Article by Michael Clark in Today’s Daily Business Review: “Ruling Creates Opening for Property Owners to Escape from Liens”

Michael Clark Gort photo-thumb-160x240-13551Firm partner B. Michael Clark, Jr. authored an article that appeared in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was titled “Ruling Creates Opening for Property Owners to Escape from Liens,” focuses on the implications of a recent ruling by the Second District Court of Appeal that has created a potential new opening for property owners to quickly wipe away the lien rights of unwary lienors.  Michael’s article reads:

The decision came in the case of Georgia Hiller v. Phoenix Associates of South Florida. Hiller, a homeowner, contracted Phoenix for work on her home and then allegedly failed to pay. Phoenix recorded a lien against her property, and Hiller responded by posting a transfer bond to remove the cloud of the encumbrance from the property.

Hiller proceeded to record a notice of contest under section 713.22(2), shortening the time frame for Phoenix to commence an action against the transfer bond to 60 days.

The contractor had already filed a complaint against Hiller to foreclose the lien as well as for breach of contract and unjust enrichment. However, despite having notice of the transfer and the contest, it failed to commence an action against the surety within the 60-day deadline. Instead, after the passage of more than 60 days, it filed a motion to amend its complaint to add the surety of the transfer bond to the suit.

dbrlogo-thumb-220x41-94239Hiller, presuming that the transfer bond automatically extinguished after the 60 days elapsed, filed a motion for the release of the transfer bond, which was denied by the trial court and became the basis for her appeal.

Michael’s article concludes:

The Second DCA reversed the lower court’s decision. It found that the section of the state’s lien law pertaining to lien transfers to bonds stipulates that once a lien is transferred, “an action commenced within one year after the transfer, unless otherwise shortened by operation of law, in the same county or circuit court to recover against the security shall be deemed to have been brought as of the date of filing the action to enforce the lien, and the court shall have jurisdiction over the action.”

In light of the “unless otherwise shortened by operation of law” language in the statute, the unanimous decision found that the law allows the owner to shorten the time period to commence an action against the security by filing a notice of contest, as Hiller had done. Accordingly, Phoenix’s failure to timely sue the surety after the transfer resulted in the extinguishment of its right to make a claim against the bond.

The court concluded that Phoenix was free to proceed on its underlying contract claims against Hiller but could not continue to encumber Hiller’s real or personal property until it obtained a final judgment.

Our firm congratulates Michael for sharing his insights into this important new ruling with the readers of the Daily Business ReviewClick here to read the complete article in the newspaper’s website.