Landlord protections from tenant lien

2 months ago

In the State of Utah, is there a way to protect the Landlord of a retail shopping center from tenants who are foreclosed for non-payment of a mechanic’s lien?

Senior Legal Associate Levelset
109 reviews

Generally, when a project is being authorized by a tenant, rather than the owner, of the property – mechanics lien rights will only arise to the extent of the tenant’s interest in the property. i.e. Usually, the tenant’s lease will be lienable, but the owner’s may not. However, when the owner has some active role in the project or has specifically authorized the tenant’s work on the property, lien rights may arise against the owner. Levelset discusses that here: What Happens to Mechanics Lien Rights If My Project is a Tenant Improvement?

It seems as though Utah follows this genera rule. Utah’s mechanics lien statute doesn’t specifically address the topic of liening a tenant’s improvement to the property, but it does strictly define an owner as “the person that owns the project property.” In other states, the term “owner” may include tenants, to some extent, for the purposes of lien claims.

Further, § 38-1a-301(4) of Utah’s mechanics lien statute limits the attachment of claims to “the interest that the owner has in the project property that is the subject of the lien.

Protecting property from lien claims for a tenant’s improvement

Based on the above, an owner might not have to do all that much to prevent a valid and enforceable mechanics lien from attaching to their property. But, to avoid the filing of any lien, it might be helpful to notify potential claimants that the improvement was solely the tenant’s operation (if that’s the case) and that any liens filed against the ownership interest would be improper – sort of like an unofficial Notice of Nonresponsibility.

Alternatively (or additionally), it’d likely be wise to consult with a local construction attorney. They’d be able to review the circumstances and potential claims and advise on how best to move forward and protect the property from lien claims.

Finally, these resources may also be helpful:

– I Just Received a Notice of Intent to Lien – What Should I Do Now?
– A Mechanics Lien Was Filed on My Property – What Do I Do Now?

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