HB 0461 2004
1	A bill to be entitled
2	An act relating to liens on commercial real estate;
3	creating ch. 714, F.S., the "Commercial Real Estate Lien
4	Act"; providing definitions; specifying conditions under
5	which a broker is entitled to a lien on commercial real
6	estate; requiring a written instrument; requiring the
7	recording of a notice of lien; providing for the contents
8	and service of such notice; providing requirements with
9	respect to installment and future commissions, leases,
10	sales of property before commission is due, and written
11	instruments with transferees; providing for enforcement of
12	the lien by lawsuit; requiring written demand to initiate
13	or file an answer to such lawsuit; providing conditions
14	for satisfaction or release of the lien; providing for an
15	alternative dispute resolution process; providing for
16	assessment of costs, fees, and interest; declaring any
17	waiver of lien rights void; providing priority of other
18	recorded liens, mortgages, and encumbrances; providing for
19	escrow of disputed amounts; amending s. 475.42, F.S.;
20	providing that brokers may place liens on property as
21	provided by law; providing an effective date.
22
23	Be It Enacted by the Legislature of the State of Florida:
24
25	Section 1. Chapter 714, Florida Statutes, consisting of
26	sections 714.001, 714.003, 714.005, 714.007, and 714.009, is
27	created to read:
28	714.001 Popular name.--This chapter may be referred to by
29	the popular name the "Commercial Real Estate Lien Act."
30	714.003 Definitions.--As used in this chapter, the term:
31	(1) "Broker" has the same meaning as in s. 475.01.
32	(2)(a) "Commercial real estate" means any real estate
33	other than:
34	1. Real estate containing one to four residential units;
35	or
36	2. Real estate on which no building or structure is
37	located and which is zoned for single-family residential use.
38	(b) "Commercial real estate" does not include single-
39	family residential units such as condominiums, townhouses, or
40	homes in a subdivision when sold, leased, or otherwise conveyed
41	on a unit-by-unit basis, even though these units may be a part
42	of a larger building or parcel or real estate containing more
43	than four residential units.
44	(3) "Commission" means any compensation or consideration
45	that may be due a broker licensed in this state for services
46	performed within the scope of the broker's license.
47	(4) "Future commission" means any additional commission
48	that may be due a broker as a result of future actions,
49	including, but not limited to, the exercise of an option to
50	expand the leased premises, to renew or extend a lease, or to
51	purchase the property.
52	(5) "Real estate" has the same meaning as in s. 475.01.
53	(6) "Transferee" means a person purchasing or otherwise
54	receiving any interest in commercial real estate.
55	(7) "Transferor" means the person selling or otherwise
56	conveying any interest in commercial real estate.
57	714.005 Broker's lien.--
58	(1) WRITTEN INSTRUMENT.--A broker shall have a lien upon
59	commercial real estate or any interest in that commercial real
60	estate which is the subject of a purchase, lease, or other
61	conveyance to a buyer or tenant of an interest in the commercial
62	real estate, in the amount that the broker is due for licensed
63	services, including, but not limited to, brokerage fees,
64	consulting fees, and management fees, under a written instrument
65	signed by a transferor or the transferor's duly authorized agent
66	or by a prospective transferee or the transferee's duly
67	authorized agent. The lien shall be available to the broker
68	named in the signed instrument, and not to any employee or
69	independent contractor of the broker.
70	(2) ENTITLEMENT OF BROKER TO LIEN.--
71	(a) A lien under this chapter shall attach to the
72	commercial real estate or any interest in the commercial real
73	estate if the broker:
74	1. Is entitled to a fee or commission under a written
75	instrument signed in accordance with subsection (1); and
76	2. Except as otherwise provided in subsections (4)-(7),
77	records a notice of lien in the office of the clerk of the
78	circuit court of the county in which the property is located
79	prior to the actual conveyance or transfer of the commercial
80	real estate against which the broker is claiming the lien.
81	(b) The lien shall attach as of the date of the recording
82	of the notice of lien and shall not relate back to the date of
83	the written instrument.
