Filing A Lien When The Work Is Done For A Tenant Rather Than An Owner

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Commercial landlords often allow commercial tenants to construct a buildout tailored to their business (e.g., retail stores, restaurants, redesigning office space, etc.). Such tenants hire general contractors who in turn hire subcontractors and suppliers.  What lien rights do such subcontractors and suppliers have?

The General Rule

If the chain of contract is with the tenant, then the claimant’s lien will only cover the leasehold.  It will not attach to the owner’s fee simple interest in the property.  This should not deter you from filing a lien because there are exceptions to this rule.

Exceptions

If the tenant is shown to have acted as the agent or the general contractor of the owner, then the lien may cover the owner’s fee simple interest.  Often the owner exercises at least some degree of control and supervision of these projects, and the lease agreement evidences this control.  If so, this can be used to establish evidence of the foregoing exceptions.

The Bottom Line

If the work is done for a tenant rather than the owner, send your lien notices (include landlord and tenant) and file your lien against the property anyway.

Topics:  Commercial Property Owners, Construction Disputes, Construction Liens, Contractors, Landlords, Renovations, Subcontractors, Tenants

Published In: General Business Updates, Construction Updates, Commercial Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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