On April 12, 2016, the Missouri Court of Appeals for the Eastern District handed down an opinion Crafton Contracting Company, et al. v. Swenson Construction, Inc., that is of interest to owner/landlords, their lenders, tenants and their contractors and subcontractors, involved in tenant finish improvements on space in multi-tenant commercial properties.
Under this opinion, unpaid mechanics lien subcontractor claimants who performed tenant finish improvements in a shoe store in a regional shopping mall were able to establish and enforce mechanics liens against the entire mall property. The appellate court, reversing the trial court, concluded that lease terms that required tenant finish and the landlord's approval of same, along with certain other terms, established the tenant as an agent of the owner/landlord for purposes of the Mechanics Lien Statute, §429.010, R.S.Mo. The court rejected the trial court's finding that the improvements were not "substantial and permanent" when compared to the entirety of the mall property and further concluded that it was immaterial whether the owner/landlord actually benefitted on a long-term basis by the transaction work performed by the mechanics lien claimants.
This decision may impact the relationships and risks existing between and among owner/landlords, lenders, tenants and contractors and subcontractors, relating to any unpaid tenant finish work and mechanics liens encumbering a multi-tenant property.