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Home>Levelset Community>Legal Help>Can the owner of a property still be on the preliminary notice/lien claim even if they did not order the renovations on the property they're leasing? Can they be held liable in the event of a lien claim?

Can the owner of a property still be on the preliminary notice/lien claim even if they did not order the renovations on the property they're leasing? Can they be held liable in the event of a lien claim?

Georgia

My company is a subcontractor that have been hired to do a job in Georgia. The owner of the property demanded they be removed for the preliminary notice we sent. They said they would get their lawyers involved if we filed a lien since they did not order the services we provided. I did retract the letter but I'm not sure if that was the correct thing to do. We're predicting we won't have a payment issue, however, we want to make sure our lien rights and payment are protected. Should the lessee be added as a recipient of the notice or can they be liable if we do have payment issues? Do they already have protection against any lien claims filed under Georgia law because they didn't order the services we were hired to do?

3 replies

Jun 18, 2020
The lessee of the property should be included in any notice your file or send, and the owner can be listed as well if the owner consented to the improvements. For example, if the owner leased the property to the tenant and provided a tenant improvement allowance, the owner's interest in the property can be subject to your lien, at least to the extent of the improvement allowance.
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Jun 18, 2020
Here is one of the best brief summaries by a Georgia appellate court of Georgia law on the rules for determining whether a contractor or subcontractor who does work for a tenant has lien rights against the owner/landlord's property. It all boils down to whether the landlord agreed (expressly or impliedly) to be responsible for payment for the work the tenant is having done on the leased premises, either by direct payment to the contractor or by reimbursement to the tenant (for instance, under a tenant improvement allowance). If the landlord is going to pay for the work the tenant is going to have done, the landlord's property may be liened, but only for the scope of work and amount of payment the landlord agreed to pay for:
[B]y contracting for improvements to be made upon leased premises, a tenant does not create a basis for imposing a materialman's lien against the landlord's interest in the premises 'unless there is some relation existing between him and his landlord other than that of lessor and lessee, by virtue of which the landlord expressly or impliedly consents to the contract under which the improvements are made.' As stated in O.C.G.A. § 44-14-361(b) [the lien statute], a materialman's lien may attach to the real estate for which the labor, services, or materials were furnished if they are furnished 'at instance of the owner' or 'some person acting for the owner.' ... [A] materialman's lien can be enforced against the property interest of the landlord only to the extent that the tenant was the agent of the landlord in contracting for the work. ... [A] tenant acts as an agent for the landlord, to the extent that the landlord has contracted with the tenant to pay for the improvements to the property. To charge the premises of the landlord with liability for cost of improvements made by the tenant, the landlord 'must expressly or impliedly authorize the tenant to make the improvements for the former's benefit.' Where ... the tenant is responsible for paying for the improvements to the property, it acts for its own benefit and not as the landlord's agent in contracting for the work. Neither the landlord's right to approve plans for the improvements nor its right to receive additional rent if the tenant's revenues exceed certain amounts changes this result.
Worley v. Cowper Constr. Co., 259 Ga. App. 263, 264, 576 S.E.2d 645, 646 (2003) (internal citations and quotations omitted for readability). To know whether the landlord's complaining and threats about the preliminary notice are valid, you'll need to find out whether the tenant claims the landlord will be paying for the work, and if so, on what the tenant bases that claim.
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Jun 18, 2020
It is risky when performing work for a tenant because in many if not most cases a contractor will not have lien rights against the property. In order to perfect a lien, a contractor must show the owner consented to the work. Most leases prohibit a tenant from causing the filing of a lien against the property; however, if the owner has agreed to pay for the work then you may have lien rights. You should discuss these issues with the tenant prior to commencing your work, and you should have an attorney review the lease as well as your contract with the tenant.
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