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The Intricacies of Filing a Mechanic’s Lien in Texas Part 4

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We will now conclude this four-part article by summarizing the deadlines and requirements for filing against a residential property as laid out in the comprehensive presentation by one of the Houston contractor attorneys at Cotney Law. To join the presentation and learn about these topics, please click here. We cannot stress enough how important it is that you consult with a Houston contractor attorney to ensure that your lien is filed timely and properly. The attorneys at Cotney Law are well versed in Texas lien laws and are up to the task of helping you secure payment on a project.

Deadlines for Filing Against Residential Properties

A residential property is a single-family home that is used by one or more adults as a dwelling. All of the previously mentioned deadlines in parts one, two, and three must be followed for filing a mechanic’s lien against a residential property. For all subcontractors and other applicable parties, the deadline to send a Notice of Non-Payment is now the 15th day of the second month. Additionally, all parties must file the Lien Affidavit by the 15th day of the third month.

Requirements for Original Contractors on Residential Projects

As previously mentioned in part two, a general contractor has additional steps to take when filing a mechanic’s lien in Texas. This includes having a Disclosure Statement and list of subcontractors and suppliers in the contract. Additionally, before taking final payment, you must send the owner a Final Bills-Paid Affidavit, which states that every party below you has been paid. Finally, a Disbursement Statement must be provided to the owner that includes the names and addresses of each subcontractor under the general contractor.

Failure to follow any of the requirements laid out in this four-part article could result in the lien being deemed invalid or fraudulent. The complex nature of Texas mechanic’s liens means it is imperative that you partner with a Houston contractor attorney when looking to secure payments. Please don’t let the strict deadlines of filing deter you from seeking what is owed to you.

If you would like to speak 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.

Suppliers have their own set of deadlines that must be met in order to properly file a mechanic’s lien in the State of Texas. In parts one and two of this four-part article, we discussed the points laid out by a Houston construction lawyer at Cotney Law in their presentation on mechanic’s lien laws in Texas.

Now, we will continue by detailing the requirements that suppliers must follow in order for their lien to be valid. While this discussion is detailed, it does not completely capture the complexity of the laws in play. Please consult with our team of Houston construction lawyers at Cotney Law before moving forward with your mechanic’s lien.    

Deadlines for Suppliers of Specially Manufactured Materials

Specially manufactured materials are materials that were specifically created for a project and cannot be repurposed for another project. For example, a window or door crafted to certain dimensions may not work for other properties. The deadlines for suppliers of specially manufactured materials are just as complex as they are for second- and third-tier contractors. They are as follows:

  • Notice Trigger: Last day of the month in which material orders were received or accepted
  • Non-Payment Notice Trigger: Last day of each month that materials provided were not paid for in full
  • Send Specially Manufactured Materials Notice: 15th day of the second month from that date material orders were received or accepted
  • Lien Trigger: Last day of last month that materials were provided
  • Filing Lien Affidavit: 15th day of the fourth month
  • Notices of Non-Payment of Lien Affidavit: 5 days after the filing of the Lien Affidavit

Follow this link to view our presentation detailing the above deadlines. As you can see, the deadlines that suppliers are up against are just as strict as they are for second- and third-tier contractors. As we’ll see in part four, even original contractors have their own set of hurdles to overcome. No matter what tier you fall under, it is in your best interest to partner with a Houston construction lawyer when filing a mechanic’s lien.

Join us in part four as we discuss the requirements to file against residential properties and conclude our discussion on filing mechanic’s liens in the State of Texas.

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.

Mechanic’s liens may be the most reliable way to receive payment when an owner’s funds dry up. As our Houston construction lien attorneys know, Texas arguably has the most complicated rules in place for anyone interested in securing payment. Fortunately, a Houston construction lien attorney took the time to create an in-depth presentation outlining the deadlines involved in filing a mechanic’s lien in Texas. You can view this presentation here.

