Storm Repair Debt After Hurricane Season: Contractor Liens and Bankruptcy in Florida

The Atlantic hurricane season closes on November 30. For a Florida homeowner who took damage this year, the season does not end with the storm. It ends when the roofer, the tree service, the remediation company, and the general contractor are paid, and that usually happens months after the work, if it happens at all. Insurance adjusters dispute scope, deductibles run into the thousands, and the contractor who tarped the roof in September wants a check in October. When the money does not come, Florida's construction lien law gives the contractor a remedy that reaches the one asset most filers assume is untouchable: the homestead.

Why the homestead does not stop a construction lien

Article X, section 4 of the Florida Constitution exempts the homestead from forced sale, with three exceptions written into the text: taxes and assessments, obligations contracted for the purchase of the property, and obligations contracted for house, field, or other labor performed on the property. That third exception is the construction lien. A roofer who repairs your roof and is not paid has performed labor on the property, and the constitutional exemption that defeats a credit card judgment does not defeat the roofer's lien.

This is the single most important fact about storm repair debt in a Florida bankruptcy. An unsecured debt to a contractor is discharged like any other. A perfected construction lien is a secured claim, and a secured claim survives the discharge as a charge on the property, whether or not the personal obligation is wiped out.

Whether the contractor actually has a lien

Not every unpaid contractor has a lien. Chapter 713 of the Florida Statutes sets strict preconditions, and a contractor who misses one has only an unsecured claim.

The claim of lien must be recorded within 90 days. Under section 713.08(5), a claim of lien must be recorded in the county official records not later than 90 days after the lienor's final furnishing of labor, services, or materials. A contractor who finished the roof on September 20 and has not recorded by December 19 has no lien, and a bankruptcy filed after that date treats the debt as unsecured.

The claim must be served on the owner. Section 713.08(4)(c) requires the lienor to serve a copy of the claim of lien on the owner, and under section 713.18 that service must happen before recording or within 15 days after. A lienor who records but never serves has a lien that is voidable to the extent the failure prejudiced you.

Subcontractors and suppliers must have served a notice to owner. A lienor who did not contract directly with you, such as the roofing crew hired by your general contractor or the supplier who delivered the shingles, must serve a notice to owner early in the job. Without it, that lienor has no lien rights against your property, though it may still have a claim against the contractor who hired it.

The lien expires in one year. Section 713.08(3) requires the claim of lien to carry a warning that it may remain valid for one year from recording unless the owner shortens the period. A lienor who records but does not sue to foreclose within a year loses the lien.

Before any bankruptcy decision is made on storm repair debt, these dates are checked in the county records. The answer determines whether the debt is secured or unsecured, and that determines everything else.

Chapter 7 with an unsecured contractor claim

If the contractor has no lien, or the lien is defective, the debt is an ordinary unsecured claim. A Chapter 7 discharges it. The contractor receives notice of the case, is barred by the automatic stay from recording a lien after the petition date, and is barred by the discharge from collecting afterward.

One caution. The automatic stay under 11 U.S.C. § 362(a) stops the recording of a lien after the petition, but § 362(b)(3) permits an act to perfect an interest in property to the extent the perfection would relate back under nonbankruptcy law. Florida's construction lien, once recorded, relates back to the notice of commencement or the first work, and courts have allowed post-petition recording within the 90-day window on that basis. A contractor who is still inside the 90 days when you file may be able to record anyway. Timing the petition after the 90 days have run is the clean solution when the facts allow it.

Chapter 7 with a valid lien

If the lien is valid, a Chapter 7 discharges your personal liability but leaves the lien on the house. The contractor cannot sue you for the money. It can foreclose the lien, subject to the one-year deadline, and a foreclosure action is a suit against the property rather than against you.

In practice, lien foreclosures on homestead for storm repair amounts are uncommon, because the contractor stands behind the first mortgage and the cost of the suit often exceeds the recovery. But the lien clouds title. It must be paid or settled at any sale or refinance, and the discharge gives you leverage to settle it, because the contractor's only remaining remedy is an expensive foreclosure.

Chapter 13: curing or paying the lien over time

Chapter 13 is the better tool when the lien is valid and the home is worth keeping. A valid construction lien is a secured claim on the principal residence, and the plan can provide for it in one of two ways. Under 11 U.S.C. § 1322(b)(5) the plan can cure the default over a reasonable time while maintaining payments. Or, because the anti-modification rule in § 1322(b)(2) protects only claims secured solely by the principal residence, and a construction lien is such a claim, the plan generally cannot reduce the amount, but it can spread it over up to five years at a rate the court approves.

The automatic stay in a Chapter 13 stops the lien foreclosure for the life of the plan. When the plan is completed, the lien is satisfied and released.

The insurance check

Storm repair debt rarely exists in isolation. There is usually an insurance claim, sometimes an assignment of benefits, and sometimes a mortgage servicer holding the proceeds in escrow and releasing them in draws as the work is inspected. Our post on hurricane insurance proceeds in a Florida bankruptcy covers who owns the proceeds when a case is filed. The short version for contractor debt: if the proceeds are earmarked for the repair under the policy and the mortgage, a Chapter 13 plan can direct them to the contractor, and a Chapter 7 trustee is unlikely to treat them as a general asset of the estate.

Deposits paid to a contractor who never showed up

After every major storm, some homeowners pay a deposit to a contractor who disappears. That is not your debt; it is your claim. It belongs on Schedule A/B as an asset, and a trustee may pursue it. If the contractor was licensed, the Florida Construction Industry Licensing Board's recovery fund may be available for a licensed contractor's misconduct, independent of the bankruptcy. If the contractor was unlicensed, the deposit is usually gone, and the loss is simply listed.

Frequently asked questions

The roofer recorded a lien for more than the contract price. Can that be challenged? Yes. A lien for an amount the lienor knows is inflated is a fraudulent lien under section 713.31, and the owner has remedies including discharge of the lien and attorney's fees. That challenge can be raised in the bankruptcy as an objection to the secured claim.

Can I surrender the house and walk away from the lien? In either chapter, yes. Surrender ends your personal liability on the mortgage and the lien, and the lien is the mortgage lender's problem at foreclosure.

I have not been paid by my insurer. Does the contractor have to wait? Not under the lien law. The contractor's 90-day clock runs from its final furnishing, not from your insurer's decision. Contractors who agreed in writing to wait for the insurance check are bound by that agreement, which is why the contract matters.

Does the lien show up on my credit report? Recorded liens are public records, and some reporting services pick them up. The discharge does not remove the lien from the county records; only a satisfaction or a court order does.

Before deciding whether the storm repair debt and the rest of your debt justify a filing, the free Florida means test calculator takes about three minutes and shows whether Chapter 7 is realistic before you pay for a consultation.