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Lien Rights When Contract is With Tenant

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bsebastian

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Discussion starter · #1 ·
I'm a relatively new GC and recently contracted with a commercial tenant to build out there new office. I've always contracted with the property owner in the past so working directly for a tenant is new to me. I understand landlords have ways of protecting themselves from tenant's contractor's liens. Can someone advise me of how to protect lien rights if my client is not the property owner?

Thank you
 
#4 ·
My guess. Send the property owner a lien notice telling him your doing work on his property. Maybe treat the tenant like a sub?


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Discussion starter · #5 ·
Working for tenants is certainly not a unique arrangement. Most retail tenants hire their own GCs. When I google "protecting lien rights as a tenant contractor" all the results are from law firms talking about how landlords can protect themselves from tenants' contractor's liens. Yes, I could talk to a $400/hr attorney but I was hoping someone here has experience with this.
 
#6 ·
While you pay for an attorney's expertise and his/her knowledge of said law, asking for advice on an internet forum should be worth what you paid for it. Having said that, there's nothing wrong with asking if others have run into this same situation before. But bottom line, I would defer to an expert, because my business/rep is on the line.
Good luck!
 
#7 · (Edited)
You should have your attorney review it, but here is the general thinking.

An interior build-out usually benefits the tenant but rarely the landlord, i.e. it does not make the building more marketable to a different tenant. This is why a landlord will do the build-out at his own expense only if the tenant is willing to sign a very long lease.

So no sane landlord will ever allow you to put a lien on his property for work he didn't ask you to do. In fact, you would be well advised to get the owner's permission in writing. If you don't, lien or not, the owner could have a claim against you based on the theory that your unauthorized work has impaired the value of the building.

Long story short, not likely you can lien anything. But talk to your lawyer.
 
Discussion starter · #8 ·
I did my homework on this and found the answer in the Florida Statutes Section 713.10. Contractors generally do not have lien rights on landlord's property if the contract is with the tenant but there are exceptions.

The proper steps to follow is to request a copy of the lease or provisions of the lease prohibiting liens on the property from the landlord. If the landlord doesn't provide it within 30 days of the request then the property can be liened. Also if the lease contains lien prohibition clauses and the lease was not recorded in the public records prior to the time the contractor records a Notice of Commencement then the property can be liened.

In case anyone here wants to read the full statute, the link is below:

http://www.leg.state.fl.us/statutes...pp_mode=Display_Statute&Search_String=&URL=0700-0799/0713/Sections/0713.10.html
 
Discussion starter · #10 ·
G&Co. said:
The Notice of Commencement is recorded by the Owner, not the Contractor. Read 713.13.
Click to expand...
Technically that's what the statute says but I've always filled out the NOC, had the owner sign it, and then recorded it myself. The way I interpret 713.10 the only way a Landlord can enforce the no lien provision in their lease is if the lease is recorded prior to the NOC. So it's in my best interest to see that the NOC gets recorded promptly.

From 713.10:

"The interest of the lessor is not subject to liens for improvements made by the lessee when: The lease, or a short form or a memorandum of the lease that contains the specific language in the lease prohibiting such liability, is recorded in the official records of the county where the premises are located before the recording of a notice of commencement for improvements to the premises and the terms of the lease expressly prohibit such liability;"

At the end of the day, most likely I will not have lien rights but there must be other ways I can reduce my risk of non payment especially considering there is no lender involved and the draws would be paid directly by the tenant. I would think asking the tenant to place the funds in an escrow account would be a reasonable solution. For perspective the contract value is approximately $250k so it's no small amount. But I'm very comfortable with my client and trust there won't be any issues but I just need to dot my i's. This is something I'm probably going to encounter again and I may not have as much of a warm and fuzzy with them.
 
#11 ·
The lease language says that the tenant will defend the landlord from any liens resulting from the tenants work. There is nothing that says you can’t include the landlord on a lien. If you do, the landlord will immediately send official notice to the tenant advising them that they are at risk of being in default, and they need to clear the lien immediately. You would probably have a difficult time enforcing the lien against the landlord, but including them on the notice effectively gets them on your side with respect to leverage against the tenant. They aren’t really on your side, but they will put a lot of pressure on the tenant to clear it.
 
#12 ·
Half-fast Eddie said:
The lease language says that the tenant will defend the landlord from any liens resulting from the tenants work. There is nothing that says you can’t include the landlord on a lien. If you do, the landlord will immediately send official notice to the tenant advising them that they are at risk of being in default, and they need to clear the lien immediately. You would probably have a difficult time enforcing the lien against the landlord, but including them on the notice effectively gets them on your side with respect to leverage against the tenant. They aren’t really on your side, but they will put a lot of pressure on the tenant to clear it.
Click to expand...
Agree but will add: A lien on a tenant upfit will never get you paid. Our contracts when working for the tenants are worded to protect the contractor first, then the Owner, Tenant last. Any late progress payment stops all work. We don't lien owners for deadbeat tenants, we sue the Tenant.
 
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