In part one of this four-part article, we summarised a description of the tiers that an owed party can fall into as well as the Notice of Retainment that should be sent prior to work commencing. Now, we will continue to discuss the complicated deadlines that contractors and subcontractors will face when attempting to file a lien in Texas.

Deadlines for Second- and Third-Tier Contractors (Subcontractors)

All contractors must send a notice to the owner informing them of nonpayment every month. If you contracted directly with the owner, then you are the original contractor and have more leeway on commercial projects and less leeway on residential projects (more on that in part three). For commercial projects, the original contractor only has one filing, the Lien Affidavit, which is due the 15th day of the fourth month after the non-payment lien trigger. The lien trigger is the last day of the last month that the original contract was completed, finally settled, terminated, or abandoned.

In contrast to the above, third-tier contractors must send two notices every month when they are not paid. We’ve laid out the deadlines for notices for second- and third-tier contractors below.

  1. Non-Payment Notice Trigger: The last day of the month that work was performed and not paid for in full
  2. Non-Payment Notice: 15th day of the third month for second-tier contractors and sent to owners and original contractors. 15th day of the second month for third-tier contractors and sent only to original contractors
  3. Second Non-Payment Notice: 15th day of the third month for third-tier contractors and sent to the owner and original contractor
  4. Lien Trigger: The last day of the last month that labor or materials were provided
  5. Lien Affidavit: The 15th day of the fourth month
  6. Notice of Non-Payment Lien Affidavit: Five days after the lien affidavit was filed to the owner

You can follow this link to watch the corresponding discussion in the presentation. Even with the deadlines laid out above, the language needed for the notices and affidavit is incredibly specific. Please consult with a Houston construction lien attorney in order to ensure that your mechanic’s lien is correctly filed.

Please join us in parts three and four as we continue to discuss the deadlines and requirements for filing a mechanic’s lien in Texas.

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.

Texas is by far the state with the most complicated rules and regulations for filing a mechanic’s lien. The notices, deadlines, and language that must be used vary from situation to situation and from contractor to subcontractor to supplier. In this four-part article, we’ll be summarizing an incredible presentation by one of our Houston construction attorneys at Cotney Law, detailing the deadlines and steps to take in order to file a mechanic’s lien in The Lone Star State. To view part one of this in-depth presentation, please follow this link.   

Sending a Notice of Retainage

The State of Texas does not require an owner to send a Notice of Commencement out to contractors. This can cause contractors to have to scramble when they are forced to collect all of the necessary information to file a mechanic’s lien. That’s why we recommend sending a Notice of Retainage/Request for Information to an owner before work begins on a project.

The Notice of Retainage should request the following information:

  • A legal description of the improved property
  • The name and address of the surety and a copy of the bond if there is a surety bond
  • Confirmation of and amounts of prior recorded liens, bond claims, and security interests on the property
  • The names and addresses of persons having prior recorded liens, bond claims, and security interests on the property
  • The date of execution for the original contracts
  • The owner’s name and address
  • The original contractor’s name and address
  • The original contract’s dates of termination or abandonment
  • The Affidavit of Completion

If you do not send a Notice of Retainage at the beginning of a project, you will be forced to request information while up against a tight deadline. We encourage you to consult with a Houston construction attorney when filing a mechanic’s lien to ensure that all necessary information is collected in a timely fashion.

Know Your Tier  

The deadlines to send notices to owners depends entirely on what tier you fall under in the project hierarchy. This is what makes filing a mechanic’s lien in Texas so complicated and the primary reason why you should do so only with the aid of a Houston construction attorney. Depending on your tier, you may be required to send notices more frequently and by earlier dates. These tiers are as follows:

  1. Original contractors
  2. Second- and third-tier contractors (subcontractors)
  3. Suppliers

Join us in parts two, three, and four as we discuss the deadlines involved with filing a mechanic’s lien for second-tier contractors, third-tier contractors, and suppliers as well as the deadlines and requirements for residential properties.  

If you would like to speak with one of our Houston construction 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.

