How to Pay a Contractor in Florida Without Paying Twice

Short answer: Paying your contractor in full does not protect you. Under Florida’s Construction Lien Law an owner is protected only to the extent of proper payments. A payment handed over without collecting lien releases from the contractor and from everyone who served you a Notice to Owner is an improper payment — and a subcontractor or supplier who was never paid can still record a lien against your property for work you already paid for. That is how owners end up paying twice for the same work (plus paying the legal costs and attorneys fees of the other parties).

The rule almost every owner gets wrong

Ask an owner what protects them from a lien and the answer is nearly always the same: “I paid my contractor.”

It does not work that way. The people who can lien your property are not only the contractor you hired. They include subcontractors, sub-subcontractors, laborers and material suppliers you never met, never hired and never spoke to. Their right to lien your property does not depend on whether you paid the contractor. It depends on whether they were paid.

Florida law does give the owner a ceiling. Your total exposure is generally limited to the contract price — you should not have to pay more than you agreed to pay for the job. But that ceiling holds only if your payments were proper ones. Make an improper payment and you lose the protection for that amount, and you can be made to pay it a second time to the lienor who never received it.

What makes a payment “proper”

A proper payment is one made in the manner the statute requires. In practice that means two different jobs — one that repeats at every payment, and a second one that happens only at the end.

Note what is not in that table. You do not need an affidavit at every draw. The affidavit is a final-payment document. What you do need at every single payment, including the first one, are the releases. That is the step owners skip, and it is the step that costs them.

Lien releases: get them before the money leaves, not after

A lien release is a signed document in which someone who could lien your property gives up that right for the work and the amount described in it. Collected properly, releases are a running record that everyone in the chain has actually been paid.

The sequence matters more than the paperwork. A release signed after you have already handed over the check protects nobody, because by then you have no leverage left. The release is what you exchange the money for. If the release does not arrive, the payment does not go out.

Three things owners get wrong about releases:

• Collecting only from the contractor. Your contractor’s release covers your contractor. It does nothing about the subcontractors or material suppliers who were not paid.
• Not reading what the release actually covers. A release covering work through March does nothing for the payment covering work done in April.
• Treating a conditional release as if it were unconditional. A conditional release takes effect only if the payment actually clears.

What is a contractor’s final payment affidavit?

The final payment affidavit is a sworn statement your contractor gives you before final payment. In it the contractor states either that everyone under the direct contract has been paid in full, or, if that is not the fact, lists by name every person who has not been paid in full and the amount due or to become due to each.

It exists so the owner knows, in writing and under oath, who is still owed money before the last of the money is gone. It is the owner’s single most useful document at the end of a job, and it is routinely skipped because nobody asks for it.

Two points that carry real weight:

• The contractor has to give it to you. A contractor who fails to furnish the affidavit has no lien and no right of lien action against the owner for the work under that contract while in default for not giving it. Asking for the affidavit is not an imposition. It is a statutory prerequisite.
• If the affidavit names unpaid people, that list is now the thing to resolve — before the final payment is released, not after. Paying the contractor in full while holding an affidavit that names three unpaid suppliers is close to the worst position an owner can put themselves in. You should make joint checks to those listed as unpaid in exchange for final lien releases.

Can you withhold final payment from a contractor?

If the contractor has not furnished the final payment affidavit, the final payment is not yet properly payable under the Lien Law. That is not a negotiating tactic. It is the structure of the statute. The same is true of the releases: no releases, no proper payment.

Withholding for other reasons — defective work, incomplete work, delay — is a different question with a different answer, and it turns on your contract. Do not confuse the two. Withholding because the lien paperwork is missing rests on the statute. Withholding because you are unhappy with the work rests on your contract, and getting that one wrong can put you in breach.

Where the list of who can lien you comes from

You cannot collect releases from people you do not know about. Two documents tell you who they are.

The Notice of Commencement is recorded at the start of the job and identifies the owner, the contractor, the surety if the job is bonded, and where notices are to be sent. It is the source document for the entire project. If yours was never recorded, or was recorded with bad information, everything downstream gets harder.

The Notices to Owner then arrive in your mail. A subcontractor or supplier not in direct contract with you who wants to preserve the right to lien your property generally has to serve one within 45 days of first furnishing. Owners throw these away because they look like junk mail and because the notice itself says it is not a claim against them.

Do not throw them away. Keep every one. Together they are the list of people you must get releases from. An owner who kept the Notices to Owner and matched a release to each one is very difficult to make pay twice. An owner who trashed them is working blind and could be exposed.

How long is a Notice to Owner good for in Florida? explains the notice from the other side — what has to be in it, who has to serve it, and the bonded-job fork.

What paying twice actually looks like

It rarely looks like a dispute. It usually looks like this.

The job finished months ago. You paid every draw on time and the last check cleared. Then a company you have never heard of records a Claim of Lien against your property for the drywall, because the contractor took your money and never paid them. You call the contractor. The phone is dead, or the company is dissolved, or there is nothing left to collect from.

Now the lien is on your property. It interferes with selling and with refinancing, and the lienor has one year from recording to sue to foreclose it. Your options are to pay the drywall bill a second time, to bond the lien off, or to litigate — and the question in that litigation is whether your payments were proper. If you cannot produce releases, that is a hard case to win.

How long does a construction lien last in Florida? covers the deadlines on the lien itself and the filings that can shorten them.

The mistakes we see most often

• Paying in full and assuming that ends it. It ends nothing if the people below your contractor were not paid.
• Throwing away Notices to Owner because they look like junk mail. They are the list of who can lien you.
• Collecting releases only from the contractor, and none from the subs and suppliers who served notice.
• Taking the release after paying instead of in exchange for the payment.
• Making final payment without the final payment affidavit, or making it after receiving an affidavit that names people who have not been paid and not getting releases from those listed before you make final payment to the contractor.
• Paying in cash, or paying a sub directly to be helpful, with no paperwork tying the money to the work.
• Starting the job with no recorded Notice of Commencement, or one nobody ever checked, or has a wrong address for the owner so that the owner never sees a notice.

The cheapest time to fix this is before you sign

Every protection above is easier to obtain while the contract is being negotiated than after the money is gone. A construction contract can require the releases as a condition of each draw, require the affidavit before final payment, and name the documents by title so there is no argument later about what was owed. Once the contract is signed, you are working with whatever leverage it left you.

Construction lien and notice services

Notice to Owner services | Claim of Lien services

If you have any questions about liens or notices: Call a Construction Lawyer Board Certified by The Florida Bar: (407) 926-4100. We also offer a free initial telephone consultation, limited to 30 minutes.

Williams Law Firm | Orlando, Florida
Glenn Williams, Esq., Board Certified in Construction Law by The Florida Bar

NOT LEGAL ADVICE. This article is general information and educational commentary about construction and construction law. It is not legal advice and is not a substitute for advice from a lawyer about your specific situation. Do not act, or refrain from acting, based on anything in this article.

FLORIDA ONLY. Glenn Williams is licensed to practice law only in the State of Florida. This content generally reflects Florida law. Laws differ by state and by country, and this may not reflect the law where you live or where your project is located. If you are outside Florida, consult a lawyer licensed in your jurisdiction.

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