Contractors, subcontractors, suppliers and vendors around the country can file mechanics liens to improve their chances of being paid should a construction project run into financial difficulties. Mechanics liens are filed in county recorder’s offices and attached to properties, which means they must be satisfied before ownership of the property can be transferred. Florida has a first in time, first in right rule for determining the priority of construction liens, but a different rule applies if the project files a Notice of Commencement.
First in time, first in right
The first in time, first in right rule pays mechanics liens based on when they were filed. Liens that were filed early are paid first. When projects run out of money or become embroiled in construction litigation, contractors, subcontractors and suppliers may rush to file lien paperwork as quickly as possible. This is why some contractors file liens even when the chances of being paid in a timely manner seem good. Mortgages are paid based on when they were filed just like any other secured debt, but they are almost always paid first. This is because lenders are rarely willing to make real estate loans unless all existing liens are satisfied.
Notice of Commencement
The first in time, first in right rule for mechanics liens does not apply when projects file Notices of Commencement. NOCs mark the official beginning of a construction project. The Florida property laws require individuals and organizations to file NOCs on all private construction projects worth more than $2,500, and this changes the way mechanics liens are prioritized. When a NOC is filed, all mechanics liens attach at the same time regardless of their filing date.
Mechanics liens are attached to properties and must be satisfied before ownership can be transferred. Most construction projects in Florida are required to file Notices of Commencement, which means all of the mechanics liens connected most projects attach at the same time regardless of when they were filed.