community magazine CAI community magazine December 2017 - Page 30

Keeping abreast of the latest legislation can prevent expensive delays and costly errors. Is your bonded project exempt from liens? By Douglas A. Peebles Shareholder/Attorney Peebles Law Firm, P.A. Board Certified Construction Law Attorney 941-742-6611 30 Owners embarking on a construction project should obtain a payment and performance bond to guarantee the successful completion of the project and the payment of all potential lienors. The payment bond is intended to exempt the project from lien claims and to stand as collat- eral for the liens of subcontractors and suppliers on the project. The wisdom of obtaining a bond is never more apparent than when prob- lems arise and the owner has failed to obtain payment and perform- ance bonds from their contractor. The bond price tag of approximately 4% of total construction cost seems like quite a bargain when problems arise. While the above may be relatively well known, many may not re- alize that how an owner handles a payment bond can have a signifi- cant impact on its character and benefits. Pursuant to Section 713.23 of the Florida Statutes, if the bond is obtained prior to the commence- ment of construction and the bond is referenced in the Notice of Com- mencement and recorded with the Notice, the owner should end up with a project that is not only protected, but completely exempt, from liens and for which the owner has few, if any, remaining obligations under the lien law. This “exempt” status is of significant importance to the owner. If the bond is not handled in the proper manner, the project is no longer exempt from liens pursuant to 713.23, but rather the proj- ect is treated as a lienable project for which a transfer bond has been provided under 713.24. community • December 2017 WWW.CAIWESTFLORIDA.ORG