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Invalid and Fraudulent Mechanic’s Liens: What’s the Difference? Part 2

Filing an improper or fraudulent mechanic’s lien can often bring on harsh consequences. In these instances, a contractor would have been better off not filing at all. But a contractor that has lien rights and fails to file may not be able to afford to stay in business. As a Texas contractor, you shouldn’t be afraid of exercising their lien rights, which is why we’re here to better explain the process. 

In part one of this article, a Houston construction lien attorney at Cotney Law discussed the key differences between an invalid and a fraudulent mechanic’s lien. Now, we will be discussing the consequences of improperly filing a mechanic’s lien and the steps you can take to protect your lien rights. 

Penalties and Consequences

After investing thousands of dollars defending your lien rights, the last thing you want to hear is that your lien is invalid. While no laws have been broken, contractors that file invalid liens are leaving themselves exposed and could end up paying damages to undeserving owners. 

A fraudulent lien, on the other hand, comes with a slew of legal penalties. Those that file a fraudulent lien are liable to injured parties for the following: 

  • The greater of $10,000 or actual damages
  • Court fees
  • Attorney fees
  • Additional damages to be determined by the court 

In addition, failing to release a fraudulent lien is a Class A misdemeanor in the State of Texas. If found guilty, an offender can be fined $4,000 and receive a prison sentence of up to one year. 

Consult a Lien Attorney 

What’s the difference between an invalid lien and a fraudulent lien? The consequences for filing an invalid lien can hinder your career, while the penalties for filing a fraudulent lien can end your career. It is imperative that contractors follow Texas lien law to the letter. This requires you to know not only how to exercise your lien rights but also when you actually have lien rights. 

Knowing when and how to properly file a mechanic’s lien can be done with the aid of a Houston construction lien attorney at our Texas law office. Only then can you guarantee that deadlines are being adhered to and notifications are being submitted accordingly. To ensure that your mechanic’s liens are filed properly and that your lien rights are secured, partner with our team of experienced and aggressive Houston construction lien attorneys at Cotney Law. 

If you would like to speak with one of our Houston construction lien attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

The responsibility for properly filing a mechanic’s lien in Texas rests squarely on the shoulders of contractors. In trying to secure payment from an irresponsible owner, a contractor can find themselves in the wrong by filing an invalid or fraudulent mechanic’s lien. But what is the difference between an invalid and a fraudulent mechanic’s lien? 

In this two-part article, a Houston construction attorney at Cotney Law will be discussing not only the differences between these two undesirable liens, but also how to avoid filing them. As we’ve covered previously, Texas has some of the most complex lien laws in the United States. For help in successfully navigating through the lien process, consult with the Houston construction attorneys at Cotney Law. 

An Invalid Mechanic’s Lien

Given the Lone Star State’s complex lien laws, it’s all too easy for a contractor to incorrectly file a mechanic’s lien. Failure to abide by the state’s stringent laws can result in a lien being invalidated even when a contractor, subcontractor, or material supplier has lien rights. A lien may be found to be invalid for the following reasons: 

  • Preliminary notices were not sent
  • Deadlines were not adhered to
  • A faulty lien affidavit was filed
  • The lien was filed on a homestead property 

Even if a lien affidavit is correctly filed, a lien may still be invalid if a notice of lien affidavit was not provided to the owner or general contractor. The Texas lien process consists of strict deadlines, required notices, and obtuse legal jargon. Given these circumstances, innocent mistakes can lead to a contractor submitting an invalid lien. Speaking of innocent mistakes, that’s exactly what separates an invalid lien from a fraudulent lien. 

A Fraudulent Mechanic’s Lien 

The filing of a fraudulent mechanic’s lien occurs when a contractor knows that a lien is invalid and files anyway. The Fraudulent Lien Act states that “a person may not make, present, or use a document or other record with”: 

  • The knowledge that the lien is fraudulent
  • The intent that the lien be given the same legal effect as a valid lien
  • The intent to cause physical injury, financial injury, mental anguish, or emotional distress to another person  

There is a clear distinction between an invalid and a fraudulent lien. The penalties and financial risks of filing one or the other are also distinct. As we continue this article in part two, we’ll be discussing these differences further and advising contractors on how they can file a valid mechanic’s lien in the State of Texas. 

