On June 15, 2021, Gov. Greg Abbott signed into law House Bill 2237, introducing major changes to Chapter 53 of the Texas Property Code 1. These changes, which took effect on January 1, 2022, reflect new rules and regulations surrounding the filing of a Texas mechanics lien and all steps that come with it, including notice requirements and deadlines.
The most effective way to recover payment from a delinquent client is to file a mechanics lien. Unlike other methods, recording a mechanics lien actually limits a property’s market value by tainting its public records with a note about the outstanding payment dispute. Property owners are therefore wary about dealing with a mechanics lien, prompting them to release the payment.
However, filing a valid mechanics lien is not a straightforward process. In Texas, you must follow strict lien rules to ensure that your Affidavit of Lien, as a mechanics lien is called in the state, is valid. This guide explains the mechanics lien requirements subcontractors and suppliers on non-residential projects in Texas must meet for a successful filing.
Preliminary Notice Requirements for Non-Residential Subcontractors and Material Suppliers in Texas
First-tier subcontractors and material suppliers
First-tier subcontractors and suppliers are those who have a direct contractual relationship with the general contractor. If you do have a contract with a general contractor, you must serve a preliminary notice by the 15th day of the 3rd month following each month of unpaid work.
If, for example, you worked in January and have not gotten paid yet, you have to serve a preliminary notice by April 15 to protect your lien rights for the month you received no compensation. If you continued working in February and also did not get paid, you must serve another notice by May 15. Preliminary notice requirements in Texas are recurring, which means that you may have to serve multiple preliminary notices during the course of a project.
Note that you have to serve the preliminary notice on both the general contractor and the property owner. It is best practice to serve the preliminary notice via certified mail with return receipt requested.
Lower-tier subcontractors and material suppliers
Second- and lower-tier subcontractors and suppliers are those who have no direct contract with the general contractor. Previously, if you are one of them, then you have to serve a preliminary notice twice: you must serve one by the 15th day of the second month following each month of work, and another one by the 15th day of the third month following each month of work.
However, effective 2022, all subcontractors and lower-tier parties only have to serve the third month notice to the property owner and the prime contractor by the 15th day of the third month after providing labor or materials to a project.2
If, for example, you worked in January and did not get paid, then you must serve the same preliminary notice by April 15 on the general contractor and the property.
But even if the second month notice is no longer required, you are strongly encouraged to still serve it. Serving notices have other benefits other than preserving your lien rights such as having consistent communication with higher-tier parties and “visibility” which could help you get paid quicker.
Also note that, just like the requirement for first-tier subcontractors, the preliminary notice for lower-tier subcontractors must also be served for each unpaid month. If, say, you work from January until March and do not get paid, you must serve copies of the preliminary notice for each of those months. Serving the preliminary notice must be done by certified mail with return receipt requested or, beginning 2022, via “any other form of traceable, private delivery or mailing service that can confirm proof of receipt.”3
The deadlines for serving Texas preliminary notices may be complicated, but luckily, preparing the actual preliminary notice forms is not quite as complex. There is no prescribed form for the Texas preliminary notice for subcontractors and material suppliers. However, you need to include the following pieces of information in your form:
- The names and addresses of the claimant, the property owner, and the general contractor
- A general description of the work performed
- The location of the project
- The dates covered in the preliminary notice
- The amount or estimated amount owed to the claimant
Make sure that you verify the accuracy of the information that you write. Avoid spelling and formatting errors at all costs.
How to file a Texas Affidavit of Lien for non-residential subcontractors and material suppliers
1. Prepare the Affidavit of Lien form
When preparing your Affidavit of Lien form, make sure that you have the following information:
a. A sworn statement of the amount claim
This amount does not include lien-related costs, attorney fees, and other miscellaneous expenses. Only include the costs related to the services that you perform on a project.
b. The name and address of the property owner
This is the name and known address of the property owner(s).
c. The name and address of the general contractor
This is the name and address of the party who hired you, if different from the general contractor
d. A description of the property location sufficient for identification
This has to be sufficient to identify a property. A physical street address or a legal property description will work.
e. A general declaration of the materials furnished or labor performed
This is the description of the services that you provided to a project, and it must be itemized per month.
In Texas, the Affidavit of Lien must be notarized prior to filing. Ensure that you sign your Affidavit of Lien while in the presence of an authorized notary officer.
2. Record the Affidavit of Lien in the county clerk’s office
The next step after preparing your Affidavit of Lien form is to have it recorded in the clerk’s office in the county where the project property is located. One way to solidify your claim is to attach a copy of your written contract to the mechanics lien. This communicates to potential buyers and financiers that your Affidavit of Lien is reasonable and is based on a contract that you agreed upon with the general contractor.
The deadline for recording an Affidavit of Lien for non-residential subcontractors and material suppliers is on the 15th day of the 4th month after your last day of work.
An Affidavit of Lien may be filed by visiting the local county clerk’s office and having the mechanics lien recorded in person. The same can be accomplished by mailing the mechanics lien to the clerk’s office. If you are mailing your Affidavit of Lien, make sure that you include the filing fees in the mail as well. Call the county clerk’s office to know the exact cost for filing a mechanics lien in your area.
3. Serve a copy of the Affidavit of Lien on the property owner
When the Affidavit of Lien has been filed, the next step is to serve a copy of the Texas mechanics lien on the owner within 5 days of the date it was recorded. This is a required step to let the property owners know that an Affidavit of Lien has been recorded against their property.
Failing to complete this step could be grounds for the invalidation of your Affidavit of Lien, so make sure that you do not forget to notify the property owner about your mechanics lien. It is best practice to serve a copy of the Affidavit of Lien on the same day that it is filed.
4. Release/enforce the Affidavit of Lien
When the Texas mechanics lien has been recorded and the property owner has been duly notified, either you will get paid or you won’t.
Chances are the mechanics lien will work and you will get paid for your services. If this happens, the paying party will most likely request you to cancel or release the Affidavit of Lien. You have 10 days to release the Affidavit of Lien upon receiving such a request.
To release an Affidavit of Lien, you have to file a lien release in the same county clerk office where the original Affidavit of Lien was filed. Releasing a mechanics lien informs potential buyers and financiers of the property that the outstanding debt has been settled and the mechanics lien is no longer enforceable.
If, on the other hand, your Affidavit of Lien does not immediately prompt a higher-tier party to pay up, the next course of action is to enforce your mechanics lien by initiating a foreclosure lawsuit. If you win this lawsuit, you can recover payment from the foreclosure auction of the property.
Non-residential subcontractors and material suppliers must enforce their Affidavit of Lien by the following deadlines, whichever is later:
- Within 2 years of filing the Affidavit of Lien
- Within 1 year of the termination or completion of the project
You may no longer enforce an Affidavit of Lien after those deadlines have elapsed. This means that filing a foreclosure lawsuit will not be effective, and the mechanics lien will no longer deter potential buyers and financiers from investing in the property as the mechanics lien has already expired.
Best practices when filing a Texas Affidavit of Lien for non-residential subcontractors and material suppliers
1. Serve the third-month preliminary notice
Remember that lower-tier subcontractors have to serve copies of the monthly preliminary notices only once beginning January 1, 2022: on both the general contractor and the property owner by the 15th day of the third month.4
2. Remember to serve the preliminary notice for each month of unpaid work
The Texas preliminary notice requirements apply to each month that you work and do not get paid. This means that you must serve the preliminary notice for every month that you furnish any lienable service to a project. Failing to serve the preliminary notices by the deadline for