Only the “Owner” may seek Judicial Discharge of Mechanic’s Liens
The Connecticut Superior Court recently decided a case of first impression regarding the right to file an application for discharge of mechanic’s liens. The court in Grade A Mkt., Inc. v. Surplus Contrs., LLC held that a lessee did not have “standing” to file an application for discharge of mechanic’s liens and dismissed the tenant’s application. Grade A Mkt., Inc. v. Surplus Contrs., LLC, 2015 Conn. Super LEXIS 1342 (Conn. Super. May 26, 2015). In layman’s terms, “standing” is the right to have the court decide your case. The Grade A Mkt decision is interesting because it limits the ability of a tenant to obtain a discharge of mechanic’s liens even though the tenant’s lease with the owner may require the tenant to obtain a discharge of mechanic’s liens filed by contractors performing work for the tenant.
Mechanic’s liens are a statutory right that the legislature created to provide contractors and/or suppliers that furnish labor, materials, and/or services to a property with security for the alleged debt but mechanic’s liens were not intended to prevent the free transfer of property rights. For that reason, the statutes provide a few different mechanisms by which an appropriate individual or company may obtain a release of the mechanic’s lien. Specifically,
- Upon application, a court may issue an order discharging a mechanic’s lien pursuant to Conn. Gen. Stat. § 49-35a;
- Upon application, a court may issue an order substituting a surety bond for a mechanic’s lien pursuant to Conn. Gen. Stat. § 49-37; or
- A demand may be made for the release of an invalid mechanic’s lien pursuant to Conn. Gen. Stat. § 49-51.
Where this analysis becomes more interesting is in the language the legislature decided to use. With regard to Conn. Gen. Stat. § 49-35a, the legislature said that the application may be brought by the “owner of the real estate”; with regard to Conn. Gen. Stat. § 49-37, the legislature said that the application may brought by “the owner of that real estate, or any person interested in it”; and with regard to Conn. Gen. Stat. § 49-51, the demand may be brought by “[a]ny person having an interest in any real or personal property.” Obviously, the reference to any person having an interest in real estate is broader than the “owner” but the reference to any person having an interest in real estate would also include the owner.
In Grade A Mkt., Inc. v. Surplus Contrs., LLC, the court relied upon the old adage that “In Connecticut, a mechanic’s lien is a creature of statute and establishes a right of action where none existed at common law.” Grade A Mkt., Inc. v. Surplus Contrs., LLC, 2015 Conn. Super. LEXIS 1342, *3 (Conn. Super. Ct. May 26, 2015). “Where a statutory right of action is at issue, the statute must be strictly construed ….” Anthony Julian R.R. Constr. Co. v. Mary Ellen Drive Assocs., 50 Conn. App. 289, 296, 717 A.2d 294, 297, 1998 Conn. App. LEXIS 381, *13 (Conn. App. Ct. 1998) Therefore, the court took a hard look at the difference between the word “owner” and the reference to “person interested in the property.” After consulting Black’s Law Dictionary for the definition of “owner,” the court concluded that a tenant or “lessee” is not an owner in the true sense of the word. Therefore, taking a very strict view of the statutory construction where only an “owner” can bring an application to discharge a mechanic’s lien , the court stated that the tenant could not bring such a claim and dismissed the case.
It is important to note that the mechanic’s lien in Grade A Mkt., Inc. v. Surplus Contrs., LLC was against the owner’s interest in the property. However, a mechanic’s lien may also be filed against a tenant’s interest in a property, which is commonly referred to as the leasehold interest. Following strict interpretation, the tenant would be the “owner” of the leasehold interest. Therefore, although Grade A Mkt., Inc. v. Surplus Contrs., LLC does not address this point, it seems likely that a tenant may bring an application to discharge a mechanic’s lien that was brought against its leasehold interest.
Given this decision, however, the legislature might want to consider amending § 49-35a to include persons interested in the property. There are those, such as tenants and contractors, who are often contractually responsible to obtain a discharge of mechanic’s lien. There does not seem to be a logical reason for a contractor to be able to substitute a bond for a mechanic’s lien but not be able to obtain a direct discharge.
Notwithstanding the foregoing, until the legislature acts, there are ways to deal with this situation. If you need help addressing a mechanic’s lien filed against property you do not own, please give me a call.