Preliminary notice requirements for mechanics liens vary from state to state and project-by-project. One particular type of project that can prompt extra, or at least differing, notice requirements in several states is a project on an owner-occupied residence. Many states have made a determination that homeowners deserve some higher standard of notice or protection regarding the dwelling in which they live. And, this is understandable. But, this prompts a question. What happens when the “owner” lives in the residence, but owns the property through an LLC or other company?
Why Buy Property (To Live In) Through An LLC?
Many people, not just celebrities, have determined that buying or refinancing their property through an LLC makes good sense; either from a financial standpoint, or out of privacy concerns.The first question to consider is how this situation would arise in the first place. Many people, not just celebrities, have determined that buying or refinancing their property through an LLC makes good sense; either from a financial standpoint, or out of privacy concerns. There are several reasons why it may make sense for an LLC to own your residence.
With the ability to search relatively anything online these days, some people have decided that purchasing their residence through an LLC provides them much needed privacy. This is especially true for celebrities, but many people have similar privacy concerns that can be addressed in the same manner. By buying under an LLC, it becomes very difficult to find out a party’s address by searching public property records, and it can make it much more difficult to determine the amount paid for the property itself.
While, again, this may be needed more by celebrities or other individuals with a high net-worth, protection of assets is a universal desire. By purchasing a residence though an LLC, personal assets are protected. This works the same as it does in any business sense. Any lawsuit against the owner of the property would necessarily be against the LLC itself, not the individual. Individual assets are protected because only the assets owned by the LLC (the property) would be subject to the suit.
What Does This Mean for Mechanics Liens and Required Notices?
If this holds true, property owners, who, while not technically but for all intents and purposes own and reside in their property, will not be afforded the extra protections given by the mechanics lien law to those parties.This is a interesting question, and I haven’t seen much jurisprudence directly on point. From a black and white perspective, it clearly seems that while the preliminary notices required for a “residential” project would pertain, any additional notice requirements for an owner-occupied residence would not. While an LLC is a “juridical person” such that it is a legal person in the eyes of the law, it does not seem to be something able to “occupy” a residence.
If this holds true, property owners, who, while not technically but for all intents and purposes own and reside in their property, will not be afforded the extra protections given by the mechanics lien law to those parties. This seems to me to be a perfectly acceptable result. While there is some disconnect between the fact that a person who “owns” an LLC that in turn owns a property in which the person resides is not an owner-occupier – it makes sense as a trade-off in the scheme of LLC property ownership. If one is to gain the benefits of not technically owning the property, one must also accept the detriments of not technically owning the property. In terms of mechanics liens, this might make for more liberal lien rights against the property.