84	(3) CONTENTS OF NOTICE OF LIEN.--A notice of lien shall
85	state the name of the claimant, the name of the owner of record
86	of the commercial real estate, a description of the property
87	upon which the lien is being claimed, the amount for which the
88	lien is claimed, and the real estate license number of the
89	broker. The notice of lien shall recite that the information
90	contained in the notice is true and accurate to the knowledge of
91	the signator. The notice of lien must be signed by the broker or
92	a person authorized to sign on behalf of the broker and must be
93	notarized.
94	(4) COMMISSION DUE IN INSTALLMENTS.--Except as otherwise
95	provided in subsections (5)-(7), when payment to a broker is due
96	in installments, a portion of which is due only after the
97	conveyance or transfer of the commercial real estate, any notice
98	of lien for those payments due after the conveyance or transfer
99	may be recorded at any time subsequent to the conveyance or
100	transfer of the commercial real estate but not later than 90
101	days after the date the payment is due. A notice of lien
102	recorded prior to conveyance or transfer of the commercial real
103	estate claiming all moneys due under an installment payment
104	agreement shall be valid and enforceable to the extent it
105	pertains to payments due after the conveyance or transfer. As
106	payments or partial payments of commission are received, a
107	broker shall provide partial releases therefor, thereby reducing
108	the amount due the broker under the broker's notice of lien.
109	(5) LEASE OF COMMERCIAL REAL ESTATE.--In the case of a
110	lease, sublease, or assignment of lease, a notice of lien must
111	be recorded no later than 90 days after the transferee takes
112	possession of the leased premises. However, if a transferor
113	personally serves written notice of the intended execution of
114	the lease on a broker entitled to claim a lien, at least 10 days
115	prior to the date of the intended execution of the lease, a
116	notice of lien must be recorded before the date indicated in
117	such notice for the execution of the lease. The lien shall
118	attach as of the date of the recording of the notice of lien and
119	shall not relate back to the date of the written instrument.
120	(6) FUTURE COMMISSION.--If a broker may be due future
121	commissions pursuant to a written instrument signed by the then
122	transferor or transferee, the broker may record a notice of lien
123	at any time after execution of the lease or other written
124	instrument which contains such option or options, but may not
125	record the notice of lien later than 90 days after the event or
126	occurrence on which the claimed future commission occurs.
127	Notwithstanding subsection (10), an action to enforce a lien
128	under this subsection must be commenced within 2 years after the
129	occurrence or transaction on which the future commission is
130	claimed.
131	(7) REAL ESTATE SOLD BEFORE COMMISSION DUE.--In the event
132	that the commercial real estate is sold or otherwise conveyed
133	prior to the date on which either a future commission or an
134	unpaid installment of a commission is due, if the broker has
135	recorded a valid notice of lien prior to the sale or other
136	conveyance of the real estate, then the purchaser or transferee
137	shall be deemed to have notice of and shall take title to the
138	real estate subject to the lien. However, if a broker claiming a
139	future commission fails to record a notice of lien for future
140	commission prior to the recording of a deed conveying legal
141	title to the real estate to the transferee, then such broker may
142	not claim a lien on the real estate. The provisions of this
143	subsection do not limit or otherwise affect claims or defenses a
144	broker or any other party may have on any other basis, in law or
145	in equity.
146	(8) WRITTEN INSTRUMENT WITH TRANSFEREE.--If a transferee
147	has executed a written instrument in accordance with subsection
148	(1), then a lien shall attach to the transferee's interest upon
149	the transferee purchasing or otherwise accepting conveyance or
150	transfer of the commercial real estate and the recording of a
151	notice of lien by the broker in the office of the clerk of the
152	circuit court of the county in which the property is located,
153	within 90 days after the purchase or other conveyance or
154	transfer to the transferee. The lien shall attach as of the date
155	of the recording of the notice of lien and shall not relate back
156	to the date of the written instrument.
157	(9) SERVICE OF NOTICE OF LIEN.--A broker shall, within 10
158	days after recording a notice of lien, personally deliver or
159	mail, by registered or certified mail, a copy of the notice of
160	lien to the owner of record of the commercial real estate or the
161	duly authorized agent of the owner of record at the address of
162	the owner of record as stated in the written instrument on which
163	the claim for lien is based or, if no such address is given, to
164	the address of the property on which the claim of lien is based.
