Most of my work is time and materials was wondering if NTO's protect that as an electrical licensed subcontractor. Is it worth it to start sending? Will it protect me at all?
Feb 19, 2019
Good question! First and foremost - when payment is owed for work that's been performed to permanently improve real property, lien rights will typically arise. The actual terminology of the contract under which work is performed very typically won't affect whether or not a lien claim will be available - though it could certainly affect how much is owed. With that in mind, let's look at Florida's lien statute specifically. Under § 713.06(1) of Florida's lien statute, "A materialman or laborer, either of whom is not in privity with the owner, or a subcontractor or sub-subcontractor who complies with the provisions of this part and is subject to the limitations thereof, has a lien on the real property improved for any money that is owed to him or her for labor, services, or materials furnished in accordance with his or her contract and with the direct contract..." So, whether or not a contract is made as a time and materials contract won't have any impact on whether a lien claim would ultimately be available. Now, in order to utilize a lien claim, those parties not in contract with the property owner must send an NTO. Regardless of the terms of the contract, unless the sub-tier party is merely performing work as a laborer, an NTO must be sent in order to preserve mechanics lien rights. Now, let's look to what's required on the NTO itself. Looking to § 713.06(2)(a), which creates the requirement for sending an NTO, there's nothing that appears to limit the effectiveness of an NTO for work done under a time and materials basis. That section reads, in part, "All lienors under this section, except laborers, as a prerequisite to perfecting a lien under this chapter and recording a claim of lien, must serve a notice on the owner setting forth the lienor’s name and address, a description sufficient for identification of the real property, and the nature of the services or materials furnished or to be furnished." Thus, while a time and materials contract might not specify exactly what work will be done, a very detailed description of exactly what work will be done is not necessary. Rather, the "nature of the services or materials furnished or to be furnished" is fine! In fact, under § 713.06(2)(c), the form to be used for a Florida Notice to Owner only calls for a "General description of services or materials", among other things, and does not call for the amount that will ultimately be due for that work. So, as laid out above, the form of a potential claimant's contract won't really have much bearing on their ability to file a lien (rather, the type of work performed and the adherent to procedures and deadlines will have much more bearing), and it should not affect the claimant's ability to send an effective NTO. For more on Florida lien and notice laws, this resource should be valuable: Florida Lien & Notice FAQs.