Abandoned Personal Property: Does a Landlord’s Lien Help?
Published on: Tuesday, December 15th, 2015
by William P. Ayers, Esq.
A nonresidential tenant’s eviction or abandonment can create many questions for landlords. As one example, many landlords wonder what to do with the equipment, desks, filing cabinets and other property that fill a commercial space.
What can (or should) the landlord do with personal property that the tenant leaves behind following an eviction or actual abandonment of the premises?
Florida, like many states, affords the landlord a statutory lien on the tenant’s property to secure the tenant’s rental obligation. Thus, “[e]very person to whom rent may be due . . . shall have a lien for such rent upon the property found upon or off the premises leased or rented, and in the possession of any person . . .” (Fla. Stat. § 83.08).
However, the landlord’s lien has potential pitfalls. Three questions are commonly asked about the landlord’s personal property left behind after an eviction or abandonment.
1. When the tenant leaves personal property behind following an abandonment of, or an eviction from, the premises, may the landlord take possession of that property?
Consequently, a landlord’s lien does not confer on the landlord an automatic right to possess the property or to withhold the property from that property’s owner. Moreover, the tenant (or other owner) may demand that the landlord return the property or provide the tenant with access to retrieve the property.The answer in most cases is “no.”
Unlike the mechanic’s lien, Florida’s statutory landlord’s lien is a nonpossessory lien. It affords the landlord no right to retain possession of the tenant’s property. A landlord’s lien, by itself, will not allow the landlord to hold, sell or discard a tenant’s personal property and, if requested, the landlord must return the property to the tenant.
2. What happens if the landlord refuses to return the property, or returns it, when the tenant asks for it?
If the landlord fails to return the tenant’s property upon demand, the landlord may be liable to the tenant for conversion. On the other hand, if there is a return of the property to the tenant, the landlord loses the leverage and “control” afforded by possession.
There is a risk that the tenant, after “recovering” the property from the landlord, may convey it to a bona fide purchaser free of the landlord’s lien. Unlike consensual security interests that are perfected through filing under the Uniform Commercial Code (UCC), the landlord’s lien is an inchoate lien that arises only upon the tenant’s default without filing or recording of any notice.
3. So how can the landlord preserve its “landlord’s lien” without subjecting itself to a possible conversion claim?
Transform the “landlord’s lien” into a consensual lien before there is any relationship with the tenant, i.e., as part of the lease. The landlord’s customary means of enforcing its lien is by judicial action–foreclosure or, for nonresidential landlords, a statutory distress for rent action (Fla. Stat. §§ 83.11 – 83.19)–but the delay and expense of filing such action often nullifies the efficacy or value of the lien that exists when the tenant has not abandoned the premises.
Conversely, a consensual security interest in the same property may permit the landlord to retain possession of the property while it enforces the security interest without filing a judicial action. The landlord should include appropriate language in the lease to constitute a security agreement.
The lease should simply describe the property (i.e., equipment, furniture, inventory, etc.) and provide that the tenant grants a security interest in its property in favor of the landlord to secure the tenant’s obligations under the lease. Fla. Stat. §§ 679.2011 and 679.2031 generally describe requirements relating to an effective security agreement. The landlord then may file a UCC financing statement to protect its security interest in the tenant’s property.
When the tenant defaults, the landlord will have the rights of a secured creditor in the tenant’s property. Whether or not it has filed a UCC financing statement, those rights include taking possession of the collateralwithout judicial processagainst the defaulting tenant, if it is done without breaching the peace, and selling it a private or public sale or retaining it in satisfaction of the rent owed (Fla. Stat. §§ 679.609, 679.610 and 679.620). If the tenant abandons and/or the landlord recovers the premises through a judicial eviction and the tenant leaves behind personal property, the landlord, as a secured creditor, may enter its own property to take and hold possession of the tenant’s property without any judicial action while it enforces its consensual security interest.
In sum, every landlord should understand that the right to reenter the premises following surrender, abandonment, or eviction does not give him or her legal title to any personal property of the tenant left behind. The statutory landlord’s lien is not a self-executing possessory lien. However, the tenant’s grant of a consensual security interest in its property in the lease gives the landlord a more expedient remedy than the landlord’s lien in the same property, as it may afford the landlord the right to retain and secure its rights in the property.
Originally published at SES