165	If a notice of lien is recorded within 10 days prior to closing,
166	a broker is not required to personally deliver or mail a copy of
167	the notice of lien. Mailing of the copy of the notice of lien is
168	effective when deposited in the United States mail with postage
169	prepaid. A broker's lien on commercial real estate shall be
170	unenforceable if delivery or mailing of the copy of notice of
171	lien does not occur within the time period and in the manner
172	required by this subsection.
173	(10) LAWSUIT TO ENFORCE LIEN.--
174	(a) A broker may bring suit to enforce a lien on
175	commercial real estate in the circuit court in the county in
176	which the property is located by filing a complaint and sworn
177	affidavit that the notice of lien has been recorded.
178	(b) A broker claiming a lien on commercial real estate
179	shall, within 2 years after recording the notice of lien,
180	commence proceedings by filing a complaint. Failure to commence
181	proceedings within 2 years after recording the notice of lien
182	shall extinguish the lien. No subsequent notice of lien may be
183	given for the same claim, nor may that claim be asserted in any
184	proceedings under this chapter.
185	(c) A broker claiming a lien on commercial real estate
186	based upon an option or other right to purchase or lease shall,
187	within 2 years after the conveyance or transfer of the real
188	estate under the exercise of the option to purchase or lease,
189	commence proceedings by filing a complaint. Failure to commence
190	proceedings within this time period shall extinguish the lien.
191	No subsequent notice of lien may be given for the same claim,
192	nor may that claim be asserted in any proceedings under this
193	chapter.
194	(d) A complaint under this section shall contain a brief
195	statement of the contract or instrument on which the lien is
196	based as well as its effective date, a description of the
197	services performed, the amount due and unpaid, a description of
198	the property that is subject to the lien, and other facts
199	necessary for a full understanding of the rights of the parties.
200	The plaintiff shall make all interested parties of whose
201	interest the plaintiff is notified or has knowledge defendants
202	to the action and shall issue summons and provide service as in
203	other civil actions filed in this state. When any defendant
204	resides or has gone out of the state, or on inquiry cannot be
205	found, or is concealed within the state so that process cannot
206	be served on the defendant, the plaintiff shall cause a notice
207	to be given to the defendant or cause a copy of the complaint to
208	be served on the defendant in the manner and on the same
209	conditions as in other civil actions filed in this state.
210	Failure of the plaintiff to provide proper summons or notice to
211	the defendant as required by this paragraph shall be grounds for
212	judgment against the plaintiff and in favor of the defendant
213	with prejudice. All liens claimed under this chapter shall be
214	foreclosed in the manner of foreclosing a mortgage under the
215	provisions of chapter 702.
216	(11) DEMAND TO INITIATE OR FILE ANSWER TO LAWSUIT.--Upon
217	written demand of the owner of record or a lienee of the
218	commercial real estate, or a duly authorized agent of the owner
219	or lienee, served on the broker claiming the lien to require
220	suit to be commenced to enforce the lien or an answer to be
221	filed in a pending suit to enforce the lien, the suit must be
222	commenced or the answer filed within 30 days thereafter or the
223	lien shall be extinguished. Service of such written demand may
224	be made by registered or certified mail, return receipt
225	requested, or by personal service.
226	(12) SATISFACTION OR RELEASE OF LIEN.--
227	(a) Whenever a notice of lien on commercial real estate
228	has been recorded with the clerk of the circuit court and the
229	claimed commission has been paid to a broker claiming a lien on
230	the property, or when there is a failure to initiate a suit to
231	enforce the lien within the time period provided by this
232	section, the broker shall acknowledge satisfaction or release of
233	the lien in writing, upon written demand of the owner of the
234	commercial real estate, within 5 days after payment of the
235	amount claimed or within 5 days after expiration of the time
236	period in which the complaint to initiate the lawsuit was to be
237	filed.
238	(b) Whenever a notice of lien on commercial real estate
239	has been recorded with the clerk of the circuit court and a
240	condition occurs that would preclude a broker from receiving
241	compensation under the terms of the written agreement on which
242	the lien is based, the broker shall provide to the owner of
243	record, within 10 days following written demand by the owner of
244	record, a written release or satisfaction of the lien.
