Florida has an extremely unique approach to lien waivers. The state statutes do provide statutory lien waiver forms, but they aren’t necessarily required. The fact that the parties can agree to use an alternate form, opens up the possibility of additional rights and claims being waived. Whether they are aware of it or not.
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Florida lien waiver requirements
As we’ve mentioned many times before, Florida is one of the 12 states that provide statutory lien waiver forms. However, Florida is the only one of these 12 that allows an alternate form.
In Fla. Stat §713.20(4) & (5) the provisions state that the waiver and release may follow substantially the same form. If using the statutory lien waiver, it may be in substantially the same form. The section then ends with §713.20(8) which states that a lien waiver that is not substantially similar to the forms [provided] is still enforceable under the terms of the lien waiver.
Florida lien waiver statutes create some ambiguity and confusion concerning which lien waiver form to use. This is important given how Florida interprets lien waiver provisions.
For a deep dive on Florida lien waiver forms:
- Guide to Florida Lien Waivers – Progress Payment [Free Download]
- Guide to Florida Lien Waivers – Final Payment [Free Download]
Lien waivers are strictly enforced by their terms
Florida statutes have chosen to treat lien waivers in the same manner as contracts, meaning parties have the “freedom of contract” to make agreements as they see fit, as long as the terms don’t go against public policy. This approach dictates that when a dispute arises, the result will be governed by the contract language itself.
Accordingly, Florida courts have applied this same rationale to lien waivers. They have repeatedly posited that the language contained in a waiver and release is the best evidence of the parties’ intent when the language is clear and unambiguous the courts will not indulge in interpreting its meaning. This was established in Vermut v. General Motors Corp., Inc., Cadillac Div. Meaning that what is written on the lien waiver, is for the most part, much more important than what actually happened.
Assignment of rights is one extra provision to look out for
One particularly determinative provision that can get potential lien claimants into trouble is the assignment of rights. This got one company, Exterior Walls, Inc, (EW) into some trouble a while back.
This case was Spectrum Interiors v. Exterior Walls, Inc. (EW). Exterior Walls (EW) was a sub-subcontractor on a Palm Coast construction project, After a dispute over payment arose, EW filed a complaint alleging breach of contract and quantum meirut.
Spectrum defended this complaint by pointing towards the lien waivers executed by EW. The lien waiver in question was seemingly in the statutory form. At first glance, it appeared standard; but there some additional language added. Most notably, the:
“furnisher (potential lien claimant) assigns to Contractor all rights, title and interest which it may have against the subcontractor.”
At court, Spectrum responded by stating that EW, not only waived rights to recover damages for goods and services before the lien waiver date. Additionally, even if they did have a legitimate claim, they assigned the right to make such a claim to the contractor.
The court reasoned that since the language was clear and unambiguous, EW was bound by those terms. As a result, EW lost their right to recover any damages they had incurred prior to the through-date on the lien waiver.
The ultimate problem with non-required statutory forms
The construction industry is all about minimizing risk. Unfortunately, those higher up on the payment chain take steps to minimize their risk at the detriment of others.
In the 38 states that do not provide statutory forms, subcontractors and suppliers are at the mercy of whatever lien waiver form the GC or owner has decided to require. This has the effect of conditioning those working in these states to proceed with caution, and thoroughly review the lien waiver provisions.
Florida statutes providing waiver forms, but not requiring them, in my opinion, is a half-measure of protection. If it was decided to provide statutory forms, the legislature should have gone all in on the prospect. The Florida statutes have the capability of lulling parties into a false sense of security.
Many times, contractors will model their own lien waiver off of the statutory form, a presumably sound practice. But this can catch an unwitting subcontractor off guard. Especially those new to the industry.
Besides doing a side by side comparison to the statute, there is no clear cut way to be sure what type of lien waiver you are agreeing to use. The waiver in the EW case was clearly lopsided. And regardless of whether it was intentionally misleading or not, it was enforceable in accordance with the terms of the lien waiver.
Florida subs and suppliers should read over the lien waiver language carefully, and ask for clarification of any terms that are unclear. Florida statutes state that parties cannot be required, to use alternate forms of lien waivers. They can only be agreed to ahead of time. However, if the party unknowingly agrees to use an alternate form, this can present all sorts of problems.