An article in the Florida Bar Journal entitled “Florida’s Unwieldy but Effective Construction Lien Law” drives home the importance of following lien law and filing the Notice of Commencement for every construction project.
The article states, “A glance at any urban skyline in Florida will confirm that construction is still big business. Look again, and you might also see that it’s chaotic and messy, characterized by one-off projects owned by short-lived one-asset entities, and built by a transient alliance of hundreds of vendors and thousands of workers. As a result, the money that is the lifeblood of a project travels a long and difficult path from the inevitable lender to a worker’s weekly paycheck or a supplier’s invoice. It doesn’t always make it, and its failure to do so underlies the reason for Florida’s construction lien law.”
In a concerted effort to reduce or eliminate the “chaotic and messy,” Florida is serious about the enforcement of lien law and the filing of Notices of Commencement for construction projects. Property owners and general contractors must have their documentation in place, on time, and accurate. Having this information can prevent misunderstandings that cost the property owner or general contractor time and money. As the article states above, money is “the lifeblood of a project.” The Notice of Commencement is an important tool that helps keep people and money on track. Failing to file the Notice of Commencement may lead to some unintended negative consequences that could be very costly to the property owner and the success of the project.
What is the Notice of Commencement?
The Notice of Commencement (NOC) goes by other names such as the “Notice of Project Commencement” or the “Affidavit of Commencement.” The NOC officially states the project start date. Beginning on that date, the contractor, subcontractor, or support can commence providing labor and materials for the project.
The NOC also contains information that is useful for different stakeholders at various stages of the project. This information may include:
- The property owner’s name and address
- Property description and full address
- A succinct scope of work
- The general contractor’s name, address and contact information
- The contractor’s surety information
- Lender information
- Details of the property owner’s legal representatives
- NOC expiration date
- The property owners’ signatures (helpful if payment issues arise)
For general contractors in Florida, this information, as well as the signatures from the property owners, can be used if payment issues arise. Also, pre-lien notices (such as the Notice to Owner and the mechanic’s liens) need this information. General contractors, subcontractors, and suppliers should record and archive information contained in the Notice of Commencement.
Who Files the Notice of Commencement?
Property owners or the general contractor file the NOC. It is served in conjunction with the commencement of the project. It must be officially recorded at the local state office where the project is based.
The property owners must sign the NOC. It must show their legal names. That person will also be required to sign the document. For full compliance, all property owners must provide their signatures.
Why File a Notice of Commencement?
Florida lien law requires a notice of commencement be filed. The Notice of Commencement announces the starting point for the mechanic’s lien process. The information found on the NOC will be used to file pre-lien notices by participants on the project because a Notice to Owner is a legal requirement in Florida.
The NOC also allows a general contractor in Florida (as well as subcontractors and suppliers) to schedule the filing of other relevant documentation. For example, the preliminary notice needs to be sent within the first 15 days of the project, and that 15-day count begins on the date recorded in the notice.
What Are the Consequences for Not Filing a NOC?
There are several negative consequences for failing to properly file the Notice of Commencement. These consequences can be punitive. Here are three:
- In Florida, without a correctly filed NOC, the general contractor will not be able to secure a building permit.
- Without a NOC, the property owner may face double payment if the contractor leaves before paying subcontractors and suppliers.
- Without a NOC, the property owner will have violated Florida’s rulings on mechanics liens. This will then make the property owner responsible for all payments to stakeholders, even if the contractor has been paid in full.
As a point of information, a mechanic’s lien is a guarantee of payment to builders, contractors, and construction firms that build or repair structures. Mechanic’s liens also extend to suppliers of materials and subcontractors and cover building repairs as well. The lien ensures that the workmen are paid before anyone else in the event of a liquidation.
Florida law requires that a Notice of Commencement be filed by the property owner or the general contractor. The NOC contains important information that is useful for all involved parties in the project. A correctly filed NOC is required to obtain business permits and to start the mechanic’s lien process. Failure to comply could result in the property owner making double payments should the general contractor exit the project before it is completed and before all parties are paid.
Contractors Reporting Services in Tampa, FL, understands the importance of filing all required paperwork correctly and on-time. They help general contractors and other construction stakeholders ensure that all the documentation for a project is in order, which ensures that clients can focus on the project rather than papers.