| 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 |
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| 23 | Be It Enacted by the Legislature of the State of Florida: |
| 24 |
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| 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 cited as the |
| 29 | "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 that 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, except a |
| 55 | sublessee or assignee of a lease. |
| 56 | (7) "Transferor" means the person selling or otherwise |
| 57 | conveying any interest in commercial real estate, except a |
| 58 | sublessor or assignor of a lease. |
| 59 | 714.005 Broker's lien.-- |
| 60 | (1) WRITTEN INSTRUMENT.--A broker shall have a lien upon |
| 61 | commercial real estate or any interest in that commercial real |
| 62 | estate which is the subject of a purchase, lease, or other |
| 63 | conveyance to a buyer or tenant of an interest in the commercial |
| 64 | real estate, in the amount that the broker is due for licensed |
| 65 | services, including, but not limited to, brokerage fees, |
| 66 | consulting fees, and management fees, under a valid and |
| 67 | enforceable written instrument signed by a transferor or the |
| 68 | transferor's duly authorized agent or by a prospective |
| 69 | transferee or the transferee's duly authorized agent. The lien |
| 70 | shall be available to the broker named in the signed instrument, |
| 71 | and not to any employee or independent contractor of the broker. |
| 72 | (2) ENTITLEMENT OF BROKER TO LIEN.-- |
| 73 | (a) A lien under this chapter shall attach to the |
| 74 | commercial real estate or any interest in the commercial real |
| 75 | estate if the broker: |
| 76 | 1. Is entitled to a fee or commission under a written |
| 77 | instrument signed in accordance with subsection (1). |
| 78 | 2. Except as otherwise provided in subsections (4)-(7), |
| 79 | records a notice of lien in the office of the clerk of the |
| 80 | circuit court of the county in which the property is located |
| 81 | prior to the actual conveyance or transfer of the commercial |
| 82 | real estate against which the broker is claiming the lien. |
| 83 | (b) The lien shall attach as of the date of the recording |
| 84 | of the notice of lien and shall not relate back to the date of |
| 85 | the written instrument. |
| 86 | (c) A broker shall not have the right under this chapter |
| 87 | to a lien for commission or other compensation owed to that |
| 88 | broker pursuant to a sublease or assignment of lease. The |
| 89 | provisions of this paragraph do not limit or otherwise affect |
| 90 | the claims or defenses a broker or any other party may have on |
| 91 | any other basis, in law or in equity. |
| 92 | (3) CONTENTS OF NOTICE OF LIEN.--A notice of lien shall |
| 93 | state the name of the claimant, the name of the owner of record |
| 94 | of the commercial real estate, a description of the property |
| 95 | upon which the lien is being claimed, the amount for which the |
| 96 | lien is claimed, and the real estate license number of the |
| 97 | broker. The notice of lien shall recite that the information |
| 98 | contained in the notice is true and accurate to the knowledge of |
| 99 | the signator. The notice of lien must be signed by the broker or |
| 100 | a person authorized to sign on behalf of the broker and must be |
| 101 | notarized. |
| 102 | (4) COMMISSION DUE IN INSTALLMENTS.--Except as otherwise |
| 103 | provided in subsections (5)-(7), when payment to a broker is due |
| 104 | in installments, a portion of which is due only after the |
| 105 | conveyance or transfer of the commercial real estate, any notice |
| 106 | of lien for those payments due after the conveyance or transfer |
| 107 | may be recorded at any time subsequent to the conveyance or |
| 108 | transfer of the commercial real estate but not later than 90 |
| 109 | days after the date the payment is due. A notice of lien |
| 110 | recorded prior to conveyance or transfer of the commercial real |
| 111 | estate claiming all moneys due under an installment payment |
| 112 | agreement or for future commissions as described in subsection |
| 113 | (6) shall be valid and enforceable only to the extent it |
| 114 | pertains to payments due from the transferee to the transferor |
| 115 | after conveyance or transfer. As payments or partial payments of |
| 116 | commission are received, a broker shall provide partial releases |
| 117 | therefor, thereby reducing the amount due the broker under the |
| 118 | broker's notice of lien. |
| 119 | (5) LEASE OF COMMERCIAL REAL ESTATE.--In the case of a |
| 120 | lease, a notice of lien must be recorded no later than 90 days |
| 121 | after the transferee takes possession of the leased premises. |
| 122 | However, if a transferor personally serves written notice of the |