When an owner refuses to pay you for the work you have contributed to a project, your options may be limited. Contractors never enter a contract thinking they won’t be paid, especially when they have worked with the owner in the past; nevertheless, there’s no guarantee that the contractor-owner relationship will be completely transparent, and disputes can materialize when you least expect it. When issues arise outside of the project site that affect an owner’s ability to disseminate payments as detailed in the contract, it’s good to know that a Houston contractor attorney can help you acquire the compensation you are due by guiding you through the lien process.

Lien law is varied and complex. As we mentioned in parts one, two, and three, each state has their own filing requirements, and Texas has arguably the most confusing and outright head scratching procedures for perfecting a claim of lien against a defaulting owner. In the last section of this four-part series, we will detail a few additional considerations that every construction professional in Texas should keep in mind before filing a mechanic’s lien. Remember, if you want to ensure that you’re taking the right actions at the right time pertaining to a claim of lien, partner with one of the Houston contractor attorneys at Cotney Law.

Don’t Be Shy About Sending Notices

Remember, although contractors dealing directly with the owner don’t have to send a Notice of Intent to Lien, all other contracted parties do. This includes subcontractors, sub-subcontractors, materials suppliers, and equipment lessors. As a potential claimant, you can’t afford to be shy about sending preliminary notices. There’s a fine balancing act between salvaging a relationship with a potential source of income and being taken advantage of.

Due to the stringent nature of The Lone Star State’s monthly notice deadlines, it’s important to determine early on if you’re going to aggressively pursue a claim of lien or not. If you decide the day before the deadline that you’re DEFINITELY not getting paid, it’s already too late. Preliminary notices shouldn’t be misinterpreted as a warning or threat; instead, clarify that you’re taking precautionary measures to protect yourself and have made it a standard procedure — nothing personal. If the owner insists that payment is “on its way,” your safest bet is to send a preliminary notice before the fifteenth day of the qualifying month anyway.

Consult an Attorney

If you believe a mechanic’s lien will be necessary for you to receive payment for completed work on a construction project, you should consult a Houston contractor attorney to guide you through this process. You want to make sure you’re sending the correct documents within the appropriate time frame to maximize your chances of getting paid. Depending on your specific role in the project, you could be required to supply several documents including:

  • Disclosure Notice
  • List of Subcontractors and Suppliers
  • Notice of Specially Fabricated Material
  • Retainage Notice
  • Two Month Notice
  • Three Month Notice

If you would like to speak with 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.

The State of Texas is notorious for having some of the most complex and confusing rules regarding mechanic’s liens. If you are a contractor, subcontractor, sub-subcontractor, materials supplier, equipment lessor, or another party who has the right to file a lien against an owner who is withholding payment, your best course of action is to consult a Houston construction lawyer who is well-versed in lien law and can prevent you from making a mistake related to mechanic’s liens.

In parts one and two of this four-part series, the Houston construction lawyers at Cotney Law discussed who can file a mechanic’s lien, who should send preliminary notices before filing a lien, and detailed the specific preliminary notice filing rules for various parties involved in the building process.

Observe Deadlines Before Your Lien is Rejected

All too often, our Houston construction lawyers receive calls from frustrated contractors who have had their liens rejected because they failed to file their lien according to the deadlines outlined in Chapter 53 of the Texas Property Code. To clarify, liens must be filed by the fifteenth day of the fourth calendar month following the day on which the debt accrued. For residential projects, the lien must be filed by the fifteenth day of the third calendar month.

For example, if commercial work is performed in the month of May and goes unpaid, the lien must be filed no later than September 15 or else it will be rejected. Enforcement of the lien in this example would then be required within two years of the last filing day (September 15) or, alternatively, one year from the date of the project’s completion. The later of these two dates will be established as the official deadline for enforcing the lien. Residential projects differ as the deadline extends one year from both the final date of filing and the completion of the project. Once again, which date falls later will be established as the official deadline for lien enforcement.

What About Subcontractors and Suppliers?

