Equitable Liens
General considerations of right and justice as basis--Improvements to property
An equitable lien may be declared when one has furnished funds for the improvement of the property of another, with the knowledge and consent of the other, or when one in good faith, and under a mistake as to the condition of the title, makes improvements, renders services, or incurs expenses that are permanently beneficial to another's property.
An equitable lien may be declared when one has furnished funds for the improvement of the property of another, with the knowledge and consent of the other,[FN1] or when one in good faith, and under a mistake as to the condition of the title, makes improvements, renders services, or incurs expenses that are permanently beneficial to another's property.[FN2] However, such a lien arises only when the improvements or expenditures are made in good faith and under a mistake as to title, and not where the expenditures are made with knowledge of the real state of the title.[FN3] Furthermore, such a lien will not arise where there is an adequate remedy at law,[FN4] such as a remedy under a mechanics' lien law,[FN5] although it has been stated that one who has performed services or furnished materials in the improvement of property is not limited to proceeding under the mechanics' lien law, but may proceed to establish an equitable lien on the property in question if there are special and peculiar equities shown by the record.[FN6]
Recovery under an equitable lien arising from improvements depends upon what is found to be just and equitable in each particular case.[FN7] The purpose in granting an equitable lien is not to give a profit to the party in whose favor the lien runs, but rather to return to that party the value of the benefit conferred.[FN8] In some instances the amount to be awarded may be the cost of the improvements;[FN9] in other cases it may be more equitable to allow recovery of the amount by which the property's value was enhanced solely by reason of the improvements.[FN10] Enhancement value is always the upper limit of recovery, to prevent reimbursement for wasteful expenditures.[FN11]
[FN1] U.S.—Reisner v. Stoller, 51 F. Supp. 2d 430 (S.D. N.Y. 1999) (interpreting New York law).
Ill.—W.E. Erickson Const., Inc. v. Congress-Kenilworth Corp., 132 Ill. App. 3d 260, 87 Ill. Dec. 536, 477 N.E.2d 513 (1st Dist. 1985), judgment aff'd and remanded, 115 Ill. 2d 119, 104 Ill. Dec. 676, 503 N.E.2d 233 (1986).
Me.—United Carolina Bank v. Beesley, 663 A.2d 574 (Me. 1995).
Tex.—Matter of Marriage of Louis, 911 S.W.2d 495 (Tex. App. Texarkana 1995).
[FN2] U.S.—U.S. v. Francis, 623 F. Supp. 535 (D.V.I. 1985).
Fla.—Johns v. Gillian, 134 Fla. 575, 184 So. 140 (1938).
N.J.—Nixon v. Nixon, 100 N.J. Eq. 437, 135 A. 516 (Ch. 1927).
[FN3] U.S.—Black Hills Institute of Geological Research, Inc. v. Williams, 88 F.3d 614 (8th Cir. 1996).
Ala.—Hill v. Hill, 757 So. 2d 468 (Ala. Civ. App. 2000).
N.J.—Nixon v. Nixon, 100 N.J. Eq. 437, 135 A. 516 (Ch. 1927).
Stolen vehicle
Where purchaser of stolen vehicle knew of adverse claim to the automobile before he made repairs or improvements, purchaser's claim of equitable lien for the repairs should have been denied.
Fla.—Home Ins. Co. ex rel. White's Imports, Inc. v. Small, 389 So. 2d 1255 (Fla. Dist. Ct. App. 1st Dist. 1980).
[FN4] Fla.—Johns v. Gillian, 134 Fla. 575, 184 So. 140 (1938).
N.J.—Nixon v. Nixon, 100 N.J. Eq. 437, 135 A. 516 (Ch. 1927).
R.I.—J. K. Social Club v. J. K. Realty Corp., 448 A.2d 130 (R.I. 1982).
[FN5] Mo.—Meco Systems, Inc. v. Dancing Bear Entertainment, Inc., 42 S.W.3d 794 (Mo. Ct. App. S.D. 2001).
Tex.—Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140 (Tex. App. Amarillo 1995), writ denied, (May 10, 1996).
[FN6] Fla.—Crane Co. v. Fine, 221 So. 2d 145 (Fla. 1969).
[FN7] Mo.—Community Bank of Chillicothe, Missouri v. Campbell, 870 S.W.2d 838 (Mo. Ct. App. W.D. 1993).
[FN8] U.S.—U.S. v. Francis, 623 F. Supp. 535 (D.V.I. 1985).
[FN9] U.S.—In re Tesmetges, 47 B.R. 385 (E.D. N.Y. 1984).
Mo.—Community Bank of Chillicothe, Missouri v. Campbell, 870 S.W.2d 838 (Mo. Ct. App. W.D. 1993).
[FN10] Mo.—Community Bank of Chillicothe, Missouri v. Campbell, 870 S.W.2d 838 (Mo. Ct. App. W.D. 1993).
[FN11] Mo.—Hartog v. Siegler, 615 S.W.2d 632 (Mo. Ct. App. E.D. 1981).
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