Tenant Improvement? What’s a Landlord to do?
We’ve previously discussed liens on leaseholds, though we usually discuss this topic from the perspective of the subcontractor/material supplier. This week, we are turning the tables and looking at what a landlord in Florida can do to protect themselves from a potential lien.
In Steps Every Landlord Should Take to Prevent Liens by Its Tenant’s Contractors, authors Stacy Bercun Bohm and Leslie Miller Tomczak provide landlords with tips on how to avoid mechanic’s liens filed for their tenant’s contracted improvements.
Include No-Lien Language in all Leases and Record a Notice Thereof. That’s their first tip. The authors recommend landlords include language within the lease that “states that the interest of the landlord shall not be subject to liens for improvements performed to the premises by or on behalf of the tenant.”
However, incorporating a no-lien clause is not independently sufficient. The authors advised that the landlord must record a copy of lease (or approved lease documentation) prior to the Notice of Commencement being recorded.
“[T]he landlord must record, prior to the date of recording of the notice of commencement (NOC) for the tenant’s work either (a) a copy of the entire lease at issue; (b) a short form memorandum of the lease at issue that includes a copy of the express no-lien language; or (c) if all or a majority of the landlord’s leases for the premises on the parcel of land/building expressly prohibit the interest of the landlord from being subject to liens for improvements by tenant contractors, a statutory notice as provided in Section 713.10(2)(b)(2), Florida Statutes, that includes the express no-lien language from each such lease (this notice is sometimes called a ‘notice of non-responsibility’ or ‘713.10 notice’).”
Speaking of the Notice of Commencement, as a best practice, landlords should carefully review the NOC if the tenant has requested the landlord to sign it, because “If the landlord signs a tenant’s NOC or permit application as the ‘owner,’ by doing so, it could give the tenant’s contractors and other lower tiered subcontractors and suppliers the unintended impression that the landlord ordered the work and is therefore responsible for paying for same.”
What other tips do the authors provide? Require a standard Notice of Commencement form, add language to the lease that requires the tenant to notify all suppliers that the landlord is not responsible for the improvements and include language that would require the tenant to obtain lien waivers and releases from all parties in the ladder of supply, to name a few. Check out their full article for more information!
Ontario’s Construction Lien Act (“Act”) has been reviewed for lienability, preservation & perfection of liens, holdbacks, legal procedure, construction trusts, prompt payment, adjudication, surety bonds etc. This paper will provide a high-level overview of the Committee’s review and recommendations for the preservation & perfection of liens, surety bonds and prompt payment and will also include information regarding the Act’s current provisions. Download this paper to learn more!
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