| 123 | intended execution of the lease on a broker entitled to claim a |
| 124 | lien, at least 10 days prior to the date of the intended |
| 125 | execution of the lease, a notice of lien must be recorded before |
| 126 | the date indicated in such notice for the execution of the |
| 127 | lease. The lien shall attach as of the date of the recording of |
| 128 | the notice of lien and shall not relate back to the date of the |
| 129 | written instrument. |
| 130 | (6) FUTURE COMMISSION.--If a broker may be due future |
| 131 | commissions pursuant to a written instrument signed by the then |
| 132 | transferor or transferee, the broker may record a notice of lien |
| 133 | at any time after execution of the lease or other written |
| 134 | instrument which contains such option or options, but may not |
| 135 | record the notice of lien later than 90 days after the event or |
| 136 | occurrence on which the claimed future commission occurs. |
| 137 | Notwithstanding subsection (10), an action to enforce a lien |
| 138 | under this subsection must be commenced within 2 years after the |
| 139 | occurrence or transaction on which the future commission is |
| 140 | claimed. |
| 141 | (7) REAL ESTATE SOLD BEFORE COMMISSION DUE.--In the event |
| 142 | that the commercial real estate is sold or otherwise conveyed |
| 143 | prior to the date on which either a future commission or an |
| 144 | unpaid installment of a commission is due, if the broker has |
| 145 | recorded a valid notice of lien prior to the sale or other |
| 146 | conveyance of the real estate, then the purchaser or transferee |
| 147 | shall be deemed to have notice of and shall take title to the |
| 148 | real estate subject to the lien. However, if a broker claiming a |
| 149 | future commission fails to record a notice of lien for future |
| 150 | commission prior to the recording of a deed conveying legal |
| 151 | title to the real estate to the transferee, then such broker may |
| 152 | not claim a lien on the real estate. The provisions of this |
| 153 | subsection do not limit or otherwise affect claims or defenses a |
| 154 | broker or any other party may have on any other basis, in law or |
| 155 | in equity. |
| 156 | (8) WRITTEN INSTRUMENT WITH TRANSFEREE.--If a transferee |
| 157 | has executed a written instrument in accordance with subsection |
| 158 | (1), then a lien shall attach to the transferee's interest upon |
| 159 | the transferee purchasing or otherwise accepting conveyance or |
| 160 | transfer of the commercial real estate and the recording of a |
| 161 | notice of lien by the broker in the office of the clerk of the |
| 162 | circuit court of the county in which the property is located, |
| 163 | within 90 days after the purchase or other conveyance or |
| 164 | transfer to the transferee. The lien shall attach as of the date |
| 165 | of the recording of the notice of lien and shall not relate back |
| 166 | to the date of the written instrument. |
| 167 | (9) SERVICE OF NOTICE OF LIEN.--A broker shall, within 10 |
| 168 | days after recording a notice of lien, personally deliver or |
| 169 | mail, by registered or certified mail, a copy of the notice of |
| 170 | lien to the owner of record of the commercial real estate or the |
| 171 | duly authorized agent of the owner of record at the address of |
| 172 | the owner of record as stated in the written instrument on which |
| 173 | the claim for lien is based or, if no such address is given, to |
| 174 | the address of the property on which the claim of lien is based. |
| 175 | Mailing of the copy of the notice of lien is effective when |
| 176 | deposited in the United States mail with postage prepaid. A |
| 177 | broker's lien on commercial real estate shall be unenforceable |
| 178 | if delivery or mailing of the copy of notice of lien does not |
| 179 | occur within the time period and in the manner required by this |
| 180 | subsection. |
| 181 | (10) LAWSUIT TO ENFORCE LIEN.-- |
| 182 | (a) A broker may bring suit to enforce a lien on |
| 183 | commercial real estate in the circuit court in the county in |
| 184 | which the property is located by filing a complaint and sworn |
| 185 | affidavit that the notice of lien has been recorded. |
| 186 | (b) A broker claiming a lien on commercial real estate |
| 187 | shall, within 2 years after recording the notice of lien, |
| 188 | commence proceedings by filing a complaint. Failure to commence |
| 189 | proceedings within 2 years after recording the notice of lien |
| 190 | shall extinguish the lien. No subsequent notice of lien may be |
| 191 | given for the same claim, nor may that claim be asserted in any |
| 192 | proceedings under this chapter. |
| 193 | (c) A broker claiming a lien on commercial real estate |
| 194 | based upon an option or other right to purchase or lease shall, |
| 195 | within 2 years after the conveyance or transfer of the real |
