Liens, lien priority, and construction liens
A lien is a creditor's claim against property as security for a debt. If the debt is not paid, the creditor can force a sale of the property to collect. A lien is a type of encumbrance: something that burdens title without taking ownership away.
Specific vs general
- A specific lien attaches to one particular property. Mortgages, property tax liens on a parcel, and construction liens are specific.
- A general lien attaches to all of the debtor's property in the area it reaches. A court judgment is the classic example.
Voluntary vs involuntary
- A voluntary lien is one the owner chooses to create. A mortgage is the main example: the borrower pledges the property to get a loan.
- An involuntary lien arises by law without the owner's agreement: tax liens, judgment liens, and construction liens.
| Lien | Specific or general | Voluntary or involuntary |
|---|---|---|
| Mortgage | Specific | Voluntary |
| Real property tax lien | Specific | Involuntary |
| Construction lien | Specific | Involuntary |
| Judgment lien | General | Involuntary |
Priority
When property is sold to pay debts, liens are usually paid in order of priority. The general rule is first in time, first in right: the earlier a lien is recorded, the higher its priority.
Property taxes are the big exception. Under Fla. Stat. 197.122(1), all taxes imposed under the state constitution and laws are a first lien, superior to all other liens, on the property assessed, from January 1 of the year the taxes were levied until they are paid. So an unpaid tax bill outranks a mortgage that was recorded years earlier.
Florida construction liens (Chapter 713)
People who improve real property, such as contractors, subcontractors, laborers, and material suppliers, can file a lien if they are not paid. Florida calls these construction liens (many textbooks say "mechanic's liens").
Notice of commencement. Under 713.13(1)(a), the owner or the owner's authorized agent must record a notice of commencement in the clerk's office before the improvement begins, and must post a certified copy, or a notarized statement that it was filed plus a copy, at the job site. The notice tells everyone working on the job who the owner, contractor, and lender are.
Deadline to record a claim of lien. Under 713.08(5), a claim of lien may be recorded no later than 90 days after the final furnishing of the lienor's labor, services, or materials. If the original contract is terminated, the deadline can be shorter.
Serving the owner. Under 713.08(4)(c), the claim of lien must be served on the owner. If it is not served before recording or within 15 days after recording, the lien is voidable to the extent the delay prejudiced anyone relying on it.
How long it lasts. Under 713.22(1), a construction lien does not continue for more than 1 year after the claim of lien is recorded unless an action to enforce it is started within that time.
Exam tip: 90 days to record the claim of lien; 1 year to sue to enforce it. The notice of commencement comes first, from the owner, before work begins.