Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
In our case, the lender posted the transfer bond as principal. The GC had not been paid by the defaulting owner so had no liability.
Ian Kravitz, Esquire
Malka & Kravitz, P.A.
1300 Sawgrass Corp Pkwy
Suite 100
Sunrise, FL 33323
Sent from my mobile device so please excuse any typos
On Feb 6, 2013, at 12:56 PM, "Greg Elliott" gelliott@elliott-berger.com wrote:
Ian:
But the lender did not become the bond principal did he, his "short-selling" borrower did, didn't he? I think Hardy's original question places the lender in as bond principal.
GTE
Gregory T. Elliott
ELLIOTT - BERGER, P. A.
10225 Ulmerton Road, Suite 4A
Largo, Florida 33771
(727) 360-2600 (Phone)
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From: "Ian Kravitz" <Ian@mkpalaw.commailto:Ian@mkpalaw.com>
To: "'Greg Elliott'" <gelliott@elliott-berger.commailto:gelliott@elliott-berger.com>; "Reese J. Henderson, Jr." <Reese.Henderson@gray-robinson.commailto:Reese.Henderson@gray-robinson.com>; "Larry Leiby" <Leiby@mkpalaw.commailto:Leiby@mkpalaw.com>; "'Roberts, Hardy L.'" <hroberts@carltonfields.commailto:hroberts@carltonfields.com>; "'Construction Law Discussion'" <clc-discussion@lists.flabarrpptl.orgmailto:clc-discussion@lists.flabarrpptl.org>
Sent: 2/6/2013 12:48:39 PM
Subject: RE: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
We recently had a scenario where the lender needed to clear title in order to proceed on a complex commercial short sale because our lien, and issues too complex to be resolved short of trial, were impeding their ability to foreclose out the interests of the lien holder. As a result, they transferred the lien to bond to effectuate that multi-million dollar transaction.
As Larry indicated in his post earlier, the lender was not too happy to then realize that they had waived any right to argue the priority of their loan over the lien, and were forced to satisfy the lien that would have otherwise been worth nothing.
That is the one and only time I have experienced such a scenario, but to answer your question, there is at least one scenario where it can become an issue.
Ian T. Kravitz, Esquire view my biohttp://www.mkpalaw.com/Attorneys/Ian-T-Kravitz.shtml
Board Certified in Construction Law
AV Preeminent Rated by Martindale-Hubbell
MALKA & KRAVITZ, P.A.
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Greg Elliott
Sent: Wednesday, February 06, 2013 12:26 PM
To: Reese J. Henderson, Jr.; Larry Leiby; 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
Still struggling to picture a scenario where a lender would have any legitimate interest in transferring some claimant's lien against their borrower's property off to other security (713.24 bond). In my experience the notion of bonding a lien off usually is something a General Contractor elects do do with one of his subs or materialmen's claim of lien, where he is in a dispute with that sub or materialman over what is due, and does not want his owner's property subjected to the lien. The property owner's lender might consider the encumbrance to be an event of technical default under the mortgage, but why would they care to expend the energy and resources to transfer that inferior claim of interest off. If push came to shove the lender could just foreclose the claim out with every other junior encumberance.
G. Elliott
Gregory T. Elliott
ELLIOTT - BERGER, P. A.
10225 Ulmerton Road, Suite 4A
Largo, Florida 33771
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Board Certified In Construction Law
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------ Original Message ------
From: "Reese J. Henderson, Jr." <Reese.Henderson@gray-robinson.commailto:Reese.Henderson@gray-robinson.com>
To: "Larry Leiby" <Leiby@mkpalaw.commailto:Leiby@mkpalaw.com>; "'Roberts, Hardy L.'" <hroberts@carltonfields.commailto:hroberts@carltonfields.com>; "'Construction Law Discussion'" <clc-discussion@lists.flabarrpptl.orgmailto:clc-discussion@lists.flabarrpptl.org>
Sent: 2/6/2013 11:45:46 AM
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
“is the lien still there along with the bond . . .” – interesting point, Larry. If the lender attempts to transfer the lien through a 713.24 lien transfer bond, then by your argument the lienor would still have its lien claim AND now have a claim against that bond, which, because it does not comply with 713.24, is instead a common law bond which is additional – and not substitute – security for the lien.
