Fraud is a complete defense to enforcement of a construction lien under Florida law. If you believe that a contractor has obtained a fraudulent construction lien against your property, you should talk to a lawyer about challenging the lien in state court. In addition to removal of the lien, you may also be entitled to damages, attorneys’ fees, and costs.
Construction liens allow contractors to ensure that they have a way to get paid for the work they perform. When a contractor has a construction lien and the property owner refuses to pay (or is unable to pay), the contractor can enforce the lien by pursuing foreclosure in state court. By pursuing foreclosure, the contractor can force the sale of the property, and then the contractor can secure payment from the proceeds of the forced sale.
Property Owners Have Clear Legal Rights in Florida
While construction liens protect contractors, they present substantial risks for property owners. Along with the risk of facing foreclosure for valid debts, property owners also face the risk of fraud. Unfortunately, unscrupulous contractors will use fraudulent construction liens to try to obtain funds they are not rightfully owed—whether by pursuing foreclosure or by threatening foreclosure to coerce property owners into paying out of pocket.
Recognizing the risk of property owners suffering losses due to fraudulent construction liens, the Florida Legislature has enacted a law that specifically addresses this scenario. Under Section 713.31 of the Florida Statutes, property owners have the ability to challenge fraudulent construction liens in court when necessary.
What Qualifies as a “Fraudulent Lien” Under Florida Law?
This raises an important question: What qualifies as a “fraudulent lien” under Florida law? Section 713.31(2)(a) of the Florida Statutes states:
“Any lien . . . in which the lienor has willfully exaggerated the amount for which such lien is claimed or in which the lienor has willfully included a claim for work not performed upon or materials not furnished for the property upon which he or she seeks to impress such lien or in which the lienor has compiled his or her claim with such willful and gross negligence as to amount to a willful exaggeration shall be deemed a fraudulent lien.”
If you find this confusing, you are not alone. But, if we break it down, we can see that this language provides a handful of key protections to Florida property owners. Under Section 713.31(2)(a), all of the following constitute fraudulent construction liens in Florida:
- Liens in which the contractor has “willfully exaggerated” the amount due;
- Liens in which the contractor has “willfully included” a claim for work not performed;
- Liens in which the contractor has “willfully included” a claim for materials not provided; and,
- Liens in which the contractor’s “willful and gross negligence” resulted in an inaccurate claim.
So, not only can a construction lien be deemed fraudulent if the contractor willfully asserts a claim for money that isn’t owed, but a construction lien can also be deemed fraudulent due to a contractor’s “willful and gross negligence.” Ultimately, if a property owner has concerns about the validity of a construction lien for any reason, it will be worth consulting with an attorney about the legal options that are available.
How Can Property Owners Challenge Fraudulent Construction Liens in Florida?
If a contractor has filed a fraudulent construction lien against your property, you have the right to challenge the validity of the lien. Under Section 713.31(2)(b) of the Florida Statutes, fraud is a complete defense to the enforcement of a construction lien in state court.
If the judge finds that the lien is fraudulent, the judge can declare the lien unenforceable and bar the contractor from pursuing foreclosure. Additionally, Section 713.31(2)(c) of the Florida Statutes provides that property owners who successfully challenge fraudulent construction liens are entitled to:
- Damages for any losses suffered as a result of the fraudulent lien;
- Reasonable attorneys’ fees; and,
- The costs of defending against the contractor’s foreclosure attempt in court.
Losses that property owners can seek to recover include, “costs for services in securing the discharge of the lien, the amount of any premium for a bond given to obtain the discharge of the lien, interest on any money deposited for the purpose of discharging the lien.” In addition to these compensatory damages, property owners can also seek punitive damages in an amount equal to the value of the contractor’s fraudulent claim.
Construction Lien Fraud is a Felony, But Property Owners Still Need to Take Legal Action On Their Own
Filing a fraudulent construction lien is a third-degree felony under Florida law. If convicted of filing a fraudulent construction lien, contractors can face up to five years in prison and a $5,000 fine.
But, if a contractor faces criminal prosecution for filing a fraudulent construction lien, this does not mean that the property owner will be made whole. To secure the remedies discussed above, property owners must take appropriate legal action in civil court. The criminal justice and civil litigation systems are entirely separate, and a criminal conviction does not guarantee that a property owner’s problems will go away.
On the same token, if a fraudulent contractor avoids a criminal conviction, this does not necessarily mean that a property owner is without options. Even in this scenario, a civil judge could still very well find that the lien is unenforceable and damages are warranted. With this in mind, regardless of the circumstances at hand, if you have questions about challenging a fraudulent construction lien, you should consult with an experienced attorney promptly.
Do You Need to Challenge a Fraudulent Construction Lien in Florida? Contact Us Today
The attorneys at Willis & Davidow have extensive experience representing clients in construction-related disputes in Florida. If you need to know more about challenging a fraudulent construction lien, we encourage you to contact us promptly for a confidential consultation. To speak with an experienced attorney as soon as possible, call 239-465-0531 or tell us how we can get in touch online today.