How to Tell the Difference Between Commercial and Residential Construction Projects

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When it comes to filing and perfecting a lien against a property, the property’s classification can have an immense influence on the tools available at your disposal to collect your overdue payment. As a result, before you can pursue a lien, you must first determine whether you supplied labor or materials to a residential property or a commercial property. Although the difference between these two types of properties is quite drastic, it’s not unthinkable to believe that you could find yourself occupying a gray area without a clue as to how you should proceed. When this happens, it’s important to have a Houston construction lien attorney on your side to clarify your legal recourse for pursuing a lien against an owner who refuses to pay.

Texas Property Code Section 53.001

The term “residential construction project” is defined under the Texas Property Code Section 53.001(10).

It states: “Residential construction project means a project for the construction or repair of a new or existing residence, including improvements appurtenant to the residence, as provided by a residential construction contract.”

In the State of Texas, lien laws offer greater protections to residential properties, especially if the property is utilized as the owner’s homestead. By comparison, commercial properties are protected, but not to the same degree that residential properties are. Since there are only two classifications for building construction, if a structure qualifies as commercial, then it is inherently non-residential, and vice-versa.

Similarly, Texas Property Code Section 53.001(9) defines a “residential construction contract” as “a contract between an owner and a contractor in which the contractor agrees to construct or repair the owner’s residence, including improvements appurtenant to the residence.” Put plainly, a commercial construction project will not be occupied as a homestead by its owner after completion.

The Residential Versus Commercial Debate Can Be Complicated

As we mentioned above, the key to determining whether a project is residential or commercial in nature depends largely on its use. For example, if you are contracted to build a custom home for a homeowner, the project is considered residential. However, if the property is later rented out to a tenant, the property would no longer be considered a residential property according to Texas Property Code. Additionally, building a spec house might seem like an example of residential construction, but it is actually considered a commercial project. In fact, building homes in a large scale development is considered commercial construction until the units have been sold to owners. Finally, apartment complexes are commercial properties despite being occupied by residents.

If you would like to speak with 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.