The Law

Landlord Not Responsible to Tenant’s Contractor by Ron Davis Efforts to force owners of a Florida shopping center to pay for renovations to a tenant’s leased space have ended in failure. The shopping center is located in the Fort Lauderdale area. And the renovation work was completed by a local contractor that the tenant—a day-care operator—deemed suitable for the job. When the tenant couldn’t or wouldn’t pay for the work, the contractor tried billing the center’s owners. The contractor had learned that the owners had reimbursed $10,000 of the construction costs that the tenant incurred. So the contractor reasoned that such involvement means that the owners are liable for the tenant’s debt. In fact, the contractor added, by formally posting a notice that the renovations were under way, the center’s owners had assumed “control and a financial stake in the construction.” As such, the contractor further argued, they cannot claim noninvolvement. That’s because, the contractor explained, they identified themselves as the property’s owners in the “notice of commencement” of the renovation project. In response, the center’s owners argued that neither a reimbursement for such costs nor the posting of that notice makes them liable for the debt. Moreover, the center’s owners had recorded a “notice of lien prohibition.” That notice generally provides that the interest of a tenant is not subject to liens for improvements made by a lessee. The contractor countered that when a landlord is responsible for construction costs under the terms of a lease, responsibility for payment extends to that landlord. The contractor further contended that the center owners’ reimbursement of $10,000 of the tenant’s renovations also “constituted an unfair scheme to evade responsibility by employing the tenant as a [cover for a questionable transaction.]” A Florida court ruled in favor of the shopping center’s owners, dismissing the charges that the contractor made. The judge noted that by law a lessor will not be subject to liens for improvements when that lessor complies with the requirements of that law. The contractor appealed. A Florida appellate court agreed with the lower court, explaining, “We do not read in any legal interpretation that the execution of a notice of commencement of a project has the effect of giving a contractor the right to lien the property of a lessor who is not a party to the contractor-lessee contract for improvements…. The tenant’s lease did not require that improvements be made. The lease also required the tenant to get written consent from the landlord before the tenant could make improvements. Lastly, the landlord’s $10,000 contribution toward the construction was less than 10 percent of the total cost of improvements and was contingent on the tenant’s receiving a final release from [the contractor].” (MHB Construction Services, L.L.C. v. RM-NA HB Waterway Shoppes, L.L.C., 2011 WL 5864801 [Fla.App. 4 Dist.]) Decision: December 2011 Published: January 2012