Your construction lien oftentimes is your leverage to secure payment because the lien collateralizes the amount you are owed against real property, a leasehold interest, or alternative security if the lien is transferred to alternate security. Having a court dismiss or discharge your construction lien claim is no good. This is true even if a court dismisses or discharges a construction lien transferred to alternative security such as a lien transfer bond. Without the lien, there is nothing securing the nonpayment—not the real property, not the leasehold interest (as discussed below), and not the alternative security if the lien is transferred. But there is valuable recourse–moving for a petition for a writ of certiorari in the appellate court. “Losing the benefit of a recovery under a bond on a claim to enforce a lien constitutes the type of irreparable harm necessary to entitle a party to certiorari relief.” James B. Pirtle Construction, Co., Inc. v. Warren Henry Automobiles, Inc., 46 Fla.L.Weekly D2290a (Fla. 3d DCA 2021).
In James B. Pirtle, a contractor recorded a construction lien against a leasehold interest. The property was owned by the City of Miami (public property) and the City leased the property to an entity, which in turn, entered into a ground lease with the defendant to construct and operate a car dealership. A dispute arose between the contractor and the defendant-tenant regarding the construction of the car dealership and the contractor recorded a construction lien against the leasehold interest. The defendant transferred the contractor’s lien to a lien transfer bond and the contractor moved to foreclose its lien against the bond.
The defendant-tenant came up with an argument that the contractor could not even foreclose its lien against the leasehold interest because the real property was public property which is NOT lienable. The trial court bought this argument (not sure why because the reasoning does not seem all that logical!) and the contractor’s lien was discharged. This was reversed on appeal without a lengthy discussion because the contractor’s lien was NOT against the real property owned by the public body, but against the defendant-tenant’s leasehold interest.
The appellate court explained:
At common law, a leasehold interest was considered a type of personal property, not realty. This concept is incorporated into section 713.11, Florida Statutes, titled, ‘Liens for improving land in which the contracting party has no interest.’ In this section, Florida’s construction lien law explicitly states that ‘[w]hen the person contracting for improving real property has no interest as owner in the land, no lien shall attach to the land….’
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States and municipalities lease public property to private tenants in order to operate their facilities (e.g., parks, airports), and contractors doing work for those tenants have lien rights not on the property, but on the leasehold interest of that tenant.
James B. Pirtle, Inc., supra (internal citations omitted).
The trial court’s ruling would have ultimately meant that contractors performing work for tenants of publicly owned real property have no lien rights or ability to collateralize their nonpayment. This naturally does not make much sense as it would simply dilute the fundamental purpose of being able to lien the tenant’s leasehold interest. Recognizing this huge loss, the tenant moved for certiorari relief and the appellate court reversed the discharge of the lien keeping this important right alive — the lien against the defendant-tenant’s leasehold interest!
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.