For subcontractors and suppliers, mechanic’s liens are required to be filed by the fifteenth day of the fourth calendar month following the day on which the last provision of labor or materials was contributed to the project. Residential projects differ slightly as these mechanic’s liens must be filed by the fifteenth day of the third month instead. The claimant must enforce the lien within two years stemming from the last day they could legally file the lien or one year from the project’s completion. The later of these two days is ultimately the deadline. Once again, there is a slight variance in the deadlines for residential projects — one year from the last day to file or one year from project completion.

To learn some other important facts about mechanic’s liens in Texas, read part four.

If you would like to speak with a Houston construction lawyer, 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.

In part one of this two-part series, the Houston construction lien attorneys at Cotney Law answered two important questions regarding the use of mechanic’s liens in Texas:

  • Who Can File a Mechanics Lien in Texas?
  • Who Should Send Preliminary Notices?

Now, we will continue to discuss this topic, starting with the specific rules for sending preliminary notices. As we mentioned in the previous section, these notices are only required to be sent by subcontractors, sub-subcontractors, and materials suppliers.

Breaking Down the Rules for Preliminary Notices in Texas

If you’re employed as a subcontractor, sub-subcontractor, material supplier, equipment lessor, or another party who was involved in a project but didn’t contract directly with the owner, you are responsible for sending monthly recurring notices if you want to preserve your ability to file a lien. In many states, preliminary notices and notices of intent to lien are utilized, but Texas is different. In Texas, you will be required to send a two month notice, a three month notice, or both, and these notices are always due on the fifteenth day of the required month. Here’s a breakdown:

  • Subcontractors must send the preliminary notice to the owner and general contractor by the fifteenth day of the second month after the last provision of labor or materials was furnished and subsequently unpaid for residential projects. This notice must be sent every month in which work provisions of labor or materials were supplied. For commercial projects, the deadline is the fifteenth day of the third month.
  • Sub-subcontractors must send the preliminary notice to the owner and general contractor by the fifteenth day of the second and third month in which provisions of labor or materials were furnished and unpaid.
  • Suppliers must send the preliminary notice to the general contractor by the fifteenth day of the second month and both the general contractor and the owner by the fifteenth day of the third month in which provisions of labor or materials were furnished and unpaid.

Filing a Mechanic’s Lien in Texas is a Complex Process

As you’ve probably gathered, filing a mechanic’s lien in Texas is a complex process with an array of variables. In fact, it’s one of the hardest states to file a mechanic’s lien in. If you want to ensure that you’re protecting your lien rights, consult a  Houston construction lien attorney before you decide to file a lien destined for rejection. Our attorneys have helped hundreds of clients get paid when owners outright refused to honor their contracts. We will continue to explore this comprehensive topic in parts three and four.

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 mechanic’s lien is arguably a contractor’s greatest tool to protect their financial interests when an owner fails to provide proper compensation for provisions of labor and materials. Of course, avoiding the use of a mechanic’s lien is always preferential as contractor-owner relationships often dissolve as a result, but in many instances, there’s simply no other way for contractors to acquire the compensation they are due.

The process of filing a lien can be complex, and liens are often rejected because contractors failed to abide by the rules and regulations governing liens in their specific state. As a result, it’s always best to partner with a Houston construction attorney if an owner is withholding payment. In this four-part article, our Houston construction attorneys will discuss important, state-specific facts about mechanic’s liens in The Lone Star State.

Who Can File a Mechanics Lien in Texas?

General contractors aren’t the only ones who can file a lien. Lien rights in the State of Texas also extend to subcontractors and material suppliers, too. As long as you fall into one of these categories, and you have completed a substantial amount of work pursuant to the contract, you are eligible to file a lien against the owner of the property. One of the more confusing aspects of the lien law in Texas involves potential lien claimants who create materials specifically for a project that can’t be used on another project. These potential claimants may file a lien even if the materials are not utilized for the improvement of a piece of real property as long as they delivered the proper notices. Design professionals also have lien rights in Texas.

Who Should Send Preliminary Notices?

