You can file a Lien against a commercial tenant but the Lien will only extend to the “leasehold interest” held by the tenant as opposed to the real Property itself. A leasehold interest is the interest that a tenant has to use the Property by and through the lease agreement. There are two major benefits of a leasehold interest Lien. First, the lease agreement between the tenant and the landlord should include a provision which expressly prohibits the tenant from allowing a Lien to be filed against the Property or against the “leasehold interest.” Consequently, by filing the Lien, you may put the tenant in default of the lease. Second, as an incentive to a new tenant or to keep a pre-existing tenant, landlords will commonly agree to pay for some of the tenant improvements. The landlord will not release that money until the construction is complete and the tenant has obtained a Lien waiver from the Original Contractor representing that all subcontractors/suppliers/vendors have been paid in full. By filing a Lien, you will likely prevent the release of the TI money until your Lien is resolved.

The process for filing a Lien against the leasehold interest is exactly the same as filing a Lien against the real Property, with the only two differences being that the tenant becomes the “Property Owner” (since it owns the leasehold interest) and the Property description should state that the Lien is being recorded against “the leasehold interest owned by [tenant’s name] for real Property located at [address and legal description].” All other requirements are the same.