On a walk with my family over the Memorial Day weekend I came across a construction project in the neighborhood, separated off from the street courtesy of a rental fence. The photograph made part of this post is the very fence I speak of. After some time, this project job site will be completed and this fence will be returned to National Rent-A-Fence. What if National doesn’t get paid? Can they file a mechanics lien?
If you’re a reader of this blog, this inquiry must sound familiar. We regularly post about different “Scenarios” in the construction industry, and examine whether mechanics lien rights exist within those scenarios.
As with most of these Scenarios posts, whether fence rental companies have mechanics lien rights will depend heavily on each state’s specific regulations. Some states have very broad definitions of the work and parties qualified to file a mechanics lien, and other states have very restrictive definitions. In the case of rental fences, the broader the definition and laws, the better.
The primary reason why fence rental companies may not have mechanics lien rights is because they aren’t actually furnishing materials that will be incorporated into the immovable. We wrote about this issue from the perspective of traditional material suppliers (lumber yards, for example). It isn’t the simple supply of lumber that qualifies a lumber supplier to a mechanics lien filing. The lumber must actually be used in the property, becoming incorporated within it. Once that happens, the lien right arises.
With this in mind, you should be able to clearly see the problem with fence rental companies. The fence is supplied to a construction project, but it isn’t ever incorporated into the immovable.
There are some situations in almost every state’s laws where folks are provided mechanics lien rights even though its materials or services aren’t actually incorporated into the property. Such is the case with equipment leasing companies. These companies lease construction equipment that is used at the project and then returned.
This is actually how fence rental companies may squeeze into having mechanics lien rights. If they can fit within the definition of a “equipment rental company,” they could qualify for lien rights even though the materials are never incorporated into the property, and are actually returned to the claimant.
Anyone know of any situations like this handled by state courts around the country?