| 196 | estate under the exercise of the option to purchase or lease, |
| 197 | commence proceedings by filing a complaint. Failure to commence |
| 198 | proceedings within this time period shall extinguish the lien. |
| 199 | No subsequent notice of lien may be given for the same claim, |
| 200 | nor may that claim be asserted in any proceedings under this |
| 201 | chapter. |
| 202 | (d) A complaint under this section shall contain a brief |
| 203 | statement of the contract or instrument on which the lien is |
| 204 | based as well as its effective date, a description of the |
| 205 | services performed, the amount due and unpaid, a description of |
| 206 | the property that is subject to the lien, and other facts |
| 207 | necessary for a full understanding of the rights of the parties. |
| 208 | The plaintiff shall make all interested parties of whose |
| 209 | interest the plaintiff is notified or has knowledge defendants |
| 210 | to the action and shall issue summons and provide service as in |
| 211 | other civil actions filed in this state. When any defendant |
| 212 | resides or has gone out of the state, or on inquiry cannot be |
| 213 | found, or is concealed within the state so that process cannot |
| 214 | be served on the defendant, the plaintiff shall cause a notice |
| 215 | to be given to the defendant or cause a copy of the complaint to |
| 216 | be served on the defendant in the manner and on the same |
| 217 | conditions as in other civil actions filed in this state. |
| 218 | Failure of the plaintiff to provide proper summons or notice to |
| 219 | the defendant as required by this paragraph shall be grounds for |
| 220 | judgment against the plaintiff and in favor of the defendant |
| 221 | with prejudice. All liens claimed under this chapter shall be |
| 222 | foreclosed in the manner of foreclosing a mortgage under the |
| 223 | provisions of chapter 702. |
| 224 | (11) DEMAND TO INITIATE OR FILE ANSWER TO LAWSUIT.--Upon |
| 225 | written demand of the owner of record or a lienee of the |
| 226 | commercial real estate, or a duly authorized agent of the owner |
| 227 | or lienee, served on the broker claiming the lien to require |
| 228 | suit to be commenced to enforce the lien or an answer to be |
| 229 | filed in a pending suit to enforce the lien, the suit must be |
| 230 | commenced or the answer filed within 30 days thereafter or the |
| 231 | lien shall be extinguished. Service of such written demand may |
| 232 | be made by registered or certified mail, return receipt |
| 233 | requested, or by personal service. |
| 234 | (12) SATISFACTION OR RELEASE OF LIEN.-- |
| 235 | (a) Whenever a notice of lien on commercial real estate |
| 236 | has been recorded with the clerk of the circuit court and the |
| 237 | claimed commission has been paid to a broker claiming a lien on |
| 238 | the property, or when there is a failure to initiate a suit to |
| 239 | enforce the lien within the time period provided by this |
| 240 | section, the broker shall acknowledge satisfaction or release of |
| 241 | the lien in writing, upon written demand of the owner of the |
| 242 | commercial real estate, within 5 days after payment of the |
| 243 | amount claimed or within 5 days after expiration of the time |
| 244 | period in which the complaint to initiate the lawsuit was to be |
| 245 | filed. |
| 246 | (b) Whenever a notice of lien on commercial real estate |
| 247 | has been recorded with the clerk of the circuit court and a |
| 248 | condition occurs that would preclude a broker from receiving |
| 249 | compensation under the terms of the written agreement on which |
| 250 | the lien is based, the broker shall provide to the owner of |
| 251 | record, within 10 days following written demand by the owner of |
| 252 | record, a written release or satisfaction of the lien. |
| 253 | (13) ALTERNATIVE DISPUTE RESOLUTION.--If the broker and |
| 254 | the party or parties from whom the commission is claimed agree |
| 255 | to alternative dispute resolution, the claim shall be heard and |
| 256 | resolved in the forum on which these parties have agreed. The |
| 257 | court before which the action to enforce the lien is brought |
| 258 | shall retain jurisdiction to enter judgment on the award or |
| 259 | other result made or reached in alternative dispute resolution |
| 260 | on all parties to the action to enforce the lien. The broker's |
| 261 | notice of lien shall remain of record and the action to enforce |
| 262 | the lien shall be stayed during the pendency of the alternative |
| 263 | dispute resolution process. |
| 264 | (14) ASSESSMENT OF COSTS, FEES, AND INTEREST.--The cost of |
| 265 | proceedings brought under this section, including reasonable |
| 266 | attorney's fees, costs, and prejudgment interest due to the |
| 267 | prevailing party, shall be borne by the nonprevailing party or |
| 268 | parties. When more than one party is responsible for costs, |
