Final Contractor’s Affidavit In Florida: An In-Depth Review

What is a final Contractor’s Affidavit?

A final contractor’s affidavit is a written statement that a construction contractor provides to an owner stating that all lienors have been paid off and that no liens are claimed or would be claimed against the real property in connection with the project for which services were provided . The insurance company that issues a performance bond may require a form of the final contractor’s affidavit to be executed and provided as a prerequisite before it will release its performance under the performance bond. In addition, lenders may require an affidavit as a condition precedent to releasing the construction proceeds to the owner or the contractor.

Affidavit Requirements Under the Law

Owners in Florida are protected by the final contractor’s affidavit, as it becomes an obligation of the contractor to provide such a document to the owner. The final contractor’s affidavit is required by §713.06(3) Florida Statutes upon final payment of a contractor for work on a construction project, which states: All claims or demands which any person or persons have against the owner for labor, services, and material furnished to the real property have been fully paid for or satisfied, or if any lien has been recorded pursuant to s. 713.08, that any and all such lien claims have been paid, satisfied, or otherwise disposed of. The final contractor’s affidavit protects the owner from having to pay a second time for labor and materials already provided to the job site because the statute specifically requires the contractor to admit both to the satisfaction of the materialman’s lien and to the payment of said labor materials upon final payment. The Florida Supreme Court helps clarify the purpose of the final contractor’s affidavit in the case of Broward Builders, Inc. v. Dodd, 453 So. 2d 402 (Fla. 1984): The ostensible purpose and effect of the statute is a simple and clearly stated one: to provide an unequivocal manner of removing any encumbrance recorded against property upon payment of the subcontractors and materials men by the general contractor. Under our statute the subcontractor or materials man is deemed a third party beneficiary of the final contractor’s affidavit filed for the purpose of obtaining final payment from the owner of the realty unaffected by any lien claims asserted under the previous enjoined final subcontractor’s affidavits . . . the effect of the contractor’s affidavit is to provide a means of providing satisfaction of any liability arising out of subcontractor’s claims upon payment of the full contractor’s price for the construction in satisfaction . . . removal of the ostensible encumbrance and cloud upon the realty not being dependent upon the merits of the subcontractor’s claim. (Emphasis added) The plain language of the statute indicates that the ability of the homeowner to be insulated from the claims of contractors and subcontractors is designed to provide the greatest protection possible to the homeowner.

When and Why Is an Affidavit Filed?

The final contractor’s affidavit in Florida construction law is typically filed after the last payment request. This is because the affidavit is intended to be the very last document submitted to the owner or property owner. The timing for the completion of the work for a Florida construction project can also determine when the final contractor’s affidavit is necessary. It is important to consider the date of the last conditional payment request, as a general rule of thumb the final contractor’s affidavit is required 5 days before the last date set forth in the last conditional payment request.
In certain instances the contractor will not have a preprinted final contractor’s affidavit that adheres to the requirements set forth in the statute. In these cases the contractor and the owner can rampantly agree to use the contractor’s affidavit in its existing form, which does not comport with the statutory requirements. As an example, this scenario may occur if the contractor is entitled to payment but the sub-contractor and/or sub-subcontractors are not.
A properly filed final contractor’s affidavit is vitally important because it triggers the time period for the Owner or Property Owner to address any liens prior to the release of payment to the contractor. As previously discussed, the owner or property owner will request the contractor to file a final contractor’s affidavit prior to the disbursal of payment. This is protective measure for the owner or property owner against improper liens on the subject property.

Contents of a Final Contractor Affidavit

The final contractor’s affidavit must also contain this very important information:

• The estimated amount due to the contractor for work done or materials furnished for the benefit of the owner under the contract. (This will likely be the full contract price owed to the contractor, assuming all work has been completed and that there are no changes to the contract price. It is difficult to imagine a contractor filing an affidavit where it was not paid in full for the work or materials provided.)
• The amount due to subcontractors for work performed or materials furnished for the benefit of the owner under the contract. (This might be something less than the contract price where the contractor has paid one or more subcontractors in full for the work/materials.)
• The amount of money due to each laborer under the contract.
• A listing of each lienor for whom Moneys are due, and his or her last known address as well as the last date of which the labor, services or materials were provided.
• A listing of each lienor for whom Moneys are due, and his or her last known business or residence address as well as the last date of which the labor, services or materials were provided.
• Non-existence of liens to the knowledge of the contractor at the time of the Affidavit.

