If you’re in the construction business, you’ve more than likely come across a Mechanic’s Lien or Materialmen’s Lien. This can be a useful tool to help protect a builder or contractor’s interest in the project they are developing. If you get to a point in a project where a party hasn’t paid for labor or services, you may be able to file a Mechanic’s Lien against the property. The rules can be tricky, but you can find the basics here.
The Who
Texas statutes make it clear that there are 3 general parties allowed to file a lien.
- Parties who furnish labor and material for a project, i.e., General Contractors, Subcontractors, and Material Suppliers;
- Parties who specially fabricate materials, even if those materials were not delivered or incorporated into the improvement of the project, i.e., custom windows or doors; and
- Design professionals, i.e., Architects, Engineers, and Landscapers.
The What
The Mechanic’s or Materialman’s Lien allows a party to file a lien upon the property that was improved by of the value of their labor or materials. This lien is attached to the property making it more difficult to sell or forcing a foreclosure to pay the debt.
A properly filed lien must meet very specific requirements laid out by Texas law. Each state has different laws so it is imperative you double check your state’s laws, and seriously consider speaking with an attorney before filing.
The Where
Mechanic’s or Materialman’s Liens must be filed with the county clerk in the county where the property is located. For example, if you live in Houston, but the property you were working on is located in Sugar Land, the lien must be filed in Fort Bend County.
The When
The rules are different depending on whether the property is residential or commercial, and whether you are the 1) prime contractor 2) the subcontractor or laborer, or 3) the supplier or other.
Here is a basic breakdown of when to provide notice and when to file:
- If you are a prime contractor, you don’t need to provide preliminary notice. But you do need to file by the 15th day of the 4th month after the debt hasn’t been paid, and send notice of the filing no later than the 5th day after the date of filing (Remember, the due date will always fall on the 15th day of the month. And you start counting the month AFTER the due date has passed, not the month it is due).If you are a subcontractor or laborer and the project is RESIDENTIAL, you must provide notice to the owner of the property and the prime contractor by the 15th day of the 2nd month the debt was accrued (and every month thereafter that you worked and weren’t paid). You must file by the 15th day of the 3rd month after the debt was accrued.
- If the project is NON-RESIDENTIAL, you have to provide notice to the owner of the property and the prime contractor by the 15th day of the 3rd month after the debt was accrued (and every month thereafter that you worked and weren’t paid).If you contracted with the subcontractor, and not the prime contractor, you must send notice by both the 15th day of the 2nd month to the prime contractor, and the 15th day of the 3rd month to both the prime contractor and the owner.
You must file by the 15th day of the 4th month after the debt was accrued, and send notice that you filed your lien no later than the 5th date after it was filed.
- If you are a supplier or other person with the right to a lien, and the project is RESIDENTIAL, you must send notice by the 15th day of the 2nd month after the debt was accrued to both the prime contractor and the owner.If the project is NON-RESIDENTIAL you must send notice by the 15th day of the 2nd month after the debt was accrued to the prime contractor. You must send notice to both the prime contractor and the owner by the 15th day of the 3rd month after the debt was accrued.
You must file by the 15th day of the 4th month after the debt was accrued, and send notice that you filed your lien no later than the 5th date after it was filed.
All notices must be sent via certified mail.
The Why
Filing a Mechanic’s Lien may help you recover unpaid debts accrued when an owner, contractor, or subcontractor doesn’t pay for services, material, or labor. It may also help protect you from having to make double payments to a party when another party may be at fault for non-payment.
The Cromeens Law Firm, PLLC, offers expert counsel and representation on a variety of construction law legal matters, and is here to assist you with any issues you may have.
This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.