245	(13) ALTERNATIVE DISPUTE RESOLUTION.--If the broker and
246	the party or parties from whom the commission is claimed agree
247	to alternative dispute resolution, the claim shall be heard and
248	resolved in the forum on which these parties have agreed. The
249	court before which the action to enforce the lien is brought
250	shall retain jurisdiction to enter judgment on the award or
251	other result made or reached in alternative dispute resolution
252	on all parties to the action to enforce the lien. The broker's
253	notice of lien shall remain of record and the action to enforce
254	the lien shall be stayed during the pendency of the alternative
255	dispute resolution process.
256	(14) ASSESSMENT OF COSTS, FEES, AND INTEREST.--The cost of
257	proceedings brought under this section, including reasonable
258	attorney's fees, costs, and prejudgment interest due to the
259	prevailing party, shall be borne by the nonprevailing party or
260	parties. When more than one party is responsible for costs,
261	fees, and prejudgment interest, the costs, fees, and prejudgment
262	interest shall be equitably apportioned by the court or
263	alternative dispute resolution tribunal among the responsible
264	parties.
265	(15) WAIVER OF LIEN RIGHTS VOID.--Except for a waiver or
266	release of lien provided in consideration of payment of the fee
267	or commission claimed by a broker or pursuant to subsection
268	(12), any waiver of a broker's right to a lien on commercial
269	real estate under this section and any other waiver or release
270	of such a lien is void.
271	714.007 Priority of other recorded liens, mortgages, and
272	encumbrances.--Valid prior recorded liens, mortgages, and other
273	encumbrances shall have priority over a broker's lien under this
274	chapter. Such prior recorded liens, mortgages, and encumbrances
275	shall include, without limitation:
276	(1) Any valid mechanic's lien claim that is recorded
277	subsequent to the broker's notice of lien but which relates back
278	to a date prior to the recording date of the broker's notice of
279	lien.
280	(2) Prior recorded liens securing revolving credit and
281	future advances of construction loans.
282	714.009 Escrow of disputed amounts.--Except as otherwise
283	provided in this chapter, whenever a notice of lien on
284	commercial real estate has been filed with the clerk of the
285	circuit court that would prevent the closing of a transaction or
286	conveyance, an escrow account shall be established from the
287	proceeds from the transaction or conveyance in an amount
288	sufficient to release the lien. The requirement to establish an
289	escrow account as provided in this section shall not be cause
290	for any party to refuse to close the transaction or conveyance.
291	The moneys required to be held in escrow under this section
292	shall be held until the rights of the parties to the escrowed
293	moneys have been determined by written agreement of the parties,
294	by a court of law, or by any other process that may be agreed to
295	by the parties for resolution of their dispute. Upon the escrow
296	of funds in the amount claimed in the lien, the lien and notice
297	of lien shall be automatically dissolved. Upon release of the
298	lien by the broker, the broker shall be deemed to have an
299	equitable lien on the escrow funds, pending a resolution of the
300	broker's claim, and the escrow shall not be released until a
301	resolution is reached and agreed to by all necessary parties or
302	ordered by a court. The parties are not required to follow the
303	escrow procedure in this section if alternative procedures that
304	would allow the transaction to close are available and are
305	acceptable to the transferee in the transaction. If the proceeds
306	from the transaction are insufficient to release all liens
307	claimed against the commercial real estate, including the
308	broker's lien, then the parties are not required to follow the
309	escrow procedure in this section.
310	Section 2. Paragraph (j) of subsection (1) of section
311	475.42, Florida Statutes, is amended to read:
312	475.42 Violations and penalties.--
313	(1) VIOLATIONS.--
314	(j) A broker or sales associate may not place, or cause to
315	be placed, upon the public records of any county, any contract,
316	assignment, deed, will, mortgage, affidavit, or other writing
317	which purports to affect the title of, or encumber, any real
318	property if the same is known to her or him to be false, void,
319	or not authorized to be placed of record, or not executed in the
320	form entitling it to be recorded, or the execution or recording
321	whereof has not been authorized by the owner of the property,
322	maliciously or for the purpose of collecting a commission, or to
323	coerce the payment of money to the broker or sales associate or
324	other person, or for any unlawful purpose. However, nothing in
325	this paragraph shall be construed to prohibit a broker or a
326	sales associate from recording a judgment rendered by a court of
327	this state or to prohibit a broker from placing a lien on a
328	property where expressly permitted by contractual agreement or
329	otherwise allowed by law.
330	Section 3. This act shall take effect July 1, 2004.