It’s Better to Have It and Not Need It than it is to Need It and Not Have It: How Early Lien Notices Can Simplify the Process for Securing Payment– Texas Construction Law Attorneys

Contractors and other professionals in the construction industry are afforded considerable rights and protections under Texas law. Those who provide labor and/or materials often run into problems when attempting to secure payment for work performed, but the Texas legislature has provided a mechanism designed to aid in the collection efforts of contractors and other professionals.

Many are familiar with the term Mechanic’s Lien, but few truly understand the proper procedure that must be followed in order to enjoy the protection it provides. In order to perfect one’s lien rights, notices must be mailed (certified mail return receipt requested) at a series of deadlines in order to make the landowner and other interested parties aware of the fact that a lien is being pursued.

These deadlines depend on a number of factors such as when the work was performed and completed, as well as where you fall in the chain of command (Original Contractor or Sub-Contractor). With so many variables at play, adhering to the deadlines can be and most often is a difficult task. Often times a contractor will lose its lien rights without ever knowing it.

Although you have no way of knowing whether a lien will be required until a significant amount (if not all) of the work has been completed, there are steps which can be taken before work even begins that will minimize the risk of losing your lien rights once its determined that a lien is necessary.

The first such step is to send a Notice of Contractual Retainage Agreement to everyone above you, including the property owner. This will alert the property owner that a sum of money needs to be withheld for payment of your bill. While this notice is not required to perfect your lien, it will eliminate the need for one of the subsequent notices that would otherwise be required. It is important to note that this notice must be sent to the contractor by the fifteenth day of the second month following the date you first provide labor or materials for the project. Also, this notice is only used when you do not have a contractual relationship with the property owner (hired by another contractor).

Another early lien notice is the Notice of Specially Fabricated Materials, which allows you to perfect a lien even if the customer does not receive or use your specially fabricated materials on the project in question. This notice must be sent to the property owner (and original contractor if you don’t have an agreement with the original contractor) by the fifteenth day of the second month following receipt and acceptance of the order for specially fabricated materials.

Additionally, when you execute your contract on any job, it is a good idea to request in writing from the property owner and all parties above you in the chain of command the following:

1. A legal description of the real property being improved;
2. A copy of any contracts executed for the project;
3. A copy of the surety bond, if any, including the name and last known address of the surety; and
4. Whether the real property in question is encumbered by any prior recorded liens or security interests, and if so, the name and last known address of any persons having such lien or security interest.

While these steps will not guarantee any payment or favorable result, they will help simplify the process and expedite payment of any money that is owed. When dealing with issues like the ones addressed hereinabove, it is always a good idea to consult with an experienced attorney who is familiar with Texas lien laws.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

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