By: Jennifer M. Horn
As all subcontractors are aware, mechanics’ lien rights are precious tools to recover payment on a project for work performed. Often with the aid of a title search, subcontractors and their counsel strive to ascertain the exact identity of the “owner” of the land – a critical factor in any successful mechanics’ lien claim. The Maryland Mechanics’ Lien statute defines an “Owner” as “the Owner of the land except that, when the contractor executes the contract with a tenant for life or for years, ‘Owner’ means the tenant.” But what happens when a tenant controls the design and construction of the Project, provides funding, and is the ultimate beneficiary of the subcontractor’s work?
How Is “Ownership” Impacted For Lien Purposes When The Tenant Controls Construction?
In BRC Lease Company, LLC v. Audio Visual Innovations, Inc., corporations of the Johns Hopkins University, BRC/FSK, argued that they were not the proper “Owners” of the Johns Hopkins Biomedical Research Center located on the Bayview Campus because the National Institutes of Health (NIH), their tenant, controlled the design and construction of the project, provided funding and was the ultimate beneficiary of the subcontractor’s audio visual work. In upholding the plain language of the Maryland statute and in accordance with case law, the Maryland Court of Special Appeals confirmed that there was no merit in BRC/FSK’s argument that the NIH should be considered the “owner” because NIH did not contract with the subcontractor to install the equipment.
Impact Moving Forward
The recent decision means that prudent contractors can continue to rely on the plain meaning of the real property article. In particular, when identifying the “Owner of the land” for mechanics’ lien purposes, contractors (in addition to a properly run title search) should look to the contract for guidance.
Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.