Serving the Owner with a Tenant Improvement Mechanic’s Lien

 In Mechanic’s Lien Law Updates and News

Assume you have performed construction services in the nature of tenant improvements. It may be to a restaurant, a store in a shopping center, the third floor of an office building, or even a standalone structure. You’ve checked with the applicable state law for mechanics’ liens and have concluded there is no right to record the mechanic’s lien against the owner’s interest. Only against the tenant. You’ve been further advised by your attorney that the lien can only foreclose against the tenant’s interest in the lease as well as movable trade fixtures.

So mechanic’s lien form is specially devised for that purpose. You describe the premises, but also make it clear the lien is lodged only against the tenant’s interest, not the owner in fee simple. Simple so far.

What you also know is most long-term leases have a provision forbidding the tenant to allow a mechanic’s lien against their interest. By doing so, it would be a breach of the lease. You also realize the landlord will put serious pressure on the tenant to pay your bills if they find out there is such a breach. So do you serve the landlord with the mechanics lien as well?

Before you do so, be careful. Even though the lien clearly indicates it is only against the tenant’s interest, if you formally serve the landlord, they may interpret this as being a lien against their interest, hire an attorney, and threaten slander of title. So what do you do?

The best idea is to scan in a copy of the mechanic’s lien and email it as an attachment to the landlord. Simply indicate this is for information purposes only and you will be foreclosing against the tenant’s interest if payment is not made. In other words, a “I thought you might want to know” type of email.

That way you get the best of both worlds. You’re able to alert the landlord and at the same token not turn that person or entity into a mortal enemy.

National Lien Law. More Info.

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