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Florida’s Second District Court of Appeal in the case of Snell v. Mott’s Contracting Services, Inc. addressed an issue pertaining to lien rights and the difference between filing a lawsuit and resolving a dispute through arbitration. A big concern that this case resolves is that attempting to resolve your dispute through arbitration instead of litigation may cost you some of your Florida’s lien law rights.

The Snell case involved a construction contract between the homeowner and the contractor that had a provision which provided for disputes to be resolved through arbitration rather than litigation. In Snell,  the contractor properly recorded its lien, and the homeowners filed a lawsuit in which they asked the court to determine that the lien was invalid.  The contractor moved the case to arbitration based on the arbitration provision. The court agreed and the parties were to arbitrate the matter. The contractor prevailed in the arbitration and was entitled to recover its attorney’s fees in accordance with Section 713.29 of the Florida Statutes. The appellate court found that the contractor, by asking to have its dispute resolved through arbitration, did not bring an action “in a court of competent jurisdiction.” In doing so, the court held that the contractor’s rights under Florida Lien law had expired, and that the contractor had no basis for recovering its attorney fees. As a result of the hodling in Snell, a contractor may lose a substantial portion of its recovery merely because he followed the language of his contract by resolving his dispute through arbitration.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com

As far as zoning is concerned, the tenants need to do their due diligence and independently ascertain that the location that they have selected to lease allows for the business that the tenant is carrying out. Tenants should try to negotiate into the lease agreement representations and warranties on the part of the landlord that the leased premises are zoned for the tenant’s intended business use. Landlords on the other hand, should include a provision that they make no warranties as to the zoning of the leased premises for the tenants intended use only when the landlord believe that the zoning for the lease premises may not permit the tenants intended use.

As far code violations, they should generally be handled in a similar manner as zoning issues referenced above with each party attempting to shift the burden of liability away from each other. However, with code violations, the tenant must thoroughly inspect the premises with a contractor to determine if there are any code violations. Real estate attorneys recommend to their tenant clients that they perform a lien search with a lien search company that includes, code violations and open permits before signing a lease agreement for the premises. The landlord also needs to take an extra precaution especially when a tenant is making improvements to the leased premises and require the tenant to indemnify the landlord from any costs and fees imposed by code violations caused by the tenant’s work on attempting to improve the premises. Again, the landlord should also incorporate into the lease agreement, the right to cure the code violations himself and assess the costs and fees associated with resolving the code violation on the tenant.

Ray Garcia, Esq.

Board Certified in Real Estate Law

by the Florida Bar

www.floridaconstructionlawgroup.com