Guard Against Mechanic's Liens by Making Tenant Set Up Construction Escrow

Giving tenants construction allowances to make improvements to the property exposes you to legal risks. If the tenant doesn’t pay its contractors, they may try to collect the debt from you, which can include placing a mechanic’s lien on the property. True, most leases expressly ban tenants from letting their contractors place a lien on the property and stipulate that the landlord isn’t liable for the tenant’s debts to its contractors.

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