Imminent Statutory Change Affects Liens on Leased Property
The Florida Legislature this year passed Senate Bill 1196, not yet submitted to Governor Scott for signature, amending section 713.10 of the Lien Law affecting construction liens on leased property. This bill, when signed, will significantly affect lien rights where a tenant, rather than the landlord, acts as the “owner” on a construction job.
Under the original version of section 713.10, a landlord could, in its leases with its tenants, prohibit liens, then record either the lease or a “short form memorandum” of lease (essentially a notice containing the actual lien prohibition language from the lease) in the public records. If multiple leased parcels are involved, the landlord can file a blanket form of short form memorandum covering all parcels, but under recent case law the lien prohibition language contained in the recorded memorandum must exactly mirror the language in each and every lease. Under the new statutory amendment, a landlord may now record a notice merely stating that all or a majority of the leases on the premises expressly prohibit lien liability, without requiring disclosure in the notice of the exact lien prohibition language or the exact units containing such language in their leases. The lease, short form memorandum or notice must be recorded before a notice of commencement is recorded.
Under the new amendment, any lienor may serve a written demand upon the landlord for a copy of the lease provision prohibiting lien liability. The landlord must provide a copy under oath within 30 days of the demand. Failure to do so, or service of a false or fraudulent copy, will subject the landlord’s interest to liens unless the lienor has actual notice that the landlord’s interest isn’t subject to liens (such as the actual lease provision being recorded in the public records). The lienor’s written demand must be in a document separate from the notice to owner and contain a statutory warning.
The new amendment also makes clear that a tenant contracting for improvements may sign the notice of commencement as owner, rather than the landlord.