If you hire a contractor to perform improvements to real property in Texas and a dispute arises as to payment, the contractor may be entitled to enforce a lien against the property to secure payment. However, in order to do so, the contractor must comply with Chapter 55 of the Texas Property Code.
Under Chapter 55, a contractor has a lien if the person labors, specially fabricates material, or furnishes labor or materials for construction or repair in this state of a house, building, or improvement; a levee or embankment to be erected for the reclamation of overflow land along a river or creek; or a railroad; and the person labors, specially fabricates the material, or furnishes the labor or materials under or by virtue of a contract with the owner or the owner’s agent, trustee, receiver, contractor, or subcontractor. Certain other persons such as architects, engineers and landscapers also have lien rights under Chapter 55.
The lien extends to the house, building, fixtures, or improvements, the land reclaimed from overflow, or the railroad and all of its properties, and to each lot of land necessarily connected or reclaimed. However, the lien does not extend to abutting sidewalks, streets, and utilities that are public property.
The lien secures payment for the labor done or material furnished for the construction or repair; the specially fabricated material, even if the material has not been delivered or incorporated into the construction or repair, less its fair salvage value; or the preparation of a plan or plat by an architect, engineer, or surveyor.
The person claiming the lien must file an affidavit with the county clerk of the county in which the property is located or into which the railroad extends not later than the 15th day of the fourth calendar month after the day on which the indebtedness accrues. A person claiming a lien arising from a residential construction project must file an affidavit with the county clerk of the county in which the property is located not later than the 15th day of the third calendar month after the day on which the indebtedness accrues.
An indebtedness to a general contractor accrues on the last day of the month in which a written declaration by the original contractor or the owner is received by the other party to the original contract stating that the original contract has been terminated; or on the last day of the month in which the original contract has been completed, finally settled, or abandoned.
An indebtedness to a subcontractor or any other person who has furnished labor or material to a general contractor or to another subcontractor accrues on the last day of the last month in which the labor was performed or the material furnished.
An indebtedness for specially fabricated material accrues on the last day of the last month in which materials were delivered; on the last day of the last month in which delivery of the last of the material would normally have been required at the job site; or on the last day of the month of any material breach or termination of the original contract by the owner or contractor or of the subcontract under which the specially fabricated material was furnished.
The affidavit of the person claiming the lien must be signed by such person or by another person on the claimant’s behalf and must contain substantially:
(1) a sworn statement of the amount of the claim;
(2) the name and last known address of the owner or reputed owner;
(3) a general statement of the kind of work done and materials furnished by the claimant and, for a claimant other than an original contractor, a statement of each month in which the work was done and materials furnished for which payment is requested;
(4) the name and last known address of the person by whom the claimant was employed or to whom the claimant furnished the materials or labor;
(5) the name and last known address of the original contractor;
(6) a description, legally sufficient for identification, of the property sought to be charged with the lien;
(7) the claimant’s name, mailing address, and, if different, physical address; and (8) for a claimant other than an original contractor, a statement identifying the date each notice of the claim was sent to the owner and the method by which the notice was sent.
A person who files an affidavit must send a copy of the affidavit by registered or certified mail to the owner at the owner’s last known business or residence address not later than the fifth day after the date the affidavit is filed with the county clerk. If the person is not the general contractor, the person must also send a copy of the affidavit to the general contractor at the general contractor’s last known business or residence address within the same period.
If an owner receives notice from a subcontractor, the owner may withhold from payments to the general contractor an amount necessary to pay the claim for which he receives notice. Unless the claim is otherwise settled, discharged, indemnified against, or determined to be invalid by a final judgment of a court, the owner shall retain the funds withheld until:
(1) the time for filing the affidavit of mechanic’s lien has passed; or (2) if a lien affidavit has been filed, until the lien claim has been satisfied or released.
Except for the amount required to be retained under Sec. 53.101 of the Texas Property Code, the owner is not liable for any amount paid to the general contractor before the owner is authorized to withhold funds under Chapter 55. If the owner fails or refuses to retain funds, a claimant complying with Chapter 55 has a lien, at least to the extent of the amount that should have been retained from the original contract under which he is claiming, against the house, building, structure, fixture, or improvement and all of its properties and against the lot or lots of land necessarily connected.
All subcontractors, laborers, and materialmen who have a mechanic’s lien have preference over other creditors of the general contractor. When a debt for labor or materials is satisfied or paid by collected funds, the person who furnished the labor or materials shall, not later than the 10th day after the date of receipt of a written request, furnish to the requesting person a release of the indebtedness and any lien claimed, to the extent of the indebtedness paid.
A mechanic’s lien may be foreclosed only on judgment of a court of competent jurisdiction foreclosing the lien and ordering the sale of the property subject to the lien. In any proceeding to foreclose a lien or in any proceeding to declare that any lien or claim is invalid or unenforceable in whole or in part, the court shall award costs and reasonable attorney’s fees as are equitable and just. However, with respect to a lien or claim arising out of a residential construction contract, the court is not required to order the property owner to pay costs and attorney’s fees to the contractor.
At the Law Office of Stephen O’Rear, P.C. with help people resolve disputes involving Mechanic’s Liens.