I have this same question for Arizona as well. We are a Commercial General Contractor hired by the tenant to perform work. If we need to lien, would we have lien rights against the property or only if the tenant is getting a Tenant Allowance?
2 replies
Dec 3, 2019
Construction projects initiated by the tenant, rather than the owner, can create some confusion with mechanics lien rights. Levelset discusses that here: What Happens to Mechanics Lien Rights If My Project is a Tenant Improvement?
As discussed in that article, the general rule for a tenant improving the owner's property is that lien rights will arise against the tenant's interest in the property, but not against the owners. That is, unless the owner has some additional involvement with the improvement - then things become less black and white. Still, let's look to how Washington DC and Arizona treat mechanics liens when work is being done for a tenant.
Washington DC mechanics liens and tenant improvements
DC seems to follow the general rule. § 40-303.07 of DC's mechanics lien statute seems to limit lien claims to the tenant's interest. It reads as follows:
"When a building shall be erected or repaired by a lessee or tenant for life or years, or a person having an equitable estate or interest in such building or land on which it stands, the lien created by this chapter shall only extend to and cover the interest or estate of such lessee, tenant, or equitable owners."
Note, though, that in situations where the owner is requiring the tenant to improve the property as a part of the lease, or in other situations where the tenant and owner are working together to improve the property and the tenant is actually acting as the owner's agent, things may become less cut and dry.
Arizona mechanics liens and tenant improvements
Arizona seems to follow the general rule, too, which Levelset discusses here: Are there lien rights in Arizona when work is initiated by a tenant?
When a tenant is authorizing work without any knowledge or approval from the property owner, then a mechanics lien claim may be available against the tenant's interest. But, if the owner requests the tenant perform work or when the lease required work to be performed, then the tenant may be considered the owner's agent, entitling claimants to file liens on the owner's fee interest.
For more on Arizona liens against a tenant's interest, here's a great resource: Arizona Mechanics Lien Against Terminated Leasehold Interest May Still Have Purpose.
Additional resources on Washington DC and Arizona mechanics lien claims
Anything specific for commercial projects in WI? We were hired by the tenant to improve the property, but need to know if we can place a lien on the property.