Reese J. Henderson, Jr.
Board Certified Construction Attorney
GrayRobinson, P.A.
50 North Laura Street, Suite 1100
Jacksonville, Florida 32202
Main: 904-598-9929 | Fax: 904-598-9109
Email: Reese.Henderson@gray-robinson.commailto:Reese.Henderson@gray-robinson.com
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Larry Leiby
Sent: Wednesday, February 06, 2013 11:27 AM
To: 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
I agree with those who noted that a lender does not have an interest in property, instead it has a mortgage lien, and thus is not covered under 713.24. However that is the tip of the iceberg and begs the question.
The concern that I have experienced is where the lender seeks to transfer the lien to bond but the bond form is not conditioned only on proving the lien claim it is also conditioned on proving priority. That is not what 713.24 is about, and the clerks aren’t real students of 713.24 as they have many duties. If that happens the lienor should challenge any certificate of transfer.
So a lender is a little nuts wanting to transfer a lien under 713.24 without added language (which would not meet the requirements of 713.24), because then the lienor need only prove its lien claim and the condition of the bond is performed where the principal and surety on the bond are on the hook (assuming they didn’t sneak in any added language to the 713.24 bond form). The lender loses its argument about the lien not having equity and being inferior to the mortgage by bonding it off and taking the property equity out of the equation. The lienor should be ecstatic about not being worried about the lender’s priority any more, but must watch carefully the language in the bond. If the lender is looking to clear title for some reason of its own, it should not be the principal on the bond – only someone with an interest. If the lender gets cute and adds language to the bond, we have some new issues to address, which I believe are not yet resolved.
Thus if the lender uses a 713.24 bond to transfer it off, the question is: Is the lien really transferred off, or is the lien still there along with the bond because the lender cannot meet the requirements of 713.24 by not having an interest in the property?
Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL 33323
Phone: 954-514-0984
Fax: 954-514-0985 e-mail: leiby@mkpalaw.commailto:leiby@mkpalaw.com
Board Certified in Construction Law
Fla. Supreme Court Certified Circuit Court Civil Mediator
Member, Leiby Alexander Brandt ADR Group, LLC
Member, JAMS Global Engineering and Construction Panel
Fellow, College of Commercial Arbitrators
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org]mailto:[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of John Campo
Sent: Tuesday, February 05, 2013 2:41 PM
To: 'Matthew Belcastro'; 'Raymond L. Robinson'; 'Gibbons, Michael'; 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
As a practical matter, I would welcome a Lien Transfer Bond knowing that a pile of money is readily available for the taking should my client prevail on its lien.
John D. Campo, Esq.
Florida Bar Board Certified - Construction Law
john@npw-law.commailto:john@npw-law.com
Niesen|Price|Worthy|Campo|Blakey, PA
5216 SW 91st Drive Gainesville, FL 32608
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org]mailto:[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Matthew Belcastro
Sent: Tuesday, February 05, 2013 2:16 PM
To: Raymond L. Robinson; Gibbons, Michael; Roberts, Hardy L.; Construction Law Discussion
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
I'm not sure I understand why the construction lender wants to bond off the lien? Are they trying to convert to permanent financing and unable as a result of the construction lien?
Matthew Belcastro
Attorney at Law
Henderson, Franklin, Starnes & Holt, P.A.
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Fort Myers, FL 33902
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Raymond L. Robinson
Sent: Tuesday, February 05, 2013 2:02 PM
To: Gibbons, Michael; Roberts, Hardy L.; Construction Law Discussion
Subject: Re: [CLC-Discussion] Can a construction lender bond off aconstruction lien?
One could make the argument that Florida is considered a “lien” state and case law has held that a mortgage is not a transfer of “interest” in real property and therefore does not need two subscribing witnesses. Good question though. Let me know if you find the answer.
Raymond L. Robinson, Esq.
Office: (305) 662-7618
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Gibbons, Michael
Sent: Tuesday, February 05, 2013 12:19 PM
To: 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off a construction lien?
Yes. The lender has “an interest” via its mortgage in the real property on which the lien is imposed.
