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The Law And Your Business – Notice Of Contest To A Transfer Bond

The Law and Your Business – Notice of Contest to a Transfer Bond

The statutory requirements of Florida’s Lien law, are strictly construed by Florida Courts. In April 2016, the Second District Court of Appeal, in Hiller v. Phoenix Association of South Florida, dismissed a claim against a transfer bond due to the Lienor’s (contractor) failure to strictly comply with the requirements of Chapter 713, Florida Statutes.
In Hiller, the residential property owner refused to pay the contractor for the work performed on the project. The contractor properly complied with the statutory requirements to file a claim of lien and filed an action to foreclose on the claim of lien in a timely manner. After the court action commenced to foreclose the claim of lien, the owner took advantage of its statutory right by posting a transfer bond, thereby transferring the lien on real property to a surety bond. The owner then filed a “notice of contest” pursuant to Chapter 713, Florida Statutes, thereby shortening the time for the contractor to commence an action against the transfer bond.
Under Florida’s Lien law, unless the time to file against the owner is “shortened” by the owner, a contractor must file an action against a transfer bond within one year of the date that the transferred lien is recorded or the security must be returned. The contractor failed to bring an action against the transfer bond within the sixty-day period but attempted to file a supplemental complaint against the transfer bond (Surety). Because an action against the bond was not commenced within sixty days, the contractor had no legal right to proceed against the real property or the transfer bond.
The Court, however, stated that the contractor was still free to pursue its underlying contract claims against owner as the two were in privity. It is critical that owners and contractors (and their counsel) are aware of the nuances of Florida’s Lien law.

For more information, I can be contacted at azebouni@rwzalaw.com.
Anthony (Tony) Zebouni

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