We are picking up where we left off with our discussion of the most commonly misunderstood construction contract clauses. In part one, we talked about two types of contract provisions that can stump even the most experienced of contractors and lead to a costly payment dispute: incorporation clauses and contingent payment clauses.
Below, we will be discussing indemnity clauses and clauses that contain mechanic’s lien terms. While the state of Texas has enacted laws to protect contractors and subcontractors from potentially harmful clauses like these, you are no less responsible for understanding the contract clauses you are bound by. If you are caught up in a payment dispute as a result of vague contract clauses, consult a Houston construction lien attorney from Cotney Law to discuss your next steps.
Indemnity clauses require that a contractor or subcontractor indemnify, or hold harmless or defend, another party against their own negligence. Essentially, if a contractor or owner is responsible for damages, this clause shifts liability and requires another party to pay for those damages.
Doesn’t seem fair, does it? Fortunately for construction professionals operating out of the Lone Star State, anti-indemnity statutes came in to effect in 2012 to make indemnity clauses unenforceable. Texas law states that “a provision in a construction contract, or in an agreement collateral to or affecting a construction contract, is void and unenforceable as against public policy to the extent that it requires an indemnitor to indemnify, hold harmless, or defend a party.” However, these laws do not apply to residential projects, public works projects, or damages resulting from injury or death.
As we’ve covered previously, Texas has by far the most complex and intricate mechanic’s lien laws in the country. Filing a mechanic’s lien without the assistance of an attorney is a grueling process that is sure to put contractors up against tough lien deadlines and notice requirements. So, it’s appropriate that mechanic’s lien provisions in contracts are equally as misunderstood.
Fortunately, Texas has recently cracked down on lien waivers, essentially making provisions that waive your lien rights invalid unless you’ve already received payment. However, similar to indemnity clauses, there are possible exceptions, and a contractor could find their lien rights threatened if they don’t review the contents of their contracts. To ensure that you understand every clause in the contracts you sign and that your lien rights are absolutely protected, your only option is to turn to a Houston construction lien attorney that is dedicated solely to representing the construction industry.
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.