By: Scott Padgett
You’ve completed your work, payment is past due and you’re ready to record a construction lien . . . then you discover your client is a tenant, not an owner. Your ability to lien may be far more limited under Florida law than you had anticipated.
For example, an owner’s interest is not subject to a lien for improvements made by a tenant if any of the following is true:
- The lease contains specific language prohibiting the owner’s liability for tenant improvements and the lease is recorded in the county where the property is located prior to the notice of commencement for improvements;
- Prior to the notice of commencement for improvements, a notice has been filed in the official records of the county where the property is located that includes the name of the lessor/owner, a legal description of the parcel of land to which the notice applies, specific language included in the leases that prohibits such liability, and a statement that all or a majority of the leases entered into for the property expressly prohibit liability for lessee/tenant improvements; or
- The owner is a mobile home owner leasing a mobile home lot in a mobile home park.
To avoid problems with tenant improvements, you must educate and protect yourself at the start of a project. Before entering a contract you should verify the identity of the legal owner of the property by reviewing the official county records and notice of commencement, if one has already been filed. If your client is a tenant and not the owner, you’ll also need to check the official county records where the property is located to ensure no leases or notices have been filed that specifically prohibit owner liability for tenant improvements.
What if there is no lease or notice recorded? Florida law provides that a tenant must notify a contractor of any provision in the lease that would prohibit the property owner from being subject to liens. Failure of the tenant to provide this information gives the contractor the option to void the contract.
However, you can also go one step further to protect yourself and obtain any applicable lease provisions from the property owner. Under Florida law, you may send a written demand to the property owner asking for a copy of any provisions that would prohibit owner liability for the tenant’s improvements. The demand must be in writing and must identify both the tenant and the property at issue and include language substantially similar to the following:
WARNING
YOUR FAILURE TO SERVE THE REQUESTED VERIFIED COPY WITHIN 30 DAYS OR THE SERVICE OF A FALSE COPY MAY RESULT IN YOUR PROPERTY BEING SUBJECT TO THE CLAIM OF LIEN OF THE PERSON REQUESTING THE VERIFIED COPY.
The written demand must be a separate document from any other notice submitted to the owner regarding the improvements. The owner then has 30 days to provide you any applicable lease provisions.
Florida law has long held that in order for a landlord to be subject to liens arising from improvement made to his real property, the lease agreement must either require the tenant to make improvements or the improvements must constitute the “pith of the lease.” What does that mean?
Improvements have been found to constitute the “pith of the lease” when the lease is entered into on the condition that the improvements are made. In contrast, courts have found improvements do not constitute the “pith of the lease” when the lease merely permits the tenant to make improvements.
For these reasons, it is imperative that you obtain a copy of any applicable lease prior to the start of any work if you want to verify the ability to lien the owner’s interest in the future. It is also a good idea to talk to an attorney experienced in construction law matters to be sure you are protecting your right to full payment for any work done.
