welcome back welcome back clearly you really want to pass this test because you've made it all the way up to chapter n um this is a very very very important chapter I can't stress that enough um this chapter is going to cover a lot it's not a lot as far as Pages go but it is a lot as far as content goes on my exam I had a lot of questions about lean law and this chapter is going to be as boring as you think it is because yes it is going to deal with lean law and there's certain aspects of lean law that you're going to need to be able to reference on the exam like I said I had a whole bunch of questions dealing uh with leans so it's highly likely that you will have a bunch of questions as well so let's get into it grab your highlighter let's do this we're going to start off off on page well yeah let's start off on page 98 what is a construction lean a construction lean is a claim or charge against Real Property and the improvements thereon to secure a debt incurred for the Improvement of the property it is similar to a mortgage lean in that there are two basic elements of the lean a debt and documentation to make the property collateral for the debt the documentation is also noticed to the world of the claim against the property okay the first element of a construction lean is a debt incurred to improve property by way of analogy for mortgage lean there is a promisory note that creates the debt for construction lean the debt is created by a contract to improve the property all right important concept the second element of a construction lean is compliance with the procedure described in the statute Again by way of analogy for a mortgage lean there is the mortgage document which is recorded in the public records and act as a notice to the public of the mortgage lean for a construction lean the document creating the lean is the claim of the lean which must be timely recorded in the public records as an act to the world of the construction lean another important concept moving on to page 99 failure to have that license renders the contract void from the start all right once again talked about that this is like the third time they're bringing it up it says if a contractor's Li license is required if a contractor does not have that license the contract is null and void no lean shall exist unless the professional contractor subcontractor or the sub subcontractor has the required license they keep bringing it up they keep bringing it up if they keep bringing it up this often in all of these chaps it's probably because they want you to know that concept special Rules for residential construction warnings created warnings resal direct contracts if there is a direct contract between an owner and a contractor for improvements on property that is or will be a single family dwelling or multif family dwelling up to an including four units and the owner is not a person who created Parcels or offers Parcels for sale or at lease in the ordinary course of business the contract must contain the following language in not less than 12 point capitalize bold face type on the first page thereof not gonna read all that all right I'm not going to read all that you can read all that on your own have a great time with that next we're in page uh 910 property owned by married persons if the improved property is owned by one or both married persons and the contract with the direct contractor is signed by only one of the two and the May married cop couple is not separated and living a port lean rights exist against the property all right make sure you highlight that section right there page 9/11 small direct contract exemptions you should know that if the contract price in the contract between an owner and and a contractor is 2500 or less then the only person who has lean rights is the contractor subcontractors and suppliers do not have lean rights on a project where the contract price is between the own uh where the contract price between the owner and the contractor is less than 25 so 2500 so make sure you pay attention to that if the contract price for repair or placement of an HVAC system is 7500 or less no notice of commencement is required I had that question in my exam when they were dealing with HVAC and they wanted to know how much the amount was in this particular case 7500 or less no notice of commencement is requ moving along uh we're on page 9912 what is a notice on commencement purpose the notice of commencement serves two functions first it is a project information source for those who need to know information such as property description property owner and whether the job has a payment Bond the second function of the notice of commencment is that it fixes the time and within the effective period of the notice of commencement when leans recorded under direct contract for which the notice of commencement was recorded attached to the title of the property if there is no construction loan then the owner has the duty to record the notice of commencement okay in the public records of the county where the real property is being improved before work in the on the real property begins but but not sooner than 90 days prior to starting work at the site if there is a construction loan the recording of the notice of commen commen is the lender's Duty remember this is different it is the lender's Duty the owner is obliged to post a copy of the notice of commencement at the job site regardless of who records the notice of commencement there is no requirement that the owner maintain a posted copy at the site during the entire term of the job note that the owner is to sign the notice of commencement and not the contractor once again I'll read that note that the owner is to sign the notice of commencement and not the contractor unless the owner has specifically delegated the authority to the contractor to sign the notice of commencement as the owner's agent I'm read I read that over and I and I want you to read all of this over notice of commencement was a big big part of my exam I had multiple questions dealing with the notice of commencement and there yes there is a lot of information there it's easy to get lost in the