Protecting leased property against construction liens

Landlords do not want their ownership interest to be subject to construction liens resulting from improvements made by their tenants. However, unless certain steps are taken, a Florida landlord's property WILL be subject to liens, even if they are unaware that the tenant has contracted for improvements. Chapter 713.10(2), Florida Statutes provides two options for the landlord to protect against liens on his interest:

-->First, the landlord may include a provision in the lease expressly prohibiting liens for tenant improvements and record the lease (or a short form of the lease) in the public records to put the world on notice;

-->Second, the landlord (if he leases to multiple tenants) may include an express prohibition of liens for tenant improvements in all of his leases and records a notice in the public records which contains enumerated information and states the specific language in the leases.

A landlord must be very careful when using the second option. A court recently reminded landlords how careful they must be to meet the statutory requirement. (Everglades Elec. Supply, Inc. v. Paraiso Granite, LLC, 28 So.3d 235 (Fla.App. 4 Dist.,2010). In that case, the landlord had included language limiting construction lien liability in all of its leases. However, in one of the leases, the landlord had used slightly different language limiting liability. The court held that since the language was not the same in all of its leases, then the notice which was recorded was defective because it did not include "The specific language contained in the various leases prohibiting such liability." Landlords should take note and consult an attorney to be sure that the notices they record comply with the detailed and technical construction lien law.