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Construction Law Authority / Construction Liens  / Construction Lien Rights for Landlord/Tenant Build-outs

Construction Lien Rights for Landlord/Tenant Build-outs

When a tenant contracts for improvements, the leasehold interest is subject to construction liens.  Section 713.10 of the Florida Statutes addresses the extent to which the landlord may be liable to satisfy the lien. As a first step, a lien may not be recorded against the landlord’s interest unless the lease agreement requires the tenant to make certain improvements (called “pith of the lease”). However, if that standard is met, a landlord may limit its liability for liens by 1)prohibiting liability for construction liens in the express terms of the lease; and 2) recording the lease, or the relevant portion of it, in the public records in the county where the property is located. If a landlord expressly limits liability for liens in the lease, but fails to record it, the landlord may nevertheless be liable if the construction of improvements is an integral part of the lease. No lien attaches when the lease simply allows the tenant to make improvements; rather, the lease must require the tenant to construct improvements. 

Section 713.10 imposes a duty on the tenant to notify the contractor of the lien prohibition in the

lease. A knowing or willful failure of this requirement renders the construction contract between

the tenant and the contractor voidable at the contractor’s option. Lienors without lien rights

against the landlord’s interests may consider seeking recovery for equitable lien or unjust

enrichment. The lienor will also have lien rights against the tenant’s leasehold interest, meaning

you can foreclose against the lease interest rather than the property as a whole.

 

A landlord’s strict compliance with §713.10 is critical to its immunity from liens. One provision of

that statute allows the landlord to record in the public records the actual lease at issue or a short

form thereof reflecting the terms of that specific lease expressly prohibiting liability for

liens. Another provision permits the landlord, when all the leases entered into by that landlord for

those premises prohibit lien liability, to record in the public records a notice containing the specific

language contained in the various leases prohibiting lien liability.  Where, however, the landlord

avails itself of this second provision, yet any of the leases do not contain the exact identical lien

prohibition clause that was contained in the recorded notice, then the landlord will lose its

protection and its interest will be subject to liens.

 

The landlord’s interests are never subject to liens when the tenant is a mobile home owner leasing a mobile home lot in a mobile home park. 

Lee Weintraub

Lee Weintraub

lweintraub@bplegal.com

At age 46, Lee Weintraub was the youngest recipient ever of the Lifetime Achievement Award from the Florida Bar’s Construction Law Committee. Mr. Weintraub is also an adjunct professor of law at Nova Southeastern University Shepard Broad College of Law teaching construction law. Mr. Weintraub has been recognized by Chambers USA – America’s Leading Business Lawyers every year since 2003. Chambers USA noted he focuses on licensing and construction defect litigation, but is particularly renowned for his expertise in the Construction Lien Law. He was also selected in the The Best Lawyers in America© every year from 2006 through 2018.

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