The Law and Your Business- Notice of Commencement and Priorities
Tony Zebouni, Lindell Farson & Zebouni, P.A.
A general contractor executed and recorded a notice of commencement on January 7, 2014 that was accurate, with the exception that it was not signed by the owner of the property. Notwithstanding, the owner was aware of the general contractor’s notice of commencement and made no objection to the same, nor did the owner terminate the general contractor’s January 7, 2014, notice of commencement. No lender was listed on the January 7, 2014, general contractor’s notice of commencement. The following day, January 8, 2014, BB&T recorded a mortgage against the subject property and recorded its own notice of commencement, listing BB&T as the lender. BB&T’s notice of commencement was signed by the owner of the property.
A subcontractor who contracted with the general contractor to perform construction improvements on the property, served a notice to owner pursuant to section 713.06(2)(a) and eventually recorded a construction claim of lien against the property on September 25, 2014, for work performed. When efforts to collect the monies due under the lien failed, the subcontractor filed suit to foreclose its lien free and clear from all other claims — including BB&T’s claim. BB&T took no issue with the form and substance of the claim of lien itself, nor did it contest the perfecting of the claim of lien.
A notice of commencement serves two main purposes. First, it serves to protect the owner by providing a trigger date for when the statute of limitations begins to run. Second, and equally important, the notice of commencement serves to provide a lienor with the necessary information for purposes of serving the required notice to owner under section 713.06(2)(a), thereby perfecting the lien. 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. § 713.13(1)(a).
The general contractor’s January 7, 2014, notice of commencement in this case substantially complied with the requirements of section 713.13 because it contained all of the relevant and required information that satisfied the dual purposes of the notice of commencement: (1) to measure time limitations and (2) to provide the lienor with the current names and addresses of the owner and general contractor allowing the lienor to properly mail the statutorily required notice to owner. Further, BB&T was in the better position to protect itself by performing an updated title search through the date it filed its mortgage or by otherwise requiring the owner of the property to terminate the general contractor’s January 7, 2014, notice of commencement pursuant to section 713.132 before recording BB&T’s mortgage.
Accordingly, the court held that a notice of commencement not signed by the owner, but instead signed by the general contractor with the owner’s authority, is not a nullity, per se, in a lien foreclosure action brought by a subcontractor where the subcontractor has strictly complied with chapter 713 and relies upon the defective notice of commencement, which is otherwise in substantial compliance with section 713.07.
This case highlights the importance of statutory compliance but also the time it took to get final resolution by the court.
EDWIN TAYLOR CORPORATION, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,