Contractor’s Lien Against Condominium Association Partially Discharged for Failure to Foreclose Against Unit Owner That Filed Suit to Discharge Lien
Stein v. Reynolds Ventures, Inc. arises from a dispute between condominium unit owners and a water mitigation contractor. The contractor performed work on the condominium units pursuant to a contract between the contractor and the condominium association. Following completion of the work, the contractor recorded a construction lien against all of the units in the community. The lien did not specify whether the work was performed on the condo’s common elements, although the contractor later took the position that the work involved common elements and multiple units.
Two unit owners filed suit to discharge the lien from their unit and for a declaration that the lien was invalid. Under § 713.21(4), Florida Statutes, the clerk issued a summons requiring the contractor, within 20 days, either to show cause why the lien should not be discharged or to file a lawsuit to enforce the lien.
The contractor did not file a lien foreclosure action. Instead, it responded that it was attempting to resolve the payment dispute with the association, that, because the unit owners were not parties to the contract, they had not been billed directly, and that requiring immediate litigation could interfere with the contractor’s settlement efforts. The contractor alternatively requested an additional 14 days to file suit.
The unit owners moved for judgment on the pleadings, arguing that the response did not establish good cause under § 713.21(4),Florida Statutes. The trial court denied the motion, finding that the existence of a contract, the performance of services, and the failure to receive payment were sufficient cause to leave the lien in place. The unit owners then sought review in Florida’s Second District Court of Appeal.
The Second DCA first rejected the contractor’s argument that the unit owners lacked standing to challenge the lien. The court found that § 718.121, Florida Statutes, allows a condo owner whose unit is subject to a lien to use the remedies available under Chapter 713 to remove that lien. This right applies even where the unit owner did not contract directly with the lienor.
The appellate court then concluded that the contractor had not shown good cause, finding that a proceeding under 713.21, Florida Statutes, is a special statutory proceeding, and a lienor must strictly comply with the statute’s requirements and deadlines. The contractor’s underlying contract and payment claim were separate from enforcement of its construction lien. Accordingly, the fact that the contractor performed work, had not been paid, and hoped to resolve the contract dispute with the association did not excuse its failure to commence a lien foreclosure action. The trial court also had no discretion to extend the statutory deadline.
Because the contractor neither filed an action to enforce the lien nor established good cause for failing to do so, the Second DCA granted the unit owners’ petition and directed the trial court to discharge the lien from their property. Critically, based on a footnote in the appellate opinion, it does not appear that the contractor’s entire lien was discharged, but only the portion of it that applied to the unit owners’ property.
About the Author:
Lauren Ayers is a Construction Attorney in the Construction Industry Practice Group at Hill Ward Henderson, in Tampa, Florida. Lauren focuses her practice on representing contractors, subcontractors, and material suppliers throughout the state of Florida. She can be reached at lauren.ayers@hwhlaw.com or 813-227-8463.
