A lien is a charge imposed upon specific property securing the performance of an act, such as the payment of money. The right to file a lien arises by (1) contract, i.e., the parties agree that one of the parties may file a lien to secure a debt owed by the other party, or (2) by operation of law (e.g., by right conferred by statute). Various scenarios give rise to the existence of a lien, such as but not limited to judgment liens, medical services liens, liens on a patron’s baggage in a hotel setting, liens for ambulance services, and construction liens. As to the latter – liens in a construction setting – things get curious when a contractor provides work or materials for tenant improvements on land owned by a third-party landowner. Can a contractor, who does construction work for a tenant, file a lien upon land or improvements owned by a landlord? Like many answers in the law, it depends.
The Oklahoma Supreme Court in Dieterle Plumbing and Heating v. Green, 1980 OK 11, 605 P.2d 1335 held “that where the owner leases lands under a written contract which provides that the tenant shall at his own expense make such improvements . . . as are necessary to make the premises adaptable for the purposes for which they are leased, a materialman furnishing material for making the improvements under contract with the lessee is not entitled to a lien against the land, but he may be entitled to a lien against the improvements (buildings, fixtures, etc.) under ‘certain circumstances.’” Those circumstances in which a contractor can file a lien against the landlord’s land or improvements are when the landlord consents to the filing of a lien, promises to pay the debt secured by the lien, or, in the fact-intensive and less common scenario, when the tenant acts as the agent of landlord when the improvements were made.
For the best protection, a construction contractor doing tenant improvement work should present the landlord with the scope of work and get the landlord’s written, signed agreement that, if the tenant does not pay, the contractor may file a lien upon the leased premises and its improvements. Otherwise, the contractor risks not having the additional security of a lien to secure payment of the construction work and will likely look solely to the judgment-proof tenant for payment that is unsecured.
Written by: Daniel Sadler, Attorney at Law