| 269 | fees, and prejudgment interest, the costs, fees, and prejudgment |
| 270 | interest shall be equitably apportioned by the court or |
| 271 | alternative dispute resolution tribunal among the responsible |
| 272 | parties. |
| 273 | (15) WAIVER OF LIEN RIGHTS VOID.--Except for a |
| 274 | satisfaction or release of lien provided in consideration of |
| 275 | payment of the fee or commission claimed by a broker or other |
| 276 | consideration acceptable to the broker or pursuant to subsection |
| 277 | (12), any waiver of a broker's right to a lien on commercial |
| 278 | real estate under this section and any other waiver or release |
| 279 | of such a lien is void. |
| 280 | 714.007 Priority of other recorded liens, mortgages, and |
| 281 | encumbrances.--Valid prior recorded liens, mortgages, and other |
| 282 | encumbrances shall have priority over a broker's lien under this |
| 283 | chapter. Such prior recorded liens, mortgages, and encumbrances |
| 284 | shall include, without limitation: |
| 285 | (1) Any valid mechanic's lien claim that is recorded |
| 286 | subsequent to the broker's notice of lien but which relates back |
| 287 | to a date prior to the recording date of the broker's notice of |
| 288 | lien. |
| 289 | (2) Prior recorded liens securing revolving credit and |
| 290 | future advances of construction loans. |
| 291 | 714.009 Escrow of disputed amounts.--Except as otherwise |
| 292 | provided in this chapter, whenever a notice of lien on |
| 293 | commercial real estate has been filed with the clerk of the |
| 294 | circuit court that would prevent the closing of a transaction or |
| 295 | conveyance, an escrow account shall be established from the |
| 296 | proceeds from the transaction or conveyance, or other collateral |
| 297 | or security, in an amount sufficient to release the lien. The |
| 298 | requirement to establish an escrow account as provided in this |
| 299 | section shall not be cause for any party to refuse to close the |
| 300 | transaction or conveyance. The moneys or other collateral or |
| 301 | security required to be held in escrow under this section shall |
| 302 | be held until the rights of the parties to the escrowed moneys |
| 303 | or other collateral or security have been determined by written |
| 304 | agreement of the parties, by a court of law, or by any other |
| 305 | process that may be agreed to by the parties for resolution of |
| 306 | their dispute. Upon the escrow of funds or other collateral or |
| 307 | security in the amount claimed in the lien, the lien and notice |
| 308 | of lien shall be automatically dissolved. Upon release of the |
| 309 | lien by the broker, the broker shall be deemed to have an |
| 310 | equitable lien on the escrow funds or other collateral or |
| 311 | security pending a resolution of the broker's claim, and the |
| 312 | escrow shall not be released until a resolution is reached and |
| 313 | agreed to by all necessary parties or ordered by a court. The |
| 314 | parties are not required to follow the escrow procedure in this |
| 315 | section if alternative procedures that would allow the |
| 316 | transaction to close are available and are acceptable to the |
| 317 | transferee in the transaction. If the proceeds from the |
| 318 | transaction are insufficient to release all liens claimed |
| 319 | against the commercial real estate, including the broker's lien, |
| 320 | then the parties are not required to follow the escrow procedure |
| 321 | in this section. |
| 322 | Section 2. Paragraph (j) of subsection (1) of section |
| 323 | 475.42, Florida Statutes, is amended to read: |
| 324 | 475.42 Violations and penalties.-- |
| 325 | (1) VIOLATIONS.-- |
| 326 | (j) A broker or sales associate may not place, or cause to |
| 327 | be placed, upon the public records of any county, any contract, |
| 328 | assignment, deed, will, mortgage, affidavit, or other writing |
| 329 | which purports to affect the title of, or encumber, any real |
| 330 | property if the same is known to her or him to be false, void, |
| 331 | or not authorized to be placed of record, or not executed in the |
| 332 | form entitling it to be recorded, or the execution or recording |
| 333 | whereof has not been authorized by the owner of the property, |
| 334 | maliciously or for the purpose of collecting a commission, or to |
| 335 | coerce the payment of money to the broker or sales associate or |
| 336 | other person, or for any unlawful purpose. However, nothing in |
| 337 | this paragraph shall be construed to prohibit a broker or a |
| 338 | sales associate from recording a judgment rendered by a court of |
| 339 | this state or to prohibit a broker from placing a lien on a |
| 340 | property where expressly permitted by contractual agreement or |
| 341 | otherwise allowed by law. |
| 342 | Section 3. This act shall take effect July 1, 2005. |