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We have a customer that is a tenant in a commercial building.

She will not pay our bill. We sent a letter to the owner of the building and he said that because he is not a party to the dispute he will fight us in court to have a "property lien" removed, if we proceed with the filing. Can we legally put a lien against his property? Or is the tenant just a "bad debt" and we have no recourse?

1 reply

Feb 18, 2019

I'm sorry to hear about that. When work is being performed for a tenant, things tend to get complicated. Particularly, navigating mechanics lien rights can become a burden. But California seems a little more clear than some other states. Whether a California property owner's interest can be encumbered due to work contracted by their tenant will depend on the owner's knowledge of the improvement, and whether that owner sent a Notice of Nonresponsibility. Under § 8440 of the California Civil Code, mechanics lien will attach to the real property where work was improved "including as much space about the work of improvement as is required for the convenient use and occupation of the work of improvement." Under § 8442, this includes both the interest of the person who contracted for the work of improvement, and the interest of someone who didn't as long as the owner had knowledge that the work was being provided for the improvement of the property. So, where work is performed under contract with the tenant of the property, the owner's interest in the property may still be liened if the owner was aware of the improvement - and that's true even where an owner isn't on the hook for payment themselves. Granted, where an owner knows the property is being improved and they provide a Notice of Nonresponsiblity, the owner's property won't be subject to lien. However, an owner's Notice of Nonresponsibility will only be valid to fend off potential lien claims if it's sent within 10 days of an owner's first knowledge of the work of improvement. Also, keep in mind, regardless of whether an owner actually has any grounds to fight a mechanics lien filing, their first instinct will almost always be to fight against a mechanics lien filing. Finally, sending an official threat of lien - like a Notice of Intent to Lien - might be helpful to force a tenant to make payment. While it might not work to convince an owner to pay, if the owner knows they may have to fend off a lien claim, then they might be more inclined to put pressure on their tenant to resolve the issue before it gets that far. Even where a mechanics lien claim would ultimately be invalid, that doesn't necessarily mean that the job should be written off as a lost cause. There are a number of other actions possible - such as threatening legal claims, actually filing for litigation (potentially under a theory of breach of contract, unjust enrichment, or even under California's prompt payment or retainage laws), or even taking to small claims court (for smaller disputes). Or, a construction business might even turn to collections in order to get something in return for the work they performed.

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