In order to deliver efficient, high quality products, home builders will contract with specific companies who are experts in their trade. Some of those trades are concrete companies, framing companies, electric companies, cabinet companies and flooring companies. These trades are referred to as “subcontractors” of the builder.
Throughout the construction process property owners will likely receive a “Notice To Owner” or “NTO” from the various subcontractors who perform work on their property, advising them (the property owner) of their (the contractors) lien rights. More information can be read about Florida Lien Rights here. A copy of the NTO is sent to the property owner, builder and lender (if there is a loan on the property). As part of the Florida Construction Lien Law all subcontractors who perform work on a specific property have the right to file a lien to ensure payment once their work is completed.
The NTO does not necessarily mean that a lien has been filed on a property, it is simply a notice of the right to file a lien. The NTO simply puts all parties on notice that the subcontractor is reserving their right to file that lien within 45 days should payment be withheld after they have completed their work. In the construction industry NTO’s are quite common and the builders accounting department deals with them on a daily basis.
Once the subcontractors work is completed and the builder prepares the payment for the work, the subcontractor will sign a written release when they pick up their check. The signed release basically says the contractor is forfeiting their right to lien the property because they are accepting payment for the services. Copies of the releases are retained in the builders files as they will provide them to homeowners and many lenders require copies of these waivers before they will release any future construction draws.
One of the biggest risk in choosing the right builder is ensuring that the builder will pay the subcontractors for the work they complete. Ultimately if the builder does not pay the subcontractors for their work, the homeowner will be responsible for the payment.
It is Sposen Homes policy to pay their subcontractors on the 15th and 30th of each month. This eliminates the need for subcontractors to file liens and also gives Sposen Homes scheduling and pricing priority over other builders. It is also the policy of Sposen Homes to obtain a signed release from each and every subcontractor upon final payment for their work, protecting our clients from having to deal with liens.
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