The difficulty with tenant remodels is that the tenant is generally not the owner of the property. So, you may not be able to file an effective lien on the property to protect your payment rights. There are, however, a few steps you can take to protect your company.
The difficulty with filing a lien when doing a tenant build-out, is that the construction lien statutes provide that liens must be filed against the contracting owner. A contracting owner is defined as the person who owns the real estate, or who is an agent of the owner. So, you need to find out if you are dealing with the owner or the owner’s agent.
The lease may answer this question for you. You may find that remodeling may only be completed with the written authorization of the landlord or property owner. If the landlord is involved, or at least has approved, the remodel project, you have a strong argument that the tenant was acting as an agent of the landlord, making the landlord the contacting owner.
You may also find that the lease sets forth limits on the costs of construction, or at least how much the landlord will pay towards construction. This information may give you an idea on who you should be chasing to get paid for your work.
The lease may also be silent about remodeling. If that is the case, you would be well served to contact the owner about the remodeling project. The reason for this is two-fold. First, it may allow you to pursue the landlord should the tenant fail to pay. And, it can avoid headaches later on if the landlord does not want the tenant’s space remodeled.
How are you protecting your interests in a tenant remodel?
If you’d like to discuss your options, give me a call.