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Public property or commercial property? Lien rights or bond rights?

If a property was sold to the county, but the Property Class is still C3 - Commercial Lots, can a lien be put on the property? Does it count a public property or a commercial property? Should there be lien rights or bond rights? Appreciate your time and help!!

1 reply

Sep 19, 2018

Determining property / project type can be a much more difficult question than one would imagine it should be. Private project public property; P3 project; public project on private land; some combination . . .? It can be maddening.

While there can be complicating factors, the general rule is that the lien-ability of property has to do with the identity of the property owner - not necessarily whatever it is that happens to be under construction or who is contracting for the work to be done. This means that if the underlying property is publicly owned, it's pretty likely that the property cannot be subject to a mechanics lien. If the property was sold after the lien right arose, however, this analysis can be different.

The outcome of a situation in which the underlying property is public, can depend on the actual project, however. If the project is public - the applicable state's bond requirements should come into play. If the project is a private improvement on the public property, though, it could be different. The bond rules may not apply, since there is no public entity contracting for the work of improvement. In such a situation there may be the ability to lien the leasehold interest of the private tenant improving the property, there might be the ability to lien the improvement separate from the underlying property; there may be a private bond obtained even in the absence of a specific requirement; or there may be no avenue to recover through a security interest at all.

In the situation in which there is no applicable security interest, the path to recovery may be limited to actions directly against the contracting party who is supposed to pay.

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