Michael R. Gibbons (Biohttp://lowndes-law.com/our-people/michael-r-gibbons)
Shareholder
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From: clc-discussion-bounces@lists.flabarrpptl.orgmailto:clc-discussion-bounces@lists.flabarrpptl.org [mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Roberts, Hardy L.
Sent: Tuesday, February 05, 2013 11:55 AM
To: 'Construction Law Discussion'
Subject: [CLC-Discussion] Can a construction lender bond off a construction lien?
Anyone have any thoughts on this?
[cid:image037.png@01CE0468.48F77590]
Hardy L. Roberts
Attorney at Law / Board Certified in Construction Law by the Florida Bar
4221 W. Boy Scout Blvd., Ste. 1000
Tampa, Florida 33607-5780
Direct: 813.229.4105 | Fax: 813.229.4133
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Interesting. I can see why the lender wasn't very happy then. . .
Gregory T. Elliott
ELLIOTT - BERGER, P. A.
10225 Ulmerton Road, Suite 4A
Largo, Florida 33771
(727) 360-2600 (Phone)
(727) 360-6588 (Fax)
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Disclaimer regarding Uniform Electronic Transactions Act ("UETA")
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------ Original Message ------
From: "Ian Kravitz" Ian@mkpalaw.com
To: "Greg Elliott" gelliott@elliott-berger.com
Cc: "Reese J. Henderson, Jr." Reese.Henderson@gray-robinson.com;
"Larry Leiby" Leiby@mkpalaw.com; "Roberts, Hardy L."
hroberts@carltonfields.com; "Construction Law Discussion"
clc-discussion@lists.flabarrpptl.org
Sent: 2/6/2013 12:57:55 PM
Subject: Re: Re[2]: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
In our case, the lender posted the transfer bond as principal. The GC
had not been paid by the defaulting owner so had no liability.
Ian Kravitz, Esquire
Malka & Kravitz, P.A.
1300 Sawgrass Corp Pkwy
Suite 100
Sunrise, FL 33323
Sent from my mobile device so please excuse any typos
On Feb 6, 2013, at 12:56 PM, "Greg Elliott"
gelliott@elliott-berger.com wrote:
Ian:
But the lender did not become the bond principal did he, his
"short-selling" borrower did, didn't he? I think Hardy's original
question places the lender in as bond principal.
GTE
Gregory T. Elliott
ELLIOTT - BERGER, P. A.
10225 Ulmerton Road, Suite 4A
Largo, Florida 33771
(727) 360-2600 (Phone)
(727) 360-6588 (Fax)
Board Certified In Construction Law
[cid:em32fb1494-ef47-4ca8-baac-950fea43669c@greg-pc]
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------ Original Message ------
From: "Ian Kravitz" <Ian@mkpalaw.commailto:Ian@mkpalaw.com>
To: "'Greg Elliott'"
<gelliott@elliott-berger.commailto:gelliott@elliott-berger.com>;
"Reese J. Henderson, Jr."
<Reese.Henderson@gray-robinson.commailto:Reese.Henderson@gray-robinson.com>;
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<hroberts@carltonfields.commailto:hroberts@carltonfields.com>;
"'Construction Law Discussion'"
<clc-discussion@lists.flabarrpptl.orgmailto:clc-discussion@lists.flabarrpptl.org>
Sent: 2/6/2013 12:48:39 PM
Subject: RE: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
We recently had a scenario where the lender needed to clear title in
order to proceed on a complex commercial short sale because our lien,
and issues too complex to be resolved short of trial, were impeding
their ability to foreclose out the interests of the lien holder. As a
result, they transferred the lien to bond to effectuate that
multi-million dollar transaction.
As Larry indicated in his post earlier, the lender was not too happy
to then realize that they had waived any right to argue the priority
of their loan over the lien, and were forced to satisfy the lien that
would have otherwise been worth nothing.
That is the one and only time I have experienced such a scenario, but
to answer your question, there is at least one scenario where it can
become an issue.
Ian T. Kravitz, Esquire view my
biohttp://www.mkpalaw.com/Attorneys/Ian-T-Kravitz.shtml
Board Certified in Construction Law
AV Preeminent Rated by Martindale-Hubbell
MALKA & KRAVITZ, P.A.