weeds so make sure you read this page and some of these other Pages especially this page as well make sure you read these pages so you know what they are talking about this was like I said big on my exam time to record notice of commencement the notice of commen commencement is to be recorded before construction starts but not sooner than 90 days before construction starts duty to keep notice of commencement effective during their entire job the notice of commencement has a slot in paragraph 9 of the form for the expiration date of the notice of commencement if no date date is filled in then the date is one year from the date the notice of commencement is recorded a prudent owner will set the expiration date that is little longer than the scheduled completion date of the contract to allow for for some delay a notice of commencement may be amended before it expires to extend the expiration date once again important a notice of commencement may be amended before it expires to extend expiration date remember before it expires moving on effective period a notice of commencement is effective for the period stated if there is no effective period placed in that paragraph then the notice of commencement is effective for one year from the date of recording if a notice of commencement approaches expiration date and the job is ongoing the owner should amend the notice of commencement that's what we just talked about amendment of amendment of notice of commencement all right also read that as well who can do that so basically we're talking about the last pages especially from starting 912 913 14 and 15 and 16 17 these are very very important Pages like I said notice of commencement was on my exam in numerous questions next we're on Page 9918 in the event that there are insufficient funds from the contract to pay all valid leans the leans attaching at the same time those attaching as of the notice of commencement take priority as follows so this is very very important this may come up they're talking about uh the order of who gets paid leans of laborers leans of everyone else except the contractor lean of the contractor so make sure you take a take a look at the order a leener is defined as all of this stuff a contractor subcontractor Subs subcontractor a laborer uh materialman or material supplier a professional leaner um the following is a list that describes the proper leaners contractor subcontractor subub contractor material supplier labor professional leaner working for the owner so yes also important I'm the all make sure you know this page as well 919 note that a materialman selling to another material man is not a leaner by material M they talking about a supply guy okay so Supply guy selling to another Supply guy is not considered a leaner note that the Sub sub subcontractor is not a leaner so if they're going to ask you who qualifies as a leaner this is what you need to know okay and if they ask you is a material man selling to another materialman considered a leaner the answer is no 920 must I serve a notice to the owner construction lean law provides a form of notice to owner owner a notice to owner must contain the information in the form set forth below and specifically must include the statuto warnings statutory form for the notice to owner is printed below it is very important to use the form all right non privity claimants must serve take a look at this paragraph this whole paragraph is important like I said I'm not going to read all of it but this is an important when they're going to ask you about non privity this you have to go straight to this page this is where the answers that's the key term non privity purpose of notice to owner the notice to owner serves two purposes it gives the sender of the notice the right to participate in payments from the owner after the owner received the notice even though the sender of the notice to owner does not have a contract directly with the owner it gives the owner the duty to see that the sender of the notice is paid to the extent that the owner pays the contract two it gives the owner the opportunity need to make sure that the leaner serves a release in exchange for payments so that the owner can avoid leans by making proper payments moving on moving on if you are not dealing directly with the owner the owner must receive the no receive the the notice to owner with a copy to every person in Chain of contract between your customer and the owner not later than the earliest of the following times all right this is important make sure you understand these time frames 45 days from the leaner first work at the site prior to the time that the owner makes the final payment in Reliance upon a final contractor's affidavit even if sooner than 45 days from the first work or delivery materials by the leaner or if you are the subc subs subcontractor a material supplier to a subcontract or material supplier to a sub subcontract that then prior to the time that the subcontractor above the leaner has paid in full once again they're talking about the order of who gets paid first note that a non-private privity claimant one who is not selling directly to the owner has no lean rights until he or she serves the notice to owner once again they're going back to what we talked about before you have to serve the owner if you want to have rights privacy okay so this is a this is just a this is an important section so I've I've got it highlighted in the lean law context one often hears the legal term privity this is short for privity of contract what does it mean privity of contract has been defined as that connection or relationship which exists between two or more Contracting parties if a contracts with B and B contracts with C there is privity between a and b and between B and C there is no privity between a and C very very important term you're going to you there's a there's a high chance you're going to get questions where they're talking about privity and non privity moving on we're in page 923 how do I serve the notice to owner and other lean documents there's the actual delivery not going to read all that but they get into uh they get into the the actual procedure