TEXAS MECHANIC’S LIEN FACTS
What is a mechanic’s lien
A mechanic’s lien makes any amount owed to a claimant (subcontactor or material supplier) a problem for the legal owner of a construction project. The property that was improved becomes collateral if the claimant follows the procedure properly. Ultimately, a mechanic’s lien allows the claimant to foreclose on the property if the owner is unable to resolve the matter with the claimant. The Texas Property Code strictly governs process claimants must follow to create and enforce a valid mechanic’s lien. The law is extremely rigid and dilligence is required for mechanic’s lien to be enforcable. This is why many claimants seek professional help to make sure their lien claims are handled properly.
What is a trapping or pre-lien notice and why is it so important
The most confusing and overlooked part of mechanic’s liens is the requirement to send a trapping or pre-lien notice. These notices must be sent for any month that funds are outstanding by their own deadline date (see the chart above for deadlines). These notice deadlines are different than the lien filing deadlines, which do not start until the claimant’s last day providing labor or materials on a project The notices must be sent by certified mail or private courier (i.e. fedex, UPS, DHL) with a tracking number to prove it was delivered. Additionally, notices must be sent to the original contractor and legal owner seperately. The clock starts ticking to trap funds as soon as the month the claimant provided labor or materials ends. The deadline applies regardless if the amount is past due or the claimant is still providing labor or materials. Failure to send the notice for sums owed for a particular month will make those amouts unclaimable on a future lien. This is why these notices are often called trapping notices as they “trap” funds that can be claimed later on a lien claim if required.
Please visit https://construction.fmcollect.com/trapping/ to view order a trapping or pre-lien notice today. Failure to send these timely notices is the primary reason a claimant’s lien claim is determined to be invalid. A claimant cannot wait until the lien filing deadline or when they know there is a collection problem to send these notices. They must be sent by the trapping/pre-lien notice deadline which may be months before a claimant finishes a project that stretches over a few months or your lien filing deadline, there are no exceptions.
What happens when I file a mechanic’s lien
Assuming all trapping/pre-lien notices have been property sent. A lien claim is created by preparing and filing an “Affidavit of Lien Claim” with the county clerk’s office where the improved property is located. This creates an encumberance on the property or “clouds” the title. Essentially, your lien claim acts as a placeholder on the realestate. This should effectively prevent the owner of the property “clearing title” when selling or re-financing the property. It should stop any future payments to the original contractor from the owner until the lien claim is released. A valid lien claim forces the owner and original contractor to take claimant’s issue seriously and seek a resolution sooner than later.
What if I file a lien claim with out sending trapping notices
The only time a lien can be valid without a trapping or pre-lien notice is when the claimant had a direct contract with the owner of the property. This may sound simple, but we have seen occasions when a contractor or supplier did not confirm the party on their contract was the owner. Sometimes the owner may contract with a claimant under one business name while the property is owned by another business entity. Many businesses owners hold their realestate in a seperate corporation or LLC than the business that hired the claimant. This confusion usually results when the person a claimant deals with may be owner of both entities, yet the legal owner and the hiring party are two seperate parties under the law. We recommend always confirming the ownership of any project before your start and following the trapping notice procedures regardless, to be safe.
If a claimant proceeds to file a lien claim without properly sending notices, the claim will still create an encumberance. However, the claimant could be held liable for unlawful clouding of title. An owner can sue to have the lien claim removed and hold the claimant liable for monetary damages that may have occured (i.e. loss of a potential sell or financing). The original contractor may also purchase a bond releasing the lien claim for a fraction of what is owned in order to resume payments from the owner and close out the project. This could be an expensive mistake if the claimant is sued for damages and attorney fees for filing a lien claim that is not valid. It is the duty of the claimant (and their attorney) to make sure a lien claim is valid beofre it is filed.
A lien claim that cannot be enforced in court generally weakens a claimant’s ability to collect the full balance. There are really no tangible advantages to filing a lien without being sure that the procedure has been followed. This is a growing problem in the construction industry and property owners/original contractors are on the look out for lien claims that are not valid for this reaoson or any other.uu
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Does a valid lien claim guarantee that I will be paid
The short answer is no, but it does increase the odds you will collect all that is owed. The bigger question is what it will take to resolve the matter. Any lien claim has an expiration date under the Texas Property Code. If a lawsuit is not filed within a year to enforce (often called perfection of the lien) then the lien claim is ignored and moot.
When you factor in the time it can take to do a professional and thorough collection effort with litigation as a last resort, a year is not very long. We recommend that if it’s been more than eight weeks since you filed your lien claim, then someone needs to be working the claim. If you do not have someone skilled at working a lien claim, you should consider having a third party construction debt collector like us work the claim on contingency. We can give you a competitive rate for contingent debt recovery here https://construction.fmcollect.com/quote We are only paid when the balance owed is collected. Our process will sort out any issues and allow us to work with the owner and original contractor to resolve the matter prior to litigation. The average construction attorney charges around $350 per hour, it does not make sense for most contractors and suppliers to let these claims go to litigation or pay an attorney to work these claims prior to litigation. TheThe
How do I file a lien claim
The Texas Government Code clearly states that a lien claim can only be drafted and filed by a licensed attorney. As you can see the lien laws are complex and the spirit of the law is to create lien claims that are not valid being filed in the first place. It is the obligation of the claimant to make sure that only valid claims are filed.
We are aware that simple internet search will produce results for mutiple businesses that attempt to skirt the law by other means and offer “do it yourself” lien filing online. These businesses risk having their customer’s lien claims thrown out when they go to enforce their lien in court. We understand the convience these services offer and while their filings may meet the technical requirements, the customer is left exposed to loss and legal liability. We are aware of a contractor in another state that had a large lien claim thrown out of court when the claimiant sued to enforce their lien because the used a popular lien filing service online instead of a licensed attorney. Additionally, these business run the risk of being investigated by the state for unauthorized practice of law.
We expect that owners and their attorneys will start requesting the state to crack down on these services and force claimants to remove lien claims or sue them for damages for claims filed by these services in the near future. It is the job of the owner to find any way they can not to pay your lien claim or hold the claimant responsible for damages as leverage. There is no good reason to start your lien claim on the wrong foot.
We have negotiated a special rate of $300.00 for a licensed attorney to prepare and file you lien claim for our referrals. This is about the same price the other non-lawyer services charge. You can still submit your request here on our website. We will send your request to a licensed lawyer that will reveiew the request and file your lien if you meet the requirements for a claimant. This is to protect both you and your claim.