1300 Sawgrass Corporate Parkway
Suite 100
Sunrise, FL 33323
Telephone 954-514-0984
Facsimile 954-514-0985
www.YourConstructionLawFirm.comhttp://www.mkpalaw.com/
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On Behalf Of Greg Elliott
Sent: Wednesday, February 06, 2013 12:26 PM
To: Reese J. Henderson, Jr.; Larry Leiby; 'Roberts, Hardy L.';
'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
Still struggling to picture a scenario where a lender would have any
legitimate interest in transferring some claimant's lien against their
borrower's property off to other security (713.24 bond). In my
experience the notion of bonding a lien off usually is something a
General Contractor elects do do with one of his subs or materialmen's
claim of lien, where he is in a dispute with that sub or materialman
over what is due, and does not want his owner's property subjected to
the lien. The property owner's lender might consider the encumbrance
to be an event of technical default under the mortgage, but why would
they care to expend the energy and resources to transfer that inferior
claim of interest off. If push came to shove the lender could just
foreclose the claim out with every other junior encumberance.
G. Elliott
Gregory T. Elliott
ELLIOTT - BERGER, P. A.
10225 Ulmerton Road, Suite 4A
Largo, Florida 33771
(727) 360-2600 (Phone)
(727) 360-6588 (Fax)
Board Certified In Construction Law
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------ Original Message ------
From: "Reese J. Henderson, Jr."
<Reese.Henderson@gray-robinson.commailto:Reese.Henderson@gray-robinson.com>
To: "Larry Leiby" <Leiby@mkpalaw.commailto:Leiby@mkpalaw.com>;
"'Roberts, Hardy L.'"
<hroberts@carltonfields.commailto:hroberts@carltonfields.com>;
"'Construction Law Discussion'"
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Sent: 2/6/2013 11:45:46 AM
Subject: Re: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
“is the lien still there along with the bond . . .” – interesting
point, Larry. If the lender attempts to transfer the lien through a
713.24 lien transfer bond, then by your argument the lienor would
still have its lien claim AND now have a claim against that bond,
which, because it does not comply with 713.24, is instead a common law
bond which is additional – and not substitute – security for the lien.
Reese J. Henderson, Jr.
Board Certified Construction Attorney
GrayRobinson, P.A.
50 North Laura Street, Suite 1100
Jacksonville, Florida 32202
Main: 904-598-9929 | Fax: 904-598-9109
Email:
Reese.Henderson@gray-robinson.commailto:Reese.Henderson@gray-robinson.com
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On Behalf Of Larry Leiby
Sent: Wednesday, February 06, 2013 11:27 AM
To: 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
I agree with those who noted that a lender does not have an interest
in property, instead it has a mortgage lien, and thus is not covered
under 713.24. However that is the tip of the iceberg and begs the
question.
The concern that I have experienced is where the lender seeks to
transfer the lien to bond but the bond form is not conditioned only on
proving the lien claim it is also conditioned on proving priority.
That is not what 713.24 is about, and the clerks aren’t real students
of 713.24 as they have many duties. If that happens the lienor should
challenge any certificate of transfer.
So a lender is a little nuts wanting to transfer a lien under 713.24
without added language (which would not meet the requirements of
713.24), because then the lienor need only prove its lien claim and
the condition of the bond is performed where the principal and surety
on the bond are on the hook (assuming they didn’t sneak in any added
language to the 713.24 bond form). The lender loses its argument about
the lien not having equity and being inferior to the mortgage by
bonding it off and taking the property equity out of the equation. The
lienor should be ecstatic about not being worried about the lender’s
priority any more, but must watch carefully the language in the bond.
If the lender is looking to clear title for some reason of its own, it
should not be the principal on the bond – only someone with an
interest. If the lender gets cute and adds language to the bond, we
have some new issues to address, which I believe are not yet resolved.
Thus if the lender uses a 713.24 bond to transfer it off, the
question is: Is the lien really transferred off, or is the lien still
there along with the bond because the lender cannot meet the
requirements of 713.24 by not having an interest in the property?