how that's going to get delivered actual delivery common carry delivery Global Express guarantee delivery or certified registered mail with EV evidence of delivery return receipt all right I'm not going to read all that certified or registered mail within the first 40 days posting at the job site next section we talk about releases a potential leaner will be required to give releases on most if not every job release through a Time certain this is the release that releases all lean rights through date recited in the release okay B release of specific sum a release for specific sum uses language such as hereby releases its leans in the amount of specific dollar amount All Right Moving On Moving on page 928 we are on the claim of lean the claim of lean is the document that is recorded in the public records as noticed to the world of the claim of the leaner against the property the claim of lean is described in Florida statute 7 13.08 notice the following about the claim of lean form crucial page very very important page so I'm going to I'm going to read all nine of these CU I think they're pretty important the document is to be signed and verified by someone acquainted with the facts the verification is typically an attestation by notarization the leaner must have furnished labor services and or materials under contract that is with the owner or goes back to the owner by Chain of contract the work must be performed on or delivered to the real property a description of the real property is sufficient to identify it must be in the claim of lean the name and address of the owner of the property must be in the claim of lean the value of work done materials furnished and the amount of remaining unpaid for the performed work must be in the clean of Lane the first date that you f the first date that you furnish labor services or materials at the site or be begin be making specifically fabricated materials must be in the claim of lean the last date that you finished your labor the date of service of the notice to owner and copies if required must be in the claim of lean all of this must be in the claim of lean this may come up on your exam the claim of lean must be recorded in the county where the improved prop uh improved property is located no later than 90 days from last work in the case of someone working under a contractor who's been terminated the lean must be be recorded within 90 days of termination of the contractor if sooner than 90 days from last work page 931 server copy of the claim of lean on the owner claim of lean on the owner not later than 15 days from recording from from days from recording very very important I'll read it again when a leaner records a claim of lean the leaner should serve a copy of the claim of lean on the owner not not later than 15 days from recording how long does a claim of lean last a claim of lean is effective for one year from the date on which it is recorded in public records on the bottom of 9:31 notice of contest of lean the owner May shorten the time to enforce the claim of Lean by recording a notice of con uh of contest of lean if the leaner fails to file a notice to enforce the lean within 60 days of the date the clerk of the clerk of court certifies in the notice of contest of lean that a copy was served on the leaner lean rights are lost if you are leaner receive a notice of contest of lean you should contact legal counsel immediately and that's what it looks like that's that form 21 20-day summons to show cause and other procedures that the owner may use to shorten the time to enforce the cllean claim of lean is to file suit challenging the lean using a 20-day summon to show cause most lawsuits start with a complaint and a summon however if the owner adds language to the summon to make it a 20-day summon to show cause the summons is more than than a notice of a suit the effect is to shorten the effective period of the claim of lean to 20 days after service of the summons unless the leaner files their counter claim or separate suit to enforce the lean request from owner for for list of subs and suppliers an owner may serve a written request to a contractor for a list of all subcontractors and suppliers who have any con who have any contract with the contractor regarding the owner's project the contractor must within 10 days after the receipt of the owner's written request furnish to the prop uh property owner a list of the subcontractors and suppliers moving on we are 938 contractors's final pay affidavit the statute says that the contractor must in any event give the owner a final contractor's affidavit not later than 5 days before the contractor files suit to enforce the contractor's lean okay we're on page 941 retaking materials if you are a leaner have furnished materials to the project and you are not paid for those materials you can take them back if you give full sales credit without stocking charges and if the materials have not been installed once the materials have been installed you cannot uninstall them to take them back I'm sure if you've ever worked out on the field that thought has ran through your head if somebody has not paid you what they owe you can you thought to yourself can I take it back the answer is no if it's been installed that's it now you have to utilize other ways of getting your money you can't just take it back criminal remedies fraudulant lean a person who willfully files a fraudulant lean is guilty of a felony of the third degree if a person knowingly uses funds paid on account of a particular job without paying F paying the funds to sub suppliers and or laborers whose funds are due for the work paid is guilty of misapplication of construction funds the crime is a felony felony of a third degree lean transfer bonds all right important all right lean transfer bonds is also something that may come up on your test it actually came up on my test you definitely want to spend some time reading this section we're on page 944 so it talks about who may transfer a lean Bond effect of lean bonds or deposits all right you want to read this parties to a payment Bond same thing talks about what is a payment Bond you want to