If you’re a renter in Texas and you fail to pay your rent, your landlord may have the legal right to enter your home and take your belongings. The clause, called a landlord’s lien, is standard language in many residential leases, but it can also apply to stores and restaurants that fall behind on rent.
AMLI Residential owns and manages luxury apartment complexes around the country. Many of those developments also rent space to restaurants and retail stores. Those are the tenants Jason Ricks works with.
“My job and the way I see it is, I’m making decisions like a landlord and how it’s going to affect the bottom line,” says Ricks, AMLI's vice president of retail asset management.
Ricks works with commercial tenants in Texas that have leases which include a landlord’s lien, allowing the landlord to take possession of property and sell it to recoup money for unpaid rent. The process can be complicated with residential property because there are restrictions on what personal items a landlord can take. The rules are somewhat easier to navigate on the commercial side, Ricks says, because of the kind of property that’s being seized.
He says it’s never easy to come to that decision, though.
“I love what I do, but I’ll be honest – this is my least favorite part of the job,” Ricks says. “I have a lot of empathy for our tenants, and I look at each kind of deal as a partnership, and the last thing that we ever want to do is really kind of take back their personal property. As one of my first mentors told me, we’re not in the furniture business, so we really don’t want to have a lot of this extra product and having to get rid of it.”
Ricks says seizing property is time-consuming and, even if a landlord is able to sell items, it's usually only for a fraction of their value. If the business owes money to other people, that makes the process even more complicated.
While Texas has a reputation for being landlord-friendly, other states offer more protections for renters. In Ohio, tenants can ask landlords to waive the right to a lien on their property.
Andrew Perry, a principal with the Cleveland-based McCarthy, Lebit, Crystal & Liffman law firm, often represents commercial real estate lenders. He says they obviously don’t want the tenants they work with to suffer a financial loss.
“If there is something in the lease on that particular point, we’ll typically cross it out because from our standpoint, the landlord is made whole by getting their property back,” Perry says.
In Ohio, Perry says, landlord’s liens are not actually codified by state law.
“Now that doesn’t necessarily mean that under common law, that the landlord won’t try to grab the possessions of the tenant,” Perry says.