Lien Rights, Oral Directives, and the Final Waiver on a Private Medical Office
Your firm is the general contractor on a $4.2 million, two-story medical office building in unincorporated Hillsborough County. It is private work with no payment bond, financed by a local bank that requires 10 percent retainage on every pay application. The owner recorded a Notice of Commencement on February 26. Bayshore Rebar, your direct subcontractor, first delivered on March 6 and last furnished on June 2; it is owed $186,000 and has never served a Notice to Owner. In April the owner's facilities director walked the site and verbally directed a $95,000 electrical-room upgrade, telling your superintendent to "just get it done, we'll paper it later." You performed the work; no written change order exists, the owner now denies authorizing it, and the amount was withheld from Application No. 6. Bayshore is threatening to record a claim of lien, and the owner's lender wants unconditional final waivers before it releases the last draw. Your project manager wants to know exactly where the company stands.
1. Does Bayshore Rebar still have lien rights against the property, and what is your real exposure?
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Start with the notice chain, not the contract balance. A lienor who is not in privity with the owner must serve a Notice to Owner within 45 days of first furnishing labor, materials, or services (F.S. 713.06). Bayshore first furnished on March 6, so its deadline was on or about April 20 and it missed it. Pull the recorded Notice of Commencement to confirm the owner, the contractor, and any surety, and check whether a notice was served on the owner or the owner's designated agent. If nothing was served, the sub has no enforceable lien against the property.
That does not make the problem disappear. Bayshore still has a breach-of-contract claim against your firm for the $186,000, and if it records a claim of lien anyway it will cloud title and force a fight. Options if it records: serve a Notice of Contest of Lien (F.S. 713.22), which shortens the lienor's time to file suit to 60 days, and serve a demand for a written statement of account (F.S. 713.16). Verify the current statutory text before you act.
Commercially: pay undisputed amounts against a conditional waiver tied to a through-date, get the sub's signed final release at closeout, and never tell a sub 'you have no lien rights' and then stop returning calls - that is how a $186,000 claim becomes a $186,000 lawsuit plus fees.
2. How should you handle the verbal directive and the $95,000 the owner has withheld?
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Treat it as a documentation failure that is still curable, not as a dead issue. Under AIA A201 (Sections 4.3.4 and 12.x, if that is your form), a contractor may act on oral instructions but must confirm them in writing within two business days; if the owner does not dissent in writing within that window, the instruction is generally validated. Most contracts also make a written change order a condition of payment - which is why the confirmation has to happen now, not at closeout.
Steps: (1) Send a written confirmation dated to the walk, naming the facilities director and your superintendent, describing the scope, and attaching daily reports, photos, crew hours, and material invoices. (2) Submit a formal change order with a labor/material/equipment breakdown. (3) If it is rejected, submit a written claim under the contract's claims clause and proceed under written protest with an express reservation of rights rather than stopping work. (4) Get a signed statement from the superintendent while memory is fresh, and check what authority the facilities director actually had under the owner's representative designation.
A signed OAC minute or a text from the director saying 'go ahead' is worth more than any legal theory. If the directive is genuinely disputed on scope - not on whether it happened - argue entitlement on the lesser of actual cost or the value added, and keep the claim off the critical path so it does not become a delay dispute too.
3. What lien-waiver and retainage protections should you insist on at the final draw?
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Three separate risks: what you sign, what the sub signs, and where the retainage actually sits.
What you sign: accept only conditional waivers at each progress payment, with the through-date and dollar amount matching the check exactly. Never sign a final unconditional waiver before funds clear, and never sign a waiver whose through-date sweeps in retainage or pending change orders unless you are being paid for them.
What the subs sign: collect conditional progress waivers from every lower-tier lienor each month, and at closeout collect final unconditional waivers plus the contractor's final payment affidavit under F.S. 713.06(3)(d) listing all unpaid lienors. That affidavit is your protection against a late-filed lien by a supplier you never met.
Retainage: Florida law requires retainage to be deposited in a separate interest-bearing account with written notice to the contractor and lienors (F.S. 713.346 - confirm the current text). Ask the owner or lender for proof the 10 percent was actually escrowed. If it was commingled, that is both leverage and a risk to your own retainage. Never let the lender condition release of the retainage on an unconditional waiver of your $95,000 pending claim; negotiate that as a separate line item before signing anything.