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Liens Are Not Always Perfect

Liens Do Not Need to Necessarily Be Perfect, But They Should Be

By: Harry Malka, Esquire

Your Construction Law Firm TM

In the recent case of Premier Finishes, Inc. v. Chris Maggirias, 2D13-1340, (Fla. 2d DCA, November 15, 2013), the Court of Appeals for the Second District of Florida addressed the issue of whether a Claim of Lien should be discharged because of a minor error in the name of the lienor.

In April 2011, “PFI Construction” (which was a fictitious name for “Premier Finishes, Inc.”) entered into a contract with the Soulos Family Trust (Owner) to build a house. In August 2012, after having allegedly completed most of the work required by the contract and having allegedly been wrongfully terminated by Owner, “Premier Finishes, Inc.” recorded a Claim of Lien against the property and filed a lawsuit against Owner for failure to pay the outstanding balance due and to foreclose on the lien.

In response to the lawsuit, Owner filed a motion to dismiss the complaint and to discharge the claim of lien based on the grounds that the lawsuit and the Claim of Lien were filed by “Premier Finishes, Inc.” whereas the contract was entered into by “PFI Construction”. As such, the Owner argued, “Premier Finishes, Inc.” was not a party to the contract and was not the proper “lienor” under Florida’s Construction Lien Law.

The contractor responded that “PFI Construction” was never an existing entity but rather was simply a name used by “Premier Finishes, Inc.”, basically an acronym. The contractor also argued that even though the contract was under the name of “PFI Construction”, “Premier Finishes, Inc.” actually completed all of the work pursuant to the contract. As its last argument, the contractor argued that the Owner failed to show any prejudice as a result of the “errors, omissions, or deficiencies” in the claim of lien.

After hearing the arguments of the parties, the trial court dismissed the lien foreclosure count and discharged the lien based upon its determination that a contract between “Premier Finishes, Inc.” and the Owner was not sufficiently “alleged” or “proven.” “Premier Finishes, Inc.” appealed.

The Court of Appeals reversed the trial court’s ruling. Initially, the Court reviewed the applicable statutory language, §713.01(8), Florida Statutes, which defines “contractor” as “a person … who enters into a contract with the owner of real property for improving it…” The Court agreed that “a construction lien can only arise when a valid contract exists between the parties.” But, the fact that “Premier Finishes, Inc.” operated under a fictitious name did not mean that it had no lien rights. In fact, the Court held that if “Premier Finishes, Inc.” was the real entity using the fictitious name when entering into the contract, it is the actual party to the contract and is entitled to proceed with a claim of lien. Furthermore, the court cited §713.08(4)(a), which provides that absent a showing of prejudice to the Owner, a deficiency, error, or omission in a Claim of Lien will not invalidate the lien. The Court of Appeals held that the Trial Court failed to make a specific finding that Owner proved, by a preponderance of the evidence, that it had been adversely affected by the error or omission in the Claim of Lien. As such, the Trial Court’s discharge of the Lien and dismissal of the Lien Foreclosure lawsuit were quashed.

This case shows the lien law does not require perfection where it comes to preparing a Claim of Lien, minor errors will not invalidate a contractor’s lien. On the other hand, this case also demonstrates that a minor error in the Claim of Lien can delay your case and can substantially increase the costs of litigation. It is always best to review the lien and the lawsuit before filing them to be sure that the names, addresses, and other pertinent information are accurate.