In almost all states, securing your lien rights begins with serving a preliminary notice. A preliminary notice notifies the property owner of your participation in a project and it informs them that you are willing to exercise your lien rights in the event that you do not get paid for your work.
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- Serving a Texas Preliminary Notice
- Who Needs to Serve a Preliminary Notice in Texas?
- How to Serve a Preliminary Notice in Texas: A Swift Process
- Preparing Your Preliminary Notice in Texas
- Serving your Preliminary Notice in Texas
- How Much Does It Cost to Serve a Preliminary Notice in Texas?
- Texas Preliminary Notice: Private Works versus Public Construction
- 3 Common Mistakes When Serving a Preliminary Notice in Texas
- Why serve the preliminary notice? Reasons for serving the Preliminary Notice
Serving a Texas Preliminary Notice
Filing a preliminary notice in Texas is both simple and complicated. It is simple because unlike in other states like California, the preliminary notice does not have to contain specific information in a specific format.
Texas preliminary notices, however, become complicated because the requirements vary depending on your role and on the type of the project you are working on. And on top of that, you may also have to submit more than one preliminary notice for each month that you furnish labor or materials to a project.
This guide will walk you through the basics of serving a preliminary notice in Texas. Remember that this pre-lien notice is required by the law in order for your mechanics lien or bond claim to be valid, so make sure that you understand all the preliminary notice requirements that apply to you.
Who Needs to Serve a Preliminary Notice in Texas?
Almost every construction participant must serve a preliminary notice in Texas. If you are a subcontractor, sub-subcontractor, or material supplier to anyone other than the property owner, you must serve a Texas preliminary notice. The preliminary notice requirement also applies to parties who provide specially fabricated materials to a project.
Notice that general contractors or parties with a direct contractual relationship with the property owner are not required to submit a preliminary notice. However, general contractors must also keep in mind other important notices that they may have to serve.
For instance, general contractors working on residential projects must serve the property owner with a Disclosure Statement. This statement outlines the rights and responsibilities of the property owner.
General contractors and other parties may also want to serve a Notice of Contractual Retainage, which is another notice that is served specifically to protect one’s right to file a mechanics lien to recover retainage payment.
How to Serve a Preliminary Notice in Texas: A Swift Process
As mentioned, serving the preliminary notice in Texas can be as simple as following these steps.
- Check the deadlines and timing requirements for your specific situation.
- Collect information required.
- Prepare your preliminary notice.
- Serve the preliminary notice(s) before the deadline(s).
Preparing Your Preliminary Notice in Texas
Preparing the Texas preliminary notice is fairly straightforward in the sense that there are no complex requirements regarding the specific information it must contain. No specific information is required for private works projects, but a typical preliminary notice has the following information:
- Names and addresses of the claimant, the property owner, and the general contractor
- General description of work performed
- Location of the project
- Dates covered in the preliminary notice
- Amount or estimated amount owed to the claimant
Public works projects, on the other hand, must contain the following information, as stated in Sec. 53.233(s) of the Texas Property Code:
- Amount claimed
- Name of the party to whom the materials were delivered or for whom the labor was performed
- Dates and place of delivery or performance
- Description reasonably sufficient to identify the materials delivered or labor performed and the amount due
- Description reasonably sufficient to identify the project for which the material was delivered or the labor performed
- Claimant’s business address
If you are providing specially fabricated materials to a project, your preliminary notice must also contain:
- Statement that the order has been received and accepted
- Price of the order
Using this form:
Serving your Preliminary Notice in Texas
Now this is the part that gets complicated. In Texas, most construction participants are required to send at least one preliminary notice for each month that they render services to a project in order for their mechanics lien to be valid. These notices go by different names depending on the deadlines by which they must be served.
- The 2nd Month notice must be served no later than the 15th day of the second month after the service was furnished on the project.
- The 3rd Month notice, consequently, must be served no later than the 15th day of the second month after the service was furnished on the project.
The preliminary notices that you must submit and the frequency by which you must serve them depend on your role in the project and on the type of project you’re working on.
General contractors DO NOT have to send a preliminary notice to the owner, whether they are working on a private or a public works project. They are also not required to submit a preliminary notice even if they are working on a residential project.
First-Tier Subcontractors and Material Suppliers
First-tier subcontractors and material suppliers are those who are in direct contact with the general contractor. If you belong to this category, then you are required to send the following monthly notices depending on which type of project you’re working on:
All notices must be served to the owner or the reputed owner of the property. First-tier subcontractors working on a public project do not have to serve a preliminary notice.
