We are an equipment rental company. What are our lien rights when we are renting to a customer that is then renting our equipment to someone else

2 years ago

We are an equipment rental company. What are our lien rights when we are renting to a customer that is then renting our equipment to someone else? Are we able to secure lien rights and be protected?

Senior Legal Associate Levelset

Whether or not lien rights exist in this situation may come down to how a court would define the role on the project- on one hand, a court could consider this arrangement to be a supplier to supplier relationship for which lien rights may be in question. On the other hand, the relationship could also be construed as a supplier to subcontractor relationship, or some other configuration. Ultimately, there won’t be a black and white answer in California, but considering California statute is rather broad in granting lien rights, a lien could very well be available. Ultimately, if a lien claim is properly filed, made in good faith, and if there is a valid basis for the lien claim, it is unlikely for penalties for fraudulent or improper liens to come into play. If a claim is filed and disputed thereafter, releasing the lien is always an available option.

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