If you would like to speak with a Houston construction attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

There’s no end to the issues that can lead to a stalled construction project. Many of these issues are sure to be beyond your control. However, many more can be mitigated with proper planning, expert contract drafting, and legal aid. We’re picking up where we left off in part one with our discussion on the causes of a stalled construction project. All of the below causes can be avoided with a clear, concise contract drafted by a Houston contractor attorney from Cotney Law. 

Cash Flow Issues  

It’s not abnormal for contractors to invest large sums of money into a project before seeing a profit. Contractors can leave themselves spread thin by essentially gambling on a project’s success. When a general contractor experiences cash flow issues, it can trickle down the construction hierarchy and stall subcontractors beneath them. In order to avoid cash flow issues, it is imperative that contractors accurately bid on projects. Failure to do so could result in your company being bound to an erroneous bid amount. In which case, you’ll require the aid of a Houston contractor attorney

Runaway Projects 

Any number of reasons can lead to project costs growing beyond what an owner and project manager envisioned. Either initial estimates were inaccurate or the scope of work gradually grew and changed as the project proceeded. If the scope of work has been altered, it could be because the owner requested alterations or unforeseen circumstances caused delays. An owner may try to pull the plug on a project they deem to be growing out of control. This is why contract drafting is the most important stage of a construction project. A properly drafted contract can outline goals and costs and temper expectations before a legal dispute erupts. Contact us if you wish to have your contracts reviewed by a Houston contractor attorney

Financing Runs Out

We’ve arrived at the main reason why construction projects stall. There’s very little that can be done if an owner runs out of money. However, there are reliable ways to mitigate the risk of owner bankruptcy. To begin with, no owner intentionally signs up for a project they believe to be outside their price range. For this reason, communication must be maintained throughout the construction process to inform the owner of any unexpected expenses or delays. As with the above topic, the best way to mitigate this issue is to have the project adequately outlined in the contract. But this can only be guaranteed with the aid of an attorney. 

Keep an Experienced Attorney Involved 

Throughout this series, we’ve brought up numerous reasons why a construction project may stall. While some of them may seem beyond your control, you can lessen the impact if not outright avoid many of them by properly drafting and reviewing contracts. To ensure that your company is consistently in the best position to succeed, we recommend looking at our subscription plans. From conception to project completion and beyond, you can rest easy knowing that your contracts have the seal of approval from the Houston contractor attorneys at Cotney Law. 

If you would like to speak with one of our Houston contractor attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

A stalled construction project could mean bankruptcy for any construction company, even those that have been in business for decades. Whether by contractor error, owner error, or outside forces, there are a myriad of reasons why construction projects fail, and we’re here to tell you how to avoid them. 

In this two-part series, we will be discussing what causes a stalled construction project. 

Below, we will be discussing the causes that may be beyond your control. In part two, we will be discussing the causes that can be mitigated with a properly drafted contract. In all cases, you can help prevent construction delays by partnering with the team of Houston construction lawyers at Cotney Law. 

Material Shortages 

As you’ll see throughout this series, every component of the construction hierarchy must be operational to avoid a stalled construction project, and material suppliers are no exception. Poor material procurement, poor inventory management, or a breakdown in negotiations with manufacturers can bring construction to a standstill. 

While this cause is short lived and easily remedied, it’s becoming increasingly difficult to find fairly priced materials due to the current U.S. trade war and resulting industrial tariffs. Be sure to review your current policies to ensure that you know where suppliers for your next project are coming from. 

Acts of Nature 

Acts of nature, such as hurricanes, sinkholes, flooding, and lightning, always seem to strike construction sites at the worst possible moment. Even heavy rains can cause severe delays if project managers fail to alter schedules accordingly. Worst case scenario: a worker is gravely injured during a disaster. In this case, a contractor may be held responsible if workers were placed in hazardous conditions. To ensure that your workforce is operating in compliance with all state and federal laws, consult with a Houston construction lawyer

A Lack of Skilled Workers

We’ve previously covered how construction companies are failing to retain skilled workers. An unfortunate truth is that many construction companies failed to invest in training a new generation of skilled workers to replace an aging generation of workers. As a result, companies are struggling to keep up with labor demands, and many attempt to poach skilled workers from competing firms. To exacerbate the problem, having a workforce of inexperienced and unreliable workers can lead to delays, injuries, and construction defects. If you’ve experienced any of these issues on your project, you are in need of a Houston construction lawyer

For more information on stalled construction projects, read part two.

If you would like to speak with one of our Houston construction lawyers, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.