Landlord's Liens

If the tenant refuses or fails to pay rent owing and due, the landlord shall have a lien on and may seize as much personal property of the tenant located on the premises and not exempted by law as is necessary to secure payment of the rent. If the rent is not paid and satisfied within sixty days after seizure as provided for in this section, the landlord may sell the seized personal property. (A.R.S. § 33-361) The landlord shall have a lien on all property of his tenant not exempt by law, placed upon or used on the leased premises, until the rent is paid. The lien shall not secure the payment of rent accruing after the death or bankruptcy of the lessee, or after an assignment for the benefit of the lessee's creditors. The landlord may seize for rent any personal property of his tenant found on the premises, but the property of any other person, although found on the premises, shall not be liable therefor. If the tenant fails to allow the landlord to take possession of such property, the landlord may reduce the property to possession by an action to recover possession, and may hold or sell the property for the payment of the rent. When premises are sublet, or when the lease is assigned, the landlord shall have the same lien against the sublessee or assignee as he has against the tenant and may enforce the lien in like manner. (A.R.S. § 33-362) There is no right of distraint or other landlord's lien permitted for leases of "dwelling units." (A.R.S. § 33-1372)

Landlord’s liens attach automatically and without notice. Therefore, any third party who leases or finances personal property of a real estate tenant should deal with the landlord through a waiver of lien and consent of removal or through a subordination agreement so that the secured party/lessor does not have to deal with any complications that may be present in broad landlord’s liens that are present in all Arizona commercial real property leases. Problems regarding storage and removal are better dealt with in advance, rather than having the secured party/lessor rely on showing priority of a lien or a superior ownership interest. While the landlord’s lien will not attach to leased equipment if the lease is a “true lease”, a sophisticated lessor should still seek a waiver. Any landlord that has numerous months of unpaid rent will attempt to argue that its lien rights attach to the leased equipment in order to leverage a settlement. Obtaining a waiver in advance will eliminate this issue.