Who Gets Paid First? Priority Disputes Between Mechanic’s Lienholders and Mortgage Lenders in Sarasota Construction Cases

A construction project rarely fails all at once. It usually falls apart in stages: a subcontractor stops getting paid, the general contractor runs short on funds, and the bank holding the mortgage starts asking hard questions about where the draw money actually went. By the time the dust settles and liens start showing up on the property, everyone involved wants to know the same thing. Who actually gets paid first?

That question, in Sarasota and across Florida, comes down almost entirely to timing and paperwork. Our experienced Sarasota civil litigation attorneys walk through how lien priority disputes typically unfold and what property owners, contractors, and lenders should understand before a project goes sideways.

Why Timing Decides Everything

Florida’s Construction Lien Law does not ask who worked harder or who is owed more. It asks who recorded first. Under Section 713.07 of the Florida Statutes, when a notice of commencement has been properly recorded, liens for labor and materials attach and take priority as of the date that notice of commencement was recorded, not the date the individual contractor or supplier later files a claim of lien. If no notice of commencement was recorded, priority instead runs from the date each lien is recorded.

A mortgage recorded before the notice of commencement generally keeps its senior position over later mechanic’s liens. A mortgage recorded after construction has already begun, or after a notice of commencement is on file, can find itself competing with lienholders whose claims trace back to that earlier recording date. This is why construction lenders in Sarasota are so particular about the sequence of events at closing. A few days, or even hours, can change who stands first in line if the project later goes into default.

Where These Disputes Usually Surface

Priority fights rarely come up in isolation. They tend to appear alongside a few recurring scenarios:

• A construction loan closes and funds begin disbursing before the notice of commencement is properly recorded, opening a gap that later lienholders try to exploit.
• A lender disburses loan proceeds without following the statutory disbursement requirements, prompting lienors to argue the lender should lose its priority protection.
• Multiple lenders are involved, such as a refinance that replaces an original construction loan, and the new mortgage’s priority date becomes disputed.
• A general contractor is paid but fails to pass funds down to subcontractors or suppliers, who then record liens reaching back to a date earlier than expected.
• The property heads toward foreclosure, forcing courts to sort out which claims get satisfied first from limited sale proceeds.

What This Means in Practice

For property owners, the practical lesson is that a construction loan closing is not the moment to skip careful review of the notice of commencement and disbursement schedule. Mistakes made at that stage can determine, months or years later, whether a lender’s mortgage survives a lien dispute intact or gets pushed behind a stack of unpaid subcontractor claims. For contractors and suppliers, understanding exactly when your lien rights attach, and making sure your notices and claims of lien are recorded correctly and on time, is often the difference between full payment and a diminished recovery after a lender’s mortgage is paid out first.

According to the Associated General Contractors of America, Florida’s construction industry employs hundreds of thousands of people across the state, which means these disputes touch a wide range of businesses, not just large developers. A single missed filing deadline or an improperly sequenced closing can ripple through an entire chain of subcontractors and suppliers who had no direct role in the mistake.

If you are a Sarasota property owner, lender, or contractor caught in a dispute over which claim gets paid first, our office can review the recorded documents and disbursement history to assess where you stand. Suncoast Civil Law represents parties on all sides of these disputes throughout the Central Gulf Coast. Give us a call to talk through your situation with our Sarasota construction law lawyers.

Source:

flsenate.gov/Laws/Statutes/2025/713.07