Can A Landlord Keep Property Owned by a Tenant If The Tenant Breaks Their Lease?

In Business Tips, Business Transactions, Contract Disputes, Dispute Resolution, Litigation & Lawsuits by Alicia McConnellLeave a Comment

The Landlord’s Lien.

Under New Mexico law, a landlord has what is known as a “Landlord’s Lien” on property that is housed within the space that is being rented. This means that a landlord has a lien on the property which remains in the rented location for the rent due under the terms of a lease. If a business has missed several rent payments, a Landlord is acting within their rights to keep the items, furnishings, products, and tenant improvements that are in the rented space.  Businesses are not able to force landlords to return property until such time as the rent is paid. The purpose of a landlord’s lien is to provide landlords some security if a tenant defaults on his or her lease. It allows a landlord to sell the property that remains in a rented space to recoup the rent payments they are owed. Before selling items, however, a landlord must provide the business with notice of the sale.

Regarding products or inventory for which a business still owes money to a distributor, there are a few factors to consider. These factors include the purchase agreement with the distributor and whether the distributor has a “security interest” in the items that is superior to the lien held by the landlord.  If a distributor has a security interest in the products that is superior to a landlord’s interest, it would be entitled to reclaim those products. A business should advise distributors if a landlord appears to be asserting a landlord’s lien that includes their products so that they can assert their rights in the products, if any.

In addition, the statute that permits a landlord to keep property upon rent default states that a landlord’s lien may only be claimed on property owned by a tenant. Thus, a landlord cannot assert a landlord’s lien on the property that belongs to contractors, for example.  

Naturally, every situation, and potentially every lease, is unique. As such, business owners should reach out to a competent Business Attorney when issues involving a Landlord’s Lien come up.    

Do you have tenants that are behind on rent or breaking their lease? Maybe you are a business owner and a Landlord is threatening to sell your property from your rented space.  Whatever the situation, if you are a business owner and you need some legal advice, Contact us today.  We can help.

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