- One of the tools a contractor can use in a dispute with a developer is to file a mechanic’s lien against the property in question.
- But there are strict rules in Texas a contractor must follow when filing the lien.
- If it does not follow those rules, the lien will likely be unenforceable.
One of the things I love about real estate is that we get to see how it can positively transform an area into a great place where people can work, live, and play. Its just so exciting to watch new areas be built up. As a result, we try to work with as many developers as we can. ON a good day, that means helping them get started with purchase agreements and construction contracts and loan docs.
But the flip side of that – developers are constantly working with contractors. And sometimes they have disputes. As a result, we also often work with our developer clients on their litigation disputes with contractors.
Most of you probably know, when there is a dispute between a developer and a contractor, a mechanic’s lien can provide contractors and suppliers with a valuable tool to protect their interests in unpaid bills for services rendered or materials supplied. But in Texas, there are very specific requirements for contractors to file and enforce a mechanic’s lien, and understanding these requirements is critical to ensure that the lien is valid and enforceable. So what are those requirements? That’s what we talk about this week.
What are the Requirements for a Contractor Filing a Mechanic’s Lien
A mechanic’s lien, also known as a construction lien or materialman’s lien, is a legal claim against a property that secures payment for labor and materials used in construction. To file a mechanic’s lien in Texas, contractors must comply with several specific statutory requirements. The Texas Property Code sets out these requirements in detail. In summary, to be eligible to file a mechanic’s lien in Texas, a contractor must be a party to the contract and must have provided labor or materials for the improvement of the property.
First and foremost, contractors must provide notice of their intent to file a lien. This notice must be provided in writing, and it must be sent to the property owner, the general contractor, and any other party with an interest in the property. The notice must be sent via certified mail, return receipt requested, or via registered mail. The notice must contain specific information, including the amount owed, the property address, and a description of the services provided or materials supplied.
The notice must be sent within strict time limits. In Texas, a contractor must send the notice at least 15 days before filing the lien. This notice is critical, as failure to provide the required notice can result in the invalidation of the lien.
Once the notice is sent, the contractor can file the lien. The lien must be filed in the county where the property is located, and it must also be filed within strict time limits – four months from the last date they provided labor or materials. If the contractor is contracted with the original owner of the property, the lien must be filed within the 15th day of the fourth month after the completion of the contract.
The lien must contain specific information, including the name and address of the contractor, the property owner, and the general contractor. It must also include a description of the work performed or materials supplied, the amount owed, and the dates the work was performed. The lien must also contain a legal description of the property.
After the lien is filed, the contractor must serve a copy of the lien on the property owner and any other party with an interest in the property. The lien must be served via certified mail, return receipt requested, or by personal delivery. The contractor must file proof of service with the county clerk’s office.
Once the Lien is Filed, How does the Contractor Enforce It?
Once the lien is filed and served, the contractor must enforce the lien by filing a lawsuit. The lawsuit must be filed within strict time limits. In Texas, a contractor has 2 years from the date the lien is filed to file a lawsuit to enforce the lien. Failure to file a lawsuit within this time frame will result in the invalidation of the lien.
In addition to the statutory requirements, there are other considerations that contractors should keep in mind when filing and enforcing a mechanic’s lien. For example, it is important to ensure that the lien is filed against the correct property. The lien must be filed against the specific property that was improved or supplied with materials. Filing a lien against the wrong property can also result in the invalidation of the lien.
It is also important to ensure that the lien is properly served on all interested parties. Failure to serve the lien properly can result in the invalidation of the lien.
Finally, it is important to work with an experienced attorney when filing and enforcing a mechanic’s lien. An attorney can help ensure that all requirements are met, and can help to navigate the legal process of enforcing the lien.