A landlord’s lien used to be superior to other creditors’ claims; however, in New York, it does not arise automatically because a landlord-tenant relationship is created. Landlords who want to retain title to the products of the land against the tenant’s other creditors must explicitly include a provision to that effect in the lease.
Both the landlord and tenant should memorialize their intent to create such a security interest. The sooner the landlord in this situation files a UCC-1 statement with the NYS Department of State, the more likely courts are to protect his or her position for payment. Ideally, this filing should be made when the lease is signed.
New York landlords should be cautious about relying on security interests. The validity of UCC -1 statements is often the subject of protracted litigation. Accordingly, New York courts have commented that landlords may find more effective protection in the form of insurance. See e.g., Badillo v. Tower Ins. Co. of New York, 686 N.Y.S.2d. 363 (N.Y. Ct. of Appeals 1999).
This is an excerpt from my first book that I co-authored with Pat Dillon, an Iowa agriculture lawyer titled “Field Manual: Legal Guide for New York Farmers and Food Entrepreneurs” available on CreateSpace, Amazon, Kindle and iBooks. You can find out more about this book here.