Construction work can be incredibly rewarding. Unfortunately, it also carries a high degree of risk – particularly when it comes to not getting paid for work performed. This is particularly true for subcontractors working on a construction project.
In Texas, contractors, subcontractors, artisans, and materials suppliers have extensive protection against nonpayment through filing a mechanic’s lien. The process of filing for a mechanic’s lien is complicated and requires an understanding of the various rules and deadlines set forth in the Texas Property Code. Failure to properly and timely file a mechanic’s lien can defeat your right to be compensated for your right.
At Forbes & Forbes, we have decades of combined experience advising subcontractors and other business owners about their legal rights. We have an in-depth understanding of the intricacies of Texas mechanics’ liens. Reach out to our law office today to schedule a consultation with an El Paso construction law attorney.
What Is a Mechanic’s Lien?
In Texas, subcontractors have certain rights and protections for the labor that they perform on private property. These rights are guaranteed by the Texas Constitution, which provides that “Mechanics, artisans, and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor.” In short, if you do not receive payment for your work, then you can place a mechanic’s lien on the Owner’s property.
A mechanic’s lien is a way for subcontractors to immediately secure their financial interests. . The process for getting a mechanic’s lien is spelled out in the Texas Property Code. The laws that govern mechanics liens are very complicated, which is why it is a good idea to work with a TX mechanic’s lien attorney if you have a dispute with a property owner or its general contractor over work that you performed for them.
If a lien is properly created and filed, then the property owner has a “cloud” on the title, which serves as a notice to lenders and potential buyers that a debt is owed. As a result, property owners typically cannot borrow money against or refinance a property with a mechanic’s lien on it. They also cannot sell the property without clearing the lien. This creates an incentive for property owners to make sure that their subcontractors are paid so that their property does not have an encumbrance on the title.
There are many benefits to filing a mechanic’s lien, which is why it is common practice in Texas for subcontractors and others in the construction industry to file for liens routinely. With a properly filed mechanic’s lien, a subcontractor is not limited to filing a lawsuit for breach of contract in the event of nonpayment. Instead, subcontractors have a number of additional rights and protections, including the right to foreclose on the lien and force a sale of the property, a lien against any funds held by the property owner, and due to the general contractor, the right to be paid directly by the property owner, and the potential right to force the property owner to pay twice for their labor.
Filing a mechanic’s lien is one of the best ways that subcontractors in Texas can protect their financial interests and reduce the risk of not getting paid for their work. That being said, the rules surrounding mechanics liens are complicated. A seasoned Mechanics lien attorney in El Paso, TX can advise you of your rights and the proper procedure for securing your rights under Texas law.
How Can I File for a Mechanic’s Lien?
There are specific steps that must be followed to obtain a mechanic’s lien. For subcontractors, the first step is to send timely notice to the general contractor and owner for each month in which work was done for which the general contractor did not pay. Then, to perfect the lien, file an affidavit claiming lien by the 15th day of the fourth month. The notices and the affidavit must contain specific information that is set forth in the statute. The notices must be delivered to the general contractor and owner in the manner set forth in the statute and the affidavit claiming lien must be recorded in the county in which the property where the work was performed or the materials were furnished. Then, the subcontractor has 5 days from filing the affidavit to send a copy to the Owner and general contractor. However, if you have a direct contract with the property owner, you are not required to send a any notices or file a lien because you have a Constitutional Lien. However, the best advise for the general contractor is to satisfy the statutory requirements.
For commercial projects, a lien notice must be served no later than the 15th day of the third month for each month that you provide unpaid labor to the project. For residential construction, the ien notice must be served by no later than the 15th day of the second month, for each and every month that you provide unpaid labor.
There is also a deadline for filing a lien affidavit, which is determined by the type of project. For commercial projects, a lien notice must be filed in the County Clerk’s office by no later than the 15th day of the fourth calendar month from when the contract ends or is completed. For residential construction, the lien affidavit must be filed with the County Clerk’s office by no later than the 15th day of the third calendar month from when the contract has ended.
Can I File a Mechanic’s Lien on Public Property?
No. In Texas, you cannot file a mechanic’s lien against a property that is owned by a public entity, such as the state, a county, a municipality, or a city. For example, if you are performing construction on a public school, highway, or government building, you cannot place a mechanic’s lien on that property.
However, Texas does require the general contractor on a public works contract to purchase a payment bond from a surety (insurance company) for projects valued at over $25,000. This allows subcontractors to make a claim against the bond for nonpayment. To learn more, reach out to an El Paso, TX mechanic’s lien attorney.
Can I File a Mechanic’s Lien If I Am Unlicensed?
Yes. Texas law does not impose a requirement that a subcontractor be licensed in order to file a mechanic’s lien. However, there may be other consequences to performing work without a license when it is required by the state of Texas.
If you have questions about your rights and obligations as a subcontractor, an El Paso, TX construction law attorney can help. The law firm of Forbes & Forbes can help you with every aspect of your business, from formation to contract disputes. Give us a call today to schedule a consultation with a TX mechanic’s lien lawyer.
How Can I Release a Mechanic’s Lien When I Get Paid?
When a lien is satisfied, the person or entity that filed the lien (known as the claimant) is required to release the lien within 10 days of receiving a written request to do so. The duty to release a lien is only triggered by a written request from an interested party. To release a mechanic’s lien in Texas, you will need to sign and notarize a lien release. The release is then filed at the County Clerk’s office by any party.
There are a number of unusual situations that can arise with lien releases – such as a partial release or a release due to error. A skilled El Paso, TX mechanic’s lien attorney can work with you to understand your rights and obligations. Contact Forbes & Forbes to schedule a consultation with a member of our team.
Curious about Mechanics’ Liens? We Can Help.
Mechanics’ liens are a vital way for subcontractors to protect their financial interests and ensure that they get paid. Filing these crucial documents can be difficult, as it requires an understanding of complex laws. A mechanics lien attorney in El Paso, TX can help.
The legal team at Forbes & Forbes works with business owners, including subcontractors, to help them succeed. We have deep experience in all aspects of Texas construction law. To schedule a consultation with a TX mechanics lien attorney, give us a call at 915-533-5441 or fill out our online contact form.