Major Win for Mall Contractor: Missouri Appeals Court Finds Lien Can Be Enforced against Entire Mall for Tenant’s Failure to PayApril 2016
On April 12, 2016, the Missouri Court of Appeals held, for the first time, that contractors who have performed work for shopping mall tenants may have mechanic's lien rights on the entire mall if the tenant fails to pay. The case, Crafton Contracting Co. v. Swenson Construction Co., gives contractors and subcontractors an opening to more effectively enforce liens for improvements made on mall property.
The Crafton court held that when a mall lease requires a tenant to make improvements "of a substantial and permanent nature" to its retail store, the tenant, in making such improvements, becomes an agent of the mall for purposes of subjecting the mall to a lien. The Crafton court noted that "where the improvements are required and completed under the control of the [mall] owner with the view of improving the property," it is immaterial whether the mall owner ultimately benefits financially from the tenant build out. Applying this reasoning to the facts of Crafton, the court determined that, because Plaza Frontenac Mall supervised and controlled how the improvements were made by tenant Allen Edmonds, pursuant to the terms of the lease granting it such control, the improvements were substantial and permanent, even though the value of the improvements was no more than two percent of the value of the mall. Thus, the court held that the contractors could appropriately enforce their mechanic's liens against Plaza Frontenac Mall.
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Contractors and subcontractors are encouraged to promptly contact an attorney if they have any questions regarding their lien rights when facing nonpayment or slow payment from customers.