What You Need to Know About Florida Commercial Real Estate Lien Law
What You Need to Know About Florida Commercial Real Estate Lien Law
The rights and obligations of parties participating in commercial real estate transactions are governed by Florida commercial real estate lien law. The law specifies how liens on commercial real estate properties in the state are to be filed and enforced.
According to Florida law, a real estate broker is entitled to a lien on the owner’s net earnings from the sale of commercial real estate. This lien covers the broker’s compensation. Brokers in Florida must be careful to ensure that they abide by the law. Failing to do so will prevent them from being able to enforce their lien.
What Does Florida Law Say About Real Estate Lien Law?
Florida Law 475, Part III, is the Commercial Real Estate Sales Commission Lien Act. The amount secured by any encumbrance, lien, or claim that takes precedence over the recorded commission notice is deducted from the gross sales proceeds. It also excludes any costs incurred by the owner to dispose of the property. The cost includes real transfer tax, escrow fees, title insurance premiums, and ad valorem taxes and assessments.
Any broker that wants to enforce a lien for a commission under the Act must also deliver a legally mandated commission notice to the following parties:
- The owner of the commercial property as specified in the brokerage agreement; and
- The closing agent designated to close the transaction, and it applies where the identity of the closing agent is known. It is usually within 30 days after the broker earns a commission and at least one day before the closing.
A commission notice must be in writing, signed by the broker, and an oath or affirmation must be made before a notary public under penalty of perjury.
The broker’s lien will expire within two years of the recording date unless the broker initiates an action to foreclose the lien and registers a notice of Lis pendens. The owner can reduce that time to sixty (60) days by documenting and serving a notice opposing the lien. Anyone with a stake in the commercial property can convert the lien into security by making a cash or surety bond deposit at the clerk’s office. The winning party is entitled to an award of legal fees and expenses in any case filed to enforce a CRESCLA debt.
Wrapping Up
Finally, understanding the Florida Commercial Real Estate Lien Law is crucial for protecting the rights and interests of property owners, contractors, subcontractors, material suppliers, and laborers in commercial real estate deals.