Lower-Tier Subcontractors and Material Suppliers
All other sub-subcontractors and material suppliers that are not in direct contact with the general contractor must submit the following monthly notices:
For those who are working on a residential project, the 2nd month notice must be sent to both the property owner and the general contractor.
For those who are working on a non-residential project, the 2nd month notice to the general contractor and the 3rd month notice to both the general contractor the property owner.
TIP: you are allowed to serve both the 2nd and 3rd month notices at the same time. This simply means that you are submitting the 3rd month notice a month earlier than the deadline.
For those who are working on a public works project, the 2nd month notice must be served to the state, county, town, or municipality responsible for paying the general contractor, and also to the general contractor.
Providers of Specially Fabricated Materials
Fabricators who provided specially fabricated materials to a project are also entitled to protect their lien rights by submitting the following preliminary notices:
The 2nd month notice must be served to the property owner and/or the general contractor, if applicable. There are no specific requirements regarding preliminary notices for fabricators providing materials to a public project.
Keep in mind that fabricators may secure their right to file a mechanics lien even if the materials have not been delivered or incorporated to the project.
If you want to protect your lien rights before you have delivered the specially fabricated materials to the project, you can submit the preliminary notice by the 15th day of the second month after you receive the order.
Once the project has been delivered, you can also submit the preliminary notice by the 15th day of the second month following the delivery date. Do note that doing this step will protect your lien rights even if you missed submitting the 2nd month notice for the receipt of the order (i.e. pre-delivery of the materials).
How Much Does It Cost to Serve a Preliminary Notice in Texas?
The Texas preliminary notice may be served via registered mail or certified mail, and according to USPS, the prices for those methods of mailing are as follows:
- Registered mail: price starts at $12.60
- Certified mail: $3.55
- Return receipt (additional cost): $2.85 (for mail receipt), $1.70 (for email receipt)
Texas Preliminary Notice: Private Works versus Public Construction
The key thing to remember is that the mechanics lien covers private works projects, while bond claim covers public works construction. When it comes to preliminary notices, the main difference between these two sectors are the people who are required to submit the notices and the parties to which they must be sent.
- Only sub-subcontractors and material suppliers who are not in direct contact with the general contractor are required to submit the 2nd month notice in public works projects
- Preliminary notices for public works projects must be sent to the general contractor and to the state, county, town, or municipality that is in charge of paying the contractor
3 Common Mistakes When Serving a Preliminary Notice in Texas
Not serving the preliminary notices before the deadline.
Late monthly notices are not accepted in Texas. Once you miss the deadline, you lose your lien rights for the month on which you performed labor or provided materials to the project. It is always highly advisable to have your preliminary notices ready and to serve them at least a few days before the deadline.
Not serving the preliminary notices to the appropriate parties.
Forgetting to serve the preliminary notice to the appropriate parties is another common mistake. Remember to send the notices to the property owner and to the general contractor, as applicable.
Note that for non-residential private projects, the 2nd month notice must be handed to the general contractor and the 3rd month notice must be served to both the general contractor and the property owner. The documents may contain the same information, but the law states that you submit the notice twice to the general contractor.
Not serving the preliminary notices via the correct method.
All Texas preliminary notices in Texas must be served by registered or certified mail. It is highly advisable that you keep proof (e.g. post office invoice, return receipts) that you have sent the notices to the intended parties.
You may also serve the notices online via Handle. By choosing to serve your preliminary notices online with Handle, you will be assured that the notices will be sent to the correct parties and within the appropriate deadline.
Why serve the preliminary notice? Reasons for serving the Preliminary Notice
Protect your right to get paid
The preliminary notice in Texas is required by the law in order for a mechanics lien or a bond claim to be valid. This means that if you do not serve the required monthly notices for the month that you furnish your services to a project, you may risk not getting paid for such services.
Protect the property owner from paying twice
The preliminary notice does not only protect the subcontractors and material suppliers — they always protect the property owners from having to pay extra.
Say, the property owner pays the general contractor but the latter fails to pay the subcontractor. If a preliminary notice has been sent, the contractor may be liable for the debt instead of the owner. The owner may also intervene to ensure that the subcontractor gets the payment.
Protect your business
Serving the monthly preliminary notice in Texas ensures that you develop good business practices by being proactive in protecting your lien rights and by staying on top of the deadlines for the required paperwork. Streamlining your processes for these administrative tasks should be a top priority if you are running a business in the construction industry.