In Texas, general contractors are not required to send preliminary notices before filing a claim of lien against an owner, but the rules for subcontractors, sub-subcontractors, and suppliers differ significantly. In part two, we will discuss the specific rules for each of these parties regarding the use of preliminary notices, which are required in order to file a successful lien.

To learn more about Texas mechanic’s liens, read parts two, three, and four.

If you would like to speak with one of our Houston construction 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.

If you’re a contractor having trouble obtaining payment for completed work from an owner, a demand letter could be exactly what you need. Depending on the situation, a demand letter may be more appropriate than a lawsuit. Sending a demand letter rather than pursuing litigation against a business partner as a first course of action can even help preserve your reputation.

Read on to learn about the benefits of having a Houston contractor attorney from Cotney Law draft a demand letter for you.

1. Can Result in Payment

The ultimate goal is to get you the money you’re owed. A demand letter written by an attorney lets the project owner know you are serious about collecting payment and will persevere until you get compensated fairly. To impress the gravity of the situation on the owner, your attorney can add references to specific laws and contractual obligations that were not upheld. This may be all that’s needed to recover funds owed to you.

2. Saves Time and Costs

If you’ve spoken in person or on the phone to a nonpaying project owner, the situation can get heated and convoluted quickly. Before you know it, you’ve lost half a day to arguing without gaining any traction. A letter gives you the time and separation to state your case cooly and logically.

Having an attorney draft the demand letter shows that you are prepared if further action is necessary, and that’s often all it takes. Using courtesy and professionalism, your attorney will create a calculated, diplomatic demand letter as a means to an end. Taking the demand letter as a stepping stone instead of skipping ahead to a lawsuit has another upside too: drafting a demand letter takes less time and costs less than a lawsuit. That’s time back that you can use to work on paying projects.

3. Establishes Documentation

If there’s still no sign that the project owner is going to pay you, a demand letter can be used as an exhibit during litigation to prove that you provided notice. Drafting a letter also encourages the nonpaying party to write you back, providing further documentation. Sending the letter through certified mail with return receipt requested is another way to add to your evidence to prove that the project owner knows you made an effort to resolve the payment issue before litigating.

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.

Even the most seasoned contractors are often baffled by the sheer volume of knowledge required to skillfully handle construction pricing and contracting. If you feel like you’re losing out on your contracts, consult a Houston construction lawyer from Cotney Law to assist you with contract drafting, review, and negotiation.

In part one of this two-part series, our Houston construction lawyers introduced the topic of construction pricing and contracting by discussing some of the factors that influence pricing and the best procedures for submitting a competitive bid to procure lucrative contracts. Now, we will discuss negotiated contracts and speculative residential construction.

Negotiated Contracts

Unlike projects that seek out the best contractor through competitive bidding, private owners can opt to select a contractor directly. Negotiated contracts are more flexible with pricing arrangements and allow contractors more freedom when working on projects of substantial cost and complexity. Additionally, these contracts are ideal for repeated projects such as those that reuse apartment building design schemes. In this case, if one particular contractor has proven their efficacy with a past project, there’s little reason to seek another contractor unless price considerations come into play.

As a contractor, negotiated contracts can be extremely lucrative, especially if you are duplicating a past project. Calculating the price of a negotiated contract typically follows one of these methods:

  • Cost plus fixed percentage
  • Cost plus fixed fee
  • Cost plus variable fee
  • Target estimate
  • Guaranteed maximum price or cost

Speculative Residential Construction

When building houses or condominiums in new communities, contractors often build units prior to purchase. This is because contractors anticipate the demand of these units. If you build quality units, they will typically sell, so speculative residential construction can be quite lucrative. Plus, since there’s no fixed price of housing, you can scale the price to meet the current demand. Finding financing for these types of projects is relatively easy when working with lending institutions because these types of projects have been proven to make a considerable return on investment over time.

Whether you’ve been a contractor for two years or twenty years, it’s always smart to partner with a Houston construction lawyer to assist you with a broad range of services including bid proposals, bid disputes, contract review, contract negotiation, and more.

If you would like to speak with 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.