Florida has one of the strongest construction lien laws in the United States. Under Chapter 713 of the Florida Statutes, contractors, subcontractors, laborers, and material suppliers who work on or improve your property have the right to file a lien if they are not paid. For homeowners who are already behind on their mortgage, an outstanding construction lien adds a layer of complexity to an already difficult situation.
This guide explains how Florida construction liens work, how they interact with first mortgage foreclosure, and what homeowners can do when they face both problems at the same time.
How Florida Construction Liens Work
When a contractor, subcontractor, laborer, or material supplier performs work or provides materials to improve your property and is not paid, they can record a Claim of Lien in the county public records. This lien attaches to your property and must be resolved before you can transfer clear title.
Key deadlines under Chapter 713:
- A subcontractor or supplier (anyone not in direct contract with the owner) must serve a Notice to Owner (NTO) within 45 days of their first day of work (F.S. 713.06). Without a timely NTO, they cannot file a valid lien.
- A lienor must record the Claim of Lien within 90 days of the last day of work (F.S. 713.08).
- A lienor must file suit to enforce (foreclose) the lien within one year of recording -- or within 60 days if you record a Notice of Contest of Lien (F.S. 713.22).
Construction Lien Priority vs. Your First Mortgage
Florida uses a “visible commencement” rule to determine construction lien priority. Under F.S. 713.07, a construction lien relates back to the date that the first physical improvement became visible on the property -- typically when ground is broken, materials are delivered to the site, or work first appears.
If your first mortgage was recorded before visible construction commenced, your mortgage has priority over any construction lien. This means a properly conducted judicial foreclosure by your first mortgage lender can extinguish subordinate construction liens -- provided the lienors are named as defendants in the foreclosure action.
If a lienor is not named in the foreclosure, their lien can survive the sale and bind the new owner. This is why foreclosure attorneys conduct thorough title searches before filing. However, recently recorded liens filed near the foreclosure filing date are sometimes missed.
How an Outstanding Construction Lien Complicates a Pre-Foreclosure Sale
If you want to sell before foreclosure, any title company will run a title search as part of the closing. An unresolved construction lien will appear in the search and will need to be resolved before the closing agent can issue title insurance and the sale can close.
Options for resolving a construction lien before closing:
- Pay the lien from sale proceeds. If the sale generates enough equity, the lien can be paid at closing like any other debt.
- Negotiate a lien release at a discount. Subcontractors and suppliers who know the property is heading toward foreclosure often accept a settlement for less than the lien amount. A lien release executed by the lienor and recorded in the county records clears the title.
- Challenge an invalid lien. If the lien was not properly served, was recorded late, or contains errors, it may be unenforceable. A Florida construction law attorney can advise on whether a lien is vulnerable to challenge.
- Have the lienor named in the foreclosure. If you cannot resolve the lien before foreclosure, ensure the foreclosure attorney names the lienor as a defendant so the lien is extinguished by the final judgment.
The Double Payment Problem: Paying the GC and the Subs
One of the most frustrating situations for Florida homeowners occurs when they paid the general contractor in full, but the general contractor did not pay subcontractors or suppliers. Under Florida law, a properly qualified subcontractor who served a timely Notice to Owner can still file a valid lien even if you paid the GC -- because the subcontractor's lien right runs against your property, not just against the contractor who owes them money.
This is called the “double payment” problem. Florida law does provide protection if you made payment to the general contractor after receiving a Notice to Owner but before that subcontractor was paid -- in that case, you may have liability even though you thought you had paid. The best protection is a Payment Bond recorded before construction begins (F.S. 713.23), which shifts the subcontractor payment obligation to the bond surety.
Short Sales and Deed in Lieu with Construction Liens
In a short sale, the lender reviews a title report and requires all liens to be resolved before approving the closing. A construction lien will need to be paid or released as a condition of short sale approval.
In a deed in lieu, the lender conducts a title review before accepting the property. They may decline a deed in lieu if there are outstanding construction liens they would inherit, or they may require you to resolve them first.
Both of these situations benefit from early action: identifying and negotiating with lienors before the short sale or deed in lieu process begins makes the transaction more likely to succeed.
Steps to Take if You Have Construction Liens and a Mortgage Default
- Order a title search or obtain a Title Commitment from a Florida title company to identify all recorded liens on your property.
- Evaluate each lien for validity -- was a Notice to Owner served within 45 days? Was the Claim of Lien recorded within 90 days of last work?
- Contact the lienors. Many subcontractors and suppliers will negotiate a lien release for less than the face amount when they understand the foreclosure timeline.
- Contact your servicer about loss mitigation options. Review our foreclosure checklist to track all deadlines.
- Consider whether your equity position supports a pre-foreclosure sale after accounting for lien payoffs. Use the equity estimator with lien amounts included.
- Consult a Florida real estate attorney if any lien appears invalid or if the negotiations with lienors stall.
Related Resources
- Florida Foreclosure Process Overview -- how judicial foreclosure works from default to auction
- Mechanics Lien Foreclosure in Florida -- in-depth look at lien foreclosure by a contractor
- Selling Before Foreclosure in Florida -- how to close a pre-foreclosure sale before the auction date
- Short Sale in Florida -- sell for less than you owe with lender approval
- Deed in Lieu of Foreclosure -- transfer the property to the lender and avoid the auction
- Deficiency Judgments in Florida -- what happens after foreclosure if the sale does not cover your debt
- How to Claim Florida Foreclosure Surplus Funds -- if the auction generates more than the judgment, you may be entitled to the excess
- Equity Estimator -- understand your equity position before deciding on a path forward
- HUD-Approved Housing Counselors in Florida -- free guidance from a certified counselor
- Contact Barrett Henry for a Free Consultation -- Broker Associate at REMAX Collective, 23+ years of real estate experience
About the Author
Barrett Henry is a Broker Associate at REMAX Collective and a Florida real estate professional with 23+ years of experience helping homeowners in distress. He works with sellers throughout Tampa Bay and provides referral assistance to homeowners in all 67 Florida counties. This guide reflects general information about Florida law and is not legal advice. Consult a licensed Florida attorney for guidance on your specific situation.
Facing foreclosure with an outstanding construction lien? Contact us today for a free consultation -- no cost, no obligation.
