Ask the Legal Professionals, Phoenix Business Journal, January 27, 2012

Published on in News Articles

Q. If tenants in my shopping center hire their own contractors for tenant improvements, would such contractors have lien rights against my interest in the property?

A.  The answer depends on whether the tenant is considered the agent of the owner under the lien law.  Under the statute, every contractor, subcontractor, architect, builder or other person having charge or control of the construction project, in whole or in part, is the agent of the owner for lien purposes. If the lease requires the improvements, then the tenant is deemed an agent of the owner and the contractor's lien rights will attach to both the tenant's leasehold interest and your fee interest in the real property. If the improvements are not required by the lease but are within the tenant's discretion, then lien rights only attach to the tenant's leasehold interest. Thus, it is important to ensure that your lease agreement with the tenant is clear in this regard.

Ask the Legal Page 1_2012