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.
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.