Landlord’s Lien on Commercial Tenant’s Personal Property in Arizona

In Arizona, when a tenant enters into a lease agreement, at the beginning of the lease term the landlord generally obtains a lien on all personal property located on the premises. This often comes into play when a tenant defaults on the lease and the landlord decides to do a self-help tenant lock-out and assert control over the contents of leased premises.

What Is a Landlord’s Lien, and When Does It Apply?

Black’s Law Dictionary defines a lien as “a qualified right of property which a creditor has in or over specific property of his debtor.” The landlord obtains a lien on all of the tenant’s personal property located on the premises at the beginning of the lease term. United States v. Globe Corp., 113 Ariz. 44 (1976). This extends to any subtenants or assignees as well. A.R.S. § 33-361(E). The landlord’s lien attaches at the beginning, for safety precautions for rent due or to become due. A landlord is not required to give notice in order to assert its lien. Lake v. Stewart, 117 Ariz. 520 (1977). Such a lien ordinarily does not reach or cover personal property of third parties (e.g., employees or guests) in the premises.”

Personal Property Subject to the Lien

A tenant’s personal property includes any “money, goods, chattels, things in action and evidences of debt.” A.R.S. § 1-215. Additionally, A.R.S. § 33-362(A) extends the scope of the property the landlord can lien to include all kinds of fixtures, inventory, books and records of the tenant. Thus, the commercial landlord has many avenues for securing a lien if rent is in arrears. What is excluded from the landlord’s lien is “any property of a tenant sold by a tenant in the usual course of business and removed from the premise.” Bates & Springer of Arizona, Inc. v. Friermood, 109 Ariz. 203 (1973).

Two Types of Liens: Statutory Liens and Contractual Liens

The governing statutory law is A.R.S. § 33-361(D), which states that, once a tenant’s rent is past due, a landlord may:

“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.”

The personal property obtained by the landlord is sold via public auction, outlined in A.R.S. § 33-1023.

On the other hand, when the landlord and tenant stipulate a lien prior to signing the lease, and add the terms into writing, the lien becomes contractual; as such, Article 9 of the Uniform Commercial Code controls.

Priority of Lienholders

Arizona case law governs whether the UCC or statutory law takes priority. Friermood, 109 Ariz. at 206, states that “a landlord’s lien is not [emphasis added] superior to a conditional sales contract.” Thus, Article 9 security interests take priority over the landlord’s lien.

Conclusion

Based on the foregoing, Arizona recognizes that a landlord has a lien on all personal property located on the premises at the beginning of the lease. Pursuant to A.R.S. § 33-362(A), the definition of “personal property” is broad and includes property beyond fixtures. Furthermore, even in the event that a tenant misses a single rent payment, a landlord may seize the personal property covered by the landlord’s lien. Accordingly, both landlords and tenants must be cognizant of the broad lien afforded to a landlord over personal property when a lease agreement is entered into.