Larry R. Leiby, Esq.
Malka & Kravitz, P.A.
1300 Sawgrass Corp. Pkwy., Suite 100
Ft. Lauderdale, FL 33323
Phone: 954-514-0984
Fax: 954-514-0985 e-mail: leiby@mkpalaw.commailto:leiby@mkpalaw.com
Board Certified in Construction Law
Fla. Supreme Court Certified Circuit Court Civil Mediator
Member, Leiby Alexander Brandt ADR Group, LLC
Member, JAMS Global Engineering and Construction Panel
Fellow, College of Commercial Arbitrators
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From:
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[mailto:clc-discussion-bounces@lists.flabarrpptl.org]mailto:[mailto:clc-discussion-bounces@lists.flabarrpptl.org]
On Behalf Of John Campo
Sent: Tuesday, February 05, 2013 2:41 PM
To: 'Matthew Belcastro'; 'Raymond L. Robinson'; 'Gibbons, Michael';
'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
As a practical matter, I would welcome a Lien Transfer Bond knowing
that a pile of money is readily available for the taking should my
client prevail on its lien.
John D. Campo, Esq.
Florida Bar Board Certified - Construction Law
john@npw-law.commailto:john@npw-law.com
Niesen|Price|Worthy|Campo|Blakey, PA
5216 SW 91st Drive Gainesville, FL 32608
Ph (352) 373-9031 Fax (352) 373-9099
http://npw-law.com
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On Behalf Of Matthew Belcastro
Sent: Tuesday, February 05, 2013 2:16 PM
To: Raymond L. Robinson; Gibbons, Michael; Roberts, Hardy L.;
Construction Law Discussion
Subject: Re: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
I'm not sure I understand why the construction lender wants to bond
off the lien? Are they trying to convert to permanent financing and
unable as a result of the construction lien?
Matthew Belcastro
Attorney at Law
Henderson, Franklin, Starnes & Holt, P.A.
1715 Monroe Street
P.O. Box 280
Fort Myers, FL 33902
Direct Dial: 239.344.1205
Direct Fax: 239.344.1524
Matthew.Belcastro@henlaw.commailto:Matthew.Belcastro@henlaw.com
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From:
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[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of
Raymond L. Robinson
Sent: Tuesday, February 05, 2013 2:02 PM
To: Gibbons, Michael; Roberts, Hardy L.; Construction Law Discussion
Subject: Re: [CLC-Discussion] Can a construction lender bond off
aconstruction lien?
One could make the argument that Florida is considered a “lien” state
and case law has held that a mortgage is not a transfer of “interest”
in real property and therefore does not need two subscribing
witnesses. Good question though. Let me know if you find the answer.
Raymond L. Robinson, Esq.
Office: (305) 662-7618
Cell: (305) 632-4384
http://www.rrobinsonlaw.com/
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[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of
Gibbons, Michael
Sent: Tuesday, February 05, 2013 12:19 PM
To: 'Roberts, Hardy L.'; 'Construction Law Discussion'
Subject: Re: [CLC-Discussion] Can a construction lender bond off a
construction lien?
Yes. The lender has “an interest” via its mortgage in the real
property on which the lien is imposed.
Michael R. Gibbons
(Biohttp://lowndes-law.com/our-people/michael-r-gibbons)
Shareholder
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 N. Eola Drive
Orlando, FL 32801
Phone: 407-418-6378
Fax: 407-843-4444
email:
michael.gibbons@lowndes-law.commailto:michael.gibbons@lowndes-law.com
website: http://www.lowndes-law.comhttp://www.lowndes-law.com/
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[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of
Roberts, Hardy L.
Sent: Tuesday, February 05, 2013 11:55 AM
To: 'Construction Law Discussion'
Subject: [CLC-Discussion] Can a construction lender bond off a
construction lien?
Anyone have any thoughts on this?
[cid:image037.png@01CE0468.48F77590]
Hardy L. Roberts
Attorney at Law / Board Certified in Construction Law by the Florida
Bar
4221 W. Boy Scout Blvd., Ste. 1000
Tampa, Florida 33607-5780
Direct: 813.229.4105 | Fax: 813.229.4133
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