As the economy continues to falter and businesses continue to fail, it has become increasingly important for commercial landlords to ensure proper measures are implemented to secure a tenants payment and performance pursuant to a property lease.
In a recent case defended by Mekani, Orow, Mekani, Shallal & Hindo, P.C., the tenant went out of business and sold its liquor license to Defendant without notifying tenants’ landlord. The Landlord, pursuant to a lease with the tenant, had previously been granted a lien against all of tenants’ personal property, including but not limited to, tenants liquor license. However, the landlord failed to file a lien against the tenants’ personal property and as a result, landlords’ lien was not discoverable by anyone. The Landlord filed suit against the tenant and purchaser of the license claiming that the liquor license should be given to Landlord due to landlords’ lien that was referenced in an unrecorded property lease. The Court held that if a Landlord does not properly file its lien, then a purchaser, who purchases the liquor license without notice of the Landlords interest, will prevail over the Landlord if a dispute arises over ownership of the license.[i] The court, in dismissing the case against the firms client held that the landlord failed to properly perfect its interest in the liquor license and in doing so, lost any interest it may have had in the liquor license and that the liquor license belonged to the purchaser.
The lesson to be learned is that if a landlord has an interest in its tenants’ property, then the landlord must file its liens against the tenant’s personal property in order to properly protect the landlords’ interest or the Landlord risks losing any interest it may have had in the tenants’ personal property.
For more information on this topic please feel free to contact John N. Hindo, Esq. at 248-223-9830.
[i] Cass Keego Properties, LLC v Double Barrell Enterprises, Inc., et. al., Oakland County Circuit Court Case No. 2008-092669-CK.