Home>Levelset Community>Legal Help>How can we protect and/or collect on long-term rentals?

How can we protect and/or collect on long-term rentals?

We're a rental equipment company, and every so often we'll have a long-term rental agreement. This means that the equipment could be out for 6 months to a year. The equipment moves around a lot and could even go home with an operator at the end of the day. Would we be able to protect long-term rentals by sending a preliminary notice? What are options on collecting on a long-term rental if a mechanics lien or bond claim isn't an option? We do work in many states, but primarily in WA, OR, and CA. Thanks.

1 reply

May 12, 2020

In California you can protect your right to payment for equipment leased for the purpose of constructing a work of improvement by sending preliminary notice for each project in question. The preliminary notice should be sent to the owner, direct contract, and lender (if any). Long term rentals can be tricky as they are often used on multiple projects. If you permit this, you would need the contractor renting the equipment to provide you information on what projects the equipment is used on and over what periods. You would then need to send out preliminary notices based on this information within 20 days of use of your equipment commencing, on the project in question. If you serve preliminary notice and keep track of what charges are associated with the project you intend to lien, then you will have the option to pursue a mechanic's lien, stop notice or bond claim. You may not pursue a mechanic's lien until your equipment is no longer being used on the project. On public works your options will be limited to a stop notice and likely a payment bond. Without a payment bond, stop payment notice or mechanic's lien claim, your remedies are primarily going to be contractual. Contractual remedies can be pursued in court but the contract might also set forth an alternative dispute resolution procedure to be completed before, or instead of litigation. Again, I can only speak for California in this regard. If you would like more specific advise, or review of your rental procedures with respect to business in California, I am available to assist. For a free consultation email me at ryan@huntortmann.com.

0 people found this helpful

Helpful