By Michael J. Gelfand / Published November 2020
More paper? Is this just another excuse for delaying associations and owners? Why—before construction commences—must a notice of commencement be signed, completed by a notary public, and then be recorded?
This specific and exacting sequence for creating a proper notice of commencement is intended to protect the property owner, including associations and individual parcel owners. Nevertheless, too often notices are not properly completed. The result can be devastating!
Recently, a Florida appellate court addressed the type of costly litigation that explodes when the contractor’s lien law is not followed to a “t,” particularly when an owner fails to sign a notice of commencement, and whether that failure exposed the owner’s property to a contractor’s lien foreclosure.
The facts in Edwin Taylor Corporation v. Mortgage Electronic Registration Systems Inc., 45 Fla. L. Weekly D 1447 (Fla. 2nd DCA, June 17, 2020), indicate that a contractor executed and recorded a notice of commencement on January 7, 2014. Although the owner did not sign the notice, the owner was aware of and did not contest the notice.
As luck would have it, the very next day BB&T recorded a mortgage against the property. Thereafter, Edwin Taylor, a subcontractor, recorded a construction claim of lien. Not having received payment, Edwin Taylor then filed an action to foreclose its lien against all other claims, including BB&T.
BB&T argued that the notice of commencement was invalid because the notice was not signed by the owner. BB&T asserted that the subcontractor’s claim of lien should not be effective as of the date of the notice of commencement, but instead the notice should be effective only as of the date it was recorded, which was after the date of the mortgage. The trial court agreed and granted final judgment for BB&T.
The Florida appellate court disagreed and reversed the final judgment for the lender. The court remarked that the contractor’s lien law, §713.13(1)(g). Fla. Stat. (2014), requires an owner to sign the notice of commencement. The notice of commencement is intended to protect a property owner by providing a trigger date for when the statute of limitations begins to run, barring the enforcement of a contractor’s claim of lien as well as providing necessary information to a lienor. “The notice of commencement is in essence a roadmap for the lienor and contains the name of the owner of the real property to be improved; the description of the real property; the name of the general contractor, surety, and lender; and where the formal notices to the owner are to be sent and who is to receive copies of the same.”
The court concluded that the notice of commencement signed by the general contractor but not signed by the owner was not invalid because the notice substantially complied with the requirements of §713.13 by containing all of the relevant and required information. “[T]he lender may not use the deficient notice of commencement as a sword against a subcontractor who bears no duty to ensure the validity and accuracy of the notice of commencement.”
What is the lesson learned? This case highlights the importance of accurately preparing, signing, and processing a notice of commencement to protect your rights. As seen, failure to follow the statutory process can involve litigation and potentially avoid a construction lien foreclosure! Thus, before you sign, make certain the notice is correct. After a notice is signed, make certain the notice is correctly processed and posted. If you have any questions regarding the execution of a notice of commencement, ask first before placing your property at risk, and contact your association’s counsel.
If a worker is injured in your Florida community, will the association be liable for dam-ages? The answer may turn on whether a new type of waiver was signed limiting the worker’s recovery options. Should your contracts include this disclaimer?
Recently, a Florida appellate court ruled that an employee waived his right to recover damages when he signed an employment agreement containing a disclaimer limiting his recovery options to workers’ compensation. In Merlien v. JM Family Enterprises Inc., 45 Fla. L. Weekly D 1749 (Fla. 4th DCA, July 22, 2020), the claimant worker was employed by AlliedBarton, a firm that provides security services for its clients. As a condition of his employment, the worker signed a waiver of all claims against AlliedBarton’s clients which are covered under the workers’ compensation statutes.
The worker was apparently assigned as a guard for JM Family Enterprises. While working, the plaintiff slipped and fell on stairs, allegedly sustaining an injury. After receiving payments under JM’s workers’ compensation policy, the worker sued JM for negligence. JM moved for summary judgment, claiming that the worker waived his right to sue for negligence by signing a waiver when employed by AlliedBarton. The trial court granted summary judgment for JM, finding that the negligence lawsuit was barred by language in the worker’s employment agreement.
What happened next? The Florida appellate court agreed with the conclusion of the trial court. First, the disclaimer signed by the worker was unambiguous. Second, and perhaps a bit of a surprise, the appellate court held that the disclaimer, waiver of rights to recover actual losses, was not in violation of Florida public policy and would be enforced.
How was this so? The court held that the disclaimer explained the rights released, the beneficiaries of that release, and the situations in which the release applied. Further, the worker was not coerced into signing the employment agreement but rather he signed it voluntarily, agreeing to limit his options for recovery of any future injuries to amounts provided by workers’ compensation coverage.
Workers’ compensation provides benefits to a third party contracted worker injured on the job. The concept of a disclaimer waiving additional compensation claims would seem to be counterintuitive to public policy, but now at least one of the five Florida appellate courts will enforce that disclaimer.
What should associations do? To potentially reduce claims against itself for damages sustained by a third-party contracted worker, a Florida community association might want to require those workers to sign an agreement containing a disclaimer prohibiting a lawsuit for injuries covered by the workers’ compensation statutes. Check this possibility when reviewing contracts with your attorney.
Michael J. Gelfand, Esq.
Senior Partner, Gelfand & Arpe, P.A.
Michael J. Gelfand, Esq., the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar Board Certified lawyer in Condominium and Planned Development Law and in Real Estate Law, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is a past Chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at firstname.lastname@example.org or (561) 655-6224.