida Lien
Laws allow you to look to the building permit.
Who must serve a Notice to Owner?
The Florida Lien Laws require all potential lienors who do not
have a direct contract with the project owner to serve a NTO. Accordingly,
everyone “down-stream” from the general contractor,
e.g. subcontractors, sub-subcontractors and suppliers to the general
contractor, subcontractors, and sub-subcontractors must serve a
NTO to preserve their lien rights. (Note, however, that if you
are too far “down-stream” that you may not have any
lien rights, NTO or not; for example, sub-sub-subcontractors and
their suppliers have no lien rights whatsoever.) However, because
the general contractor has a direct contract with the project owner,
it does not need to serve a Notice to Owner.
On what projects should I serve a Notice to Owner?
Unfortunately, some in the construction industry think that they
should only serve a NTO on those jobs on which they suspect a potential
problem with payment. That is a bad approach. You never know when
you are going to face payment problems; it is unpredictable. You
should serve a NTO on all jobs (except public projects - which
cannot be liened anyway - or those on which there is an unconditional
payment bond attached to the Notice of Commencement). Do not think
that you are going to upset your clients by serving a NTO. All
of the major suppliers and subcontracting companies make it a policy
to serve a NTO on all lienable jobs.
When should I serve a Notice to Owner?
A subcontractor’s deadline to serve its Notice to Owner
is within 45 days of first providing work on the project. This
deadline is strictly enforced. If the NTO is served on the 46th
day, you forfeit your lien rights entirely. The Florida Lien Laws
also allow you to serve the Notice to Owner before performing work.
Note, however, that if you serve the NTO by registered or certified
mail postage prepaid, the NTO will be deemed served on the date
of mailing, but only if mailed within 40 days of first providing
work. Trades performing work at the tail-end of projects (e.g.
landscapers, sign suppliers, etc.) should be warned that the NTO
must be served prior to the owner’s final payment; therefore,
those entities should make it a policy to serve an NTO immediately
upon entering their contract for the project. Another warning goes
out to suppliers of specially fabricated goods. Your 45 days starts
at the commencement of the special fabrication process – not
delivery to the project.
How must the Notice to Owner be served?
Florida’s Lien Laws state that service of the NTO must be
made by one of the following methods:
(a) By actual delivery to the person to be served; if a partnership,
to one of the partners; if a corporation, to an officer, director,
managing agent, or business agent; or, if a limited liability company,
to a member or manager;
(b) By sending the same by registered or certified mail, with postage
prepaid, or by overnight or second-day delivery with evidence of
delivery, which may be in an electronic format; or
(c) If the method specified in paragraph (a) or paragraph (b)
cannot be accomplished, by posting on the premises.
Because you must prove actual service of the NTO, obtaining written
evidence of service – like a certified mail receipt – is
preferable. Just note that, as previously stated, the certified
mail should go out no later than 40 days after first providing