Penalties for Failure to Properly File

A failure to file a compliant final contractor’s affidavit or notice of contest of the claimant gives the claimant grounds to foreclose its lien. Furthermore, it does not protect the owner from encumbering the entire original contract amount.
The Florida Supreme Court has held that "a general contractor who does not serve a proper notice of contest of lien or final contractor’s affidavit is liable for the full amount of the lien claim." Andrew Dismantling & Distribution, Inc. v. J.H. McCoy, 21 So. 3d 846 (Fla. 2009). The liability attaches regardless of whether or not the general contractor disputes the amount of the claimant’s lien on the work it performed. The failure to pay on time for properly performed work does not reduce the contractor’s exposure under the notice of contest/contractor’s affidavit rules.
Florida’s Lien Law is a remedy of equity. Because it is an equitable remedy, Florida courts have held there is no requirement that a timely written response must be provided for an unreasonable delay in payment . It is possible that a general contractor can present evidence that some payments were made late, however, a general contractor must take the good with the bad. As the Tenth Circuit Court of Appeals held in the context of a mechanic’s lien claim against the property owners, the "jury may not consider conduct prior to" the claimant’s first express request for payment if a condition precedent to payment has not been met. Tarheel Enterprises Inc. v. Cornwell, 563 F. Appx. 949, 954 (10th Cir. 2014). Generally, every owner must pay the full amount of an unpaid claim regardless of whether the owner claims a failure of consideration or an unexcused delay in the work or fraud or substantial completion.
So how does this impact payment? Unless a subcontractor or other lower tier contractor specifically agrees to be paid late or "in a timely manner," a general contractor cannot unilaterally change existing business payment practices previously agreed to. Subcontractors should be made aware of their rights and remedies for late payment, as well as the consequences for the project owner.

Tips for Drafting an Accurate Affidavit

To avoid potential conflicts with contractors and their lienors, sureties and other parties, the following are tips for contractors preparing a final subcontractor affidavit:

1. Ensure the final affidavit is a form that complies with the statute

Under F.S. 713.06(3)(d), the statute does indicate the language that is required to be included in a final contractor’s affidavit. Typically, contractors utilize this properly worded final contractor’s affidavit form.

2. Ensure the final affidavit is properly signed and notarized

Under F.S. 92.525(2)(a), the final subcontractor affidavit must be signed in the presence of a notary public (considering COVID-19, video notarization is now acceptable), whereas before video notarization was not. The statute further provides that an unsworn declaration under the penalty of perjury made under F.S. 92.525 is also acceptable in lieu of a notary public. Ensure, if your company adopts the option to use an unsworn declaration, that adequate notice is provided to lienors.

3. Ensure the subcontractor and contractor’s representations are accurate

Under F.S. 713.06(3)(d), the contractor is required to represent and warrant that it has no claim that remains unpaid and then it must represent and warrant that it knows of no persons that have unreleased lien claims. This is a strict liability rule. Typical defenses are that the contractor did not know of the unpaid subcontractor and bond completion cost packages provide a "punchlist" at the time a contractor submits its final invoices. Contractors should document all communications to ensure they are protected.

Affidavit in Mechanics Lien Law

The "final contractor’s" affidavit confirms the relationship between this contractor and the owner by stating that: "no lienors have given notice of nonpayment". The "relationship to the owner" is important. The law contemplates that subcontracts are being entered into, and that this sub-contractor is not the "contractor with whom the owner contracted". An example would be a sub-contractor named Smith who has contracted with general contractor Jones. Jones in turn had contracted with the owner. In this example, the "contractor" with the owner is Jones and the "sub-contractor" with the owner will be Smith. Smith will not be able to claim a lien on the owner’s property if no work was performed for the owner. In this case , the "affidavit of the final contractor" would have to be signed by Jones, not Smith.
The act of contracting with the owner is not determinative of who is the "sub contractor" for the purpose of Florida’s mechanics lien law. If subcontractor Smith fails to pay his sub-subcontractor, then Smith’s sub-subcontractor would be able to claim a lien on the property. Jones would have to sign an "affidavit" confirming that no sub-subcontractors have been paid, something like: "no Tier II lienors have given notice of nonpayment" confirming that no Tier I contractors have not paid their sub-contractors.
The "relationship" of the affidavit owner with the owner must be addressed or the lien rights of the "contractor" with the owner may very well be lost.