Home>Levelset Community>Legal Help>When someone holds a “land lease” does this exempt Dallas Hunting & Fishing Club from being liable for a lien, therefore requiring us to lien each cabin lot individually?

When someone holds a “land lease” does this exempt Dallas Hunting & Fishing Club from being liable for a lien, therefore requiring us to lien each cabin lot individually?

TexasRight to Lien

Sand Creek Timber Frames LLC contracted with a General Contractor, Groundbreakers LLC, to provide fabricated trusses on 5 Cabins located at the Dallas Hunting & Fishing Club. The lien was placed on the Dallas Hunting & Fishing Club land where these 5 cabins are located. When I asked my contact with Dallas Hunting & Fishing Club who owned the land these cabins are being built, her reply was: “The cabin owner holds a land lease for the property their cabin is being built on. Each cabin owner has an individual lease and an individual building contract. The exception is the Rental Cabin, which is owned by the club outright.” She insists that I need to contact the cabin owners directly because they had separate contractors with the General Contractor, Groundbreakers LLC. We also only were contracted with Groundbreakers LLC and do not have more than a name of the projects, however the cabins still appear to be built on Dallas Hunting & Fishing Land. The property addresses I have are Lot numbers(7, 9, 10, 11, 13) Dowdy Ferry Rd, Dallas, TX 75217.

1 reply

Mar 12, 2019

That's a good question, and I'm sorry to hear you've had some payment problems. When a mechanics lien will be filed against an improvement being made for a leaseholder (rather than for the property owner themselves), the ability to file a lien will likely be affected. First, if the lessee is acting on the owner's behalf by making the improvement, the owner's interest may well be subject to lien - just as if the owner had contracted for the improvement themselves. However, if the owner was in no way involved in the decision or approval to improve the property, a mechanics lien claim may be limited to the lessee's interest in the property. Meaning, a lien claim might be filed against the lease - and the claimant may end up acquiring rights to the lessee's interest in the property (i.e. their lease). But, if the owner was not involved or interested in any way, then the owner's interest is likely not subject to a mechanics lien filing. Obtaining a mechanics lien against a lease only may be helpful to compel payment to some degree - it could put pressure on the lessee to make payment or otherwise lose their lease or breach their contract with the owner. But, compared to a lien on real estate, liens against leasehold interests tend to be less favorable to a claimant. Whether or not the owner of property is involved in the improvement set out by their leaseholders could be a crucial factor when there are multiple leased properties in play. If leases are held by separate parties and work is performed at each lease (but separately authorized by each individual leaseholder), then a seperate mechanics lien would likely be required for each leased property. However, if there are multiple leases on one underlying property with the same owner, and that owner has directed or at least approved the improvements on each lease, potentially, one lien might be filed pertaining to all of the improvements. (Under § 53-022(a) of the Texas Property Code, a mechanics lien will extend to "the house, building, fixtures, or improvements, the land reclaimed from overflow, or the railroad and all of its properties, and to each lot of land necessarily connected or reclaimed."). It's likely a stretch, but also note that, potentially, there may be an argument that a party hired by multiple lessee's to perform work on multiple buildings on the same overall property might be considered to have a direct contractual relationship with the owner if the owner of the property has control over their lessees and has directed the lessees to improve the property. In such a situation, the sub of the contractor hired by the lessees (but really the owner) may be able to argue that the contract between the lessees and the contractor was actually a "sham contract" under § 53-026(a)(1) of the Texas Property Code and that lien rights should exist in the underlying property as if the owner had ordered the improvement themselves. For more information on liens on lessee improvements, this resource should be helpful: What Happens to Mechanics Lien Rights If My Project is a Tenant Improvement?. Lastly, keep in mind that if the owner of the underlying property is a public entity (which is the case, sometimes, with hunting clubs), then the available tools for recovery may look different. You can learn more about payment recovery on TX public land here: Texas Public Project FAQs.

0 people found this helpful

Helpful