read this section as well parties to a payment a payment bond is a contract or guarantee of payment it is not Insurance rather it is a financial guarantee many many persons in the business of of acting as a shity are insurance companies insurance companies are regulated by the Florida Department of Insurance there are three parties to to a payment Bond oblige the principal and the shity that should be somewhat familiar because we've covered the concept of bonds already in addition to these required parties to the payment Bond there are two other classes of persons that are directly affected by the payment Bond these are the payment Bond claimants and indemnitors okay you want to make sure you read this section talks about all of these all of these individuals and what their roles are types of bonds okay common law bonds that are not defined by any statutes but are interpreted according to the terms under common law common law federal Public Works payment Bond the Miller act this was briefly mentioned before in one of the earlier chapters take a look at this you may it it may come up okay same thing over here little Miller act talked about that as well Florida statute 25.0 5 bonds contractors and public works construction projects for any state County municipal or other Public Authority in exess of 200,000 are required to post uh payment and performance bonds had that question they asked about the amount okay uh so in this particular case $200,000 are required to post payment and performance bond that was a question dealing specifically with Florida which makes sense since we are in Florida okay let me see keep going we keep going keep going skipping a lot of pages don't definitely don't just skip you want to take a look at these Pages as well well there may not be some a lot of highlighting on the last few pages but that doesn't mean it's not important it's just it may not be as important as some of the other stuff that we're uh covering but as always you are responsible for everything in the book not just what I'm bringing up all right now we're going to get into uh the Florida statues this should be somewhat familiar because we've already done a few of these uh these are the actual rules and regulations with a lot of really really small print and a lot of really big words uh we're not going to cover everything as always we're just going to go over what I think is important um yeah and uh let's let's get into this first thing that we're going to do is we're going to be on page 972 uh 73.0 6 the notice must be served be before commencing and no later than 45 days after commencing so once again just uh I'm bringing it up but the first section of this chapter talks about the rules rules and regulations it gives you a general overview and the last part of the chapter is is where they're showing you the actual statue which is what this is so a lot of the stuff that we've we've already covered in the beginning you should be mostly focused on what we covered in the beginning but this is giving you a little bit more uh detail keep moving keep moving keep moving we are in page 978 and this is 9 uh 7313 notice of commencement a notice of commencement must be recorded and posted on the job side before the first inspection if you intend to obtain financing consult with your lender or an attorney before commencing work or recording your notice of commencement see highlighted and underline must be important all right duration of lean we're on page 986 uh section 713 22 a lean provided by this part does not continue for a longer period than one year after the claim of lean has been recorded or one year after the recording of an amended claim of lean payment Bond payment Bond required to exempt an owner and under this part shall be furnished by the contractor in at least the amount of the original contract price before commencing the construction of the Improvement under the direct contract and a cop a copy of the bond shall be attached to the notice of commencement when the notice of commencement is recorded moving on moving on some examples we are in page 993 okay and we're dealing with 71331 remedies in case of fraud any person who willfully files a fraudulent lean as defined in the section commits a felony of the third degree we just mentioned that 713 345 money's received for Real Property improvements penalty in misapplication in the amount of payments misapplied if the amount of payments misapplied has an aggregate value of 100,000 or more The Violator is guilty of the filling of the first degree if the amount of payments misapplied has an aggregate value of 1,000 or more but less than 100,000 The Violator is guilty of the felony of the second degree if the amount of payments misapplied has an aggregate value of less than 1,000 The Violator is guilty of a felony of the third degree I had this exact question on my test where they're they're going to give you the sum well they gave me the sum and they um they asked me uh for what is the penalty so you're going to you're going to tell them it's either it's first first degree felony second degree felony or third degree felony pretty easy question I actually think all right and that's that's pretty much it for chapter nine um the leans it is like I said it's it's not the easiest of chapters it's not that many pages but there's a hell of a lot of information to cover there I think what we've done here today is that we've covered most of the important stuff but I keep reiterating because I think it's I I think it's important for you to understand everything is fair game make sure you spend the time to read and cover the whole chapter not just the stuff that I'm highlighting here for you you're always responsible for everything in the book uh as always it's not an easy test I know that but I did it in the first try you can do it on the first try all you have to do is sit down and put in some work if you've got any questions if you've got any comments as always hit me up uh let me know and I'll do my best to answer any of that um other than that I thank you for your time and for joining me in this video and I look forward to seeing you in the next chapter