Mechanic’s Liens Texas Style: Deadlines and Forms of Notice to Get Paid - Webinar

In this blog presented by SunRay Construction Solutions and Rebecca A.Hicks, Managing Partner, Hicks Law Group, as we explore into the intricacies of Texas lien laws, exploring deadlines, notice requirements, and essential forms.

Texas lien law can be daunting, especially with its complexities. However, recent simplifications in 2021 have made it more manageable. In this guide, we'll break down four crucial points to help you navigate Texas lien law with confidence. Here is a step-by-step approach to get your payments coming in smoothly in Texas.

Step 1 - Gathering Necessary Information

One of the biggest hurdles in asserting a mechanics lien claim is ensuring you have the correct project information. Many contractors overlook essential details, such as the identity of the general contractor or property owner, which can jeopardize their rights to a lien.

To avoid this pitfall, ask yourself three key questions:

• What type of project am I working on (privately owned, government-owned, etc.)?
• Where do I stand in the construction chain?
• Is there a payment bond in place?

Knowing these answers lays the groundwork for a successful claim.

Step 2 - Understanding the Construction Chain

In Texas, private projects are governed by Chapter 53 of the Texas Property Code. Understanding the construction chain is vital, as notices must be sent up the chain for a mechanics lien claim.

Typically, the construction chain starts with the owner, followed by the general contractor, subcontractors, and suppliers. Each link in the chain plays a crucial role in the lien process.

Step 3 – Understanding Importance of Payment Bonds

While not mandatory for private projects, payment bonds can significantly impact your ability to assert a claim. Subcontractor bonds are common, but the most critical bond to be aware of is the general contractor's bond.

Obtaining a copy of the payment bond is your right as a subcontractor or supplier. It allows you to verify crucial information and ensures accuracy in your claim.

Step 4 - Staying Proactive

To avoid payment issues down the line, gather project information upfront. Implementing a job information sheet can streamline this process, and verifying details through phone calls or online research is essential.

By staying proactive and thorough in verifying project information, you can navigate Texas lien law with confidence and ensure a smoother process for mechanics lien or bond claims.

What is the Deadline for Notice Compliance in Texas?

In Texas lien law, understanding deadlines is paramount, especially when sending out notices. It's crucial to note that each month of work triggers a new deadline for sending these notices.

For instance, if you've worked or supplied materials in both January and February, you'll need to send out separate notice letters, each by the 15th day of the third month following the work month. Missing these deadlines can put your mechanics lien filing at risk, so always send notices early, particularly if the deadline falls on a weekend or holiday.

Why is it important to have Accurate Project Information?

• Gathering accurate project information is fundamental to ensure compliance with statutory requirements for sending notices. If any aspect of the project is unclear, it's advisable to seek clarification upfront to avoid complications later.
• Using the statutory form provided by the Texas legislature for sending notices helps ensure substantial compliance with the law, safeguarding your rights and the effectiveness of your notices in preserving lien rights.

How to file a Mechanics Liens in Texas?

Filing a mechanics lien involves a series of steps, and timing is crucial at every stage.

Here is what you need to do:

• Step 1 – Adhering to the timelines - Recognize the significance of timing at each stage of the mechanics lien filing process.
• Step 2 - Consider Electronic Recording (E-Recording): Explore the option of utilizing e-recording services for efficiency. Obtain a subscription and follow the required process if opting for this method.
• Step 3 - Prepare Lien Affidavit: Draft the lien affidavit containing all necessary details, including property information, work performed, and amounts owed.
• Step 4 - Choose Filing Method: Decide whether to electronically record the lien or physically deliver it to the county clerk's office.
• Step 5 - Submit Affidavit to County Clerk's Office: If opting for physical delivery, bring the lien affidavit to the county clerk's office. Pay any associated filing fees during this visit.
• Step 6 - Notify Parties in the Construction Chain: Within 5 days of filing the mechanics lien, notify all parties above you in the construction chain. Ensure they are aware of the lien and its recording in real property records.

Why should you Ensure Compliance?

• Ensuring compliance with statutory requirements is imperative to protect your lien rights and secure payment for your work or materials. Missing deadlines or failing to adhere to prescribed procedures can jeopardize your ability to recover payment.
• Seeking assistance if needed to ensure compliance is advisable, as navigating Texas lien law can be intricate, but with diligence and adherence to regulations, you can safeguard your rights and ensure fair compensation for your contributions to a construction project.

Understanding Delivery Methods and Recording Procedures

• When it comes to recording mechanics liens in Texas, understanding the logistics is essential. Typically, you'll need to physically deliver the lien affidavit to the county clerk's office for recording. This can be done through methods like FedEx or hand delivery, as many county clerks still accept hand-delivered documents.
• Real property records, where mechanics liens are recorded, are usually housed in or near the courthouse in most counties. However, it's crucial to be aware of recording fees, which must be paid at the time of recording to ensure the document is processed. Making inquiries with the county clerk's office and the real property records division can help determine the correct procedures and fees to avoid errors.

What are the E-Recording Considerations?

While e-recording is becoming more common, some rural counties in Texas still do not allow it. This can pose challenges, requiring physical delivery of the lien affidavit before the deadline, often by the 15th of the month following the work period. Checking in advance whether e-recording is available in the county you're dealing with can save time and effort.

Understanding the Lien Affidavit and its Content Requirements

• The lien affidavit, as mandated by Chapter 53 of the Texas Property Code, is a sworn statement signed before a notary public, affirming its accuracy. It includes essential details such as the owner's name and last known address, a description of the work performed, and the name and last known address of the contracting party.
• However, the most critical aspect of the lien affidavit is the legal description of the property. While project names and addresses suffice for preliminary notices, a legal description is required for the lien affidavit. This description outlines the precise borders and dimensions of the property, often found in CAD records or deeds. Ensuring accuracy in this description is crucial for proper lien recording.

• When preparing your mechanics lien affidavit in Texas, it's essential to cover all required information for it to be enforceable. While there's no statutory form provided by the Texas legislature, certain details must be included in the document. Ensuring that your affidavit contains all necessary information is crucial for its validity and effectiveness.
• If you're considering e-recording your mechanics lien affidavit, several services can assist you in the process. These services facilitate the electronic submission of your document to the county, streamlining the recording process. However, it's important to note that these services do not provide content assistance but rather act as intermediaries between you and the county recorder.
• Within five days of recording your mechanics lien affidavit, it's mandatory to send a notice of the filed lien to all parties in the construction chain. This notice serves as a formal notification of the lien's recording and ensures that relevant parties are aware of its existence. Typically, this notice is accompanied by a cover letter stating the date of recording and is sent via certified mail return receipt requested for documentation purposes.
• Recording your mechanics lien affidavit involves submitting the document to the county clerk's office, where it undergoes filing and indexing. Once accepted, the lien attaches to the property and becomes part of the real property records. These records are accessible online, providing valuable insights into existing mechanics liens and the parties involved in construction projects.

Addressing Residential Projects in Texas

• For residential projects, it's important to note that notice deadlines differ from those for commercial projects due to legislative regulations. Residential notices are typically required to be sent out sooner, reflecting the specific timelines mandated by Texas laws.
• Residential projects in Texas come with their own set of rules and deadlines, designed to protect individual homeowners and their properties. These stricter deadlines and requirements ensure that homeowners are adequately informed and protected throughout the construction process.

What are the differences in notice deadlines between residential and commercial projects in Texas?

For residential projects, notice deadlines are typically earlier compared to those for commercial projects, owing to legislative regulations. These deadlines are set to comply with specific timelines mandated by Texas laws, ensuring homeowners are adequately informed throughout the construction process.

Key Takeaways

Here are some key takeaways to consider when working in a construction project in Texas:

1. Mechanics' liens in Texas have specific deadlines that must be adhered to for filing notices and claims. Knowing these deadlines is crucial to protecting your right to payment.
2. There are various forms of notice required in the mechanics' lien process in Texas. Understanding the different types of notices and when they should be served is essential for ensuring compliance and maximizing your chances of getting paid.
3. Mechanics' liens are governed by specific legal requirements in Texas. Familiarizing yourself with these requirements, such as the content and format of notices, can help you navigate the process effectively.
4. Failing to comply with the deadlines and notice requirements can result in the loss of your right to file a mechanics' lien. Learning how to mitigate these risks through proper documentation and adherence to legal procedures is critical for contractors, subcontractors, and suppliers.
5. In case of non-payment, understanding the enforcement strategies available under Texas lien laws is important. Knowing your options for pursuing payment, including filing a lawsuit to foreclose on the lien, can help you recover what you're owed.
6. Maintaining accurate records and documentation throughout the construction project is vital for protecting your lien rights. Proper documentation can serve as evidence to support your claim in case of disputes or non-payment.
7. Given the complexity of mechanics' lien laws in Texas, seeking legal advice from experienced attorneys specializing in construction law is advisable. They can provide guidance tailored to your specific situation and help you navigate the process effectively.

If you find yourself in a situation where you need assistance to get paid in Texas, then ensure that you get in touch with SunRay’s experts well in advance, so that they can take all the required steps promptly. Call 800-403-7660 today and get paid what you deserve!

Addressing Common Concerns of Texas Contractors

In addition to understanding the core aspects of Texas lien law, addressing common concerns can further clarify the process and ensure smoother compliance.

1. Billing vs. Installation Dates: How are lien filing deadlines determined for equipment installations invoiced in monthly installments?

Lien filing deadlines for equipment installations invoiced in monthly installments are based on the date of installation, not the billing dates. Regardless of the payment schedule, it's crucial to accurately document the installation date to meet the lien filing deadline requirements.

2. Does Texas require a Notice of Commencement (NOC) for residential projects?

Unlike some other states, Texas does not mandate a Notice of Commencement (NOC) for residential projects as stipulated by the state legislature. While efforts have been made to modernize lien laws, including eliminating the second-month notice requirement, more significant changes are yet to be implemented.

3. Can I rely solely on e-recording services for filing my lien affidavit?

While e-recording services can streamline the process, it's crucial to ensure compliance with county-specific regulations. Some counties in Texas may not allow e-recording, requiring physical delivery of documents.

4. How should the timing of notice letters be determined for residential projects in Texas?

When sending notice letters for residential projects, it's vital to base the deadlines on the date the work was performed, rather than the invoice date. Each notice letter should reflect the specific completion date of the work, irrespective of the billing dates, to ensure compliance with Texas regulations.

5. What should I do if a project involves retainage or reserved funds?

For projects involving retainage or reserved funds, it's crucial to send notice letters within 30 days from the completion date of the project or your work on the project. Filing the lien affidavit within 30 days of project completion is advisable to ensure compliance and protect your rights.

6. How to file Liens for Reserved Funds?

Recent changes in Texas legislature regarding liens for retainages, now referred to as "reserved funds," have introduced new requirements. Contractors must send a notice letter within 30 days from the completion date of the project or their work on the project. Subsequently, the lien affidavit must be filed within a specified timeframe. It's advisable to file the lien within 30 days of completing the project to ensure compliance with the law.

By addressing these common concerns, you can navigate Texas lien law with greater confidence and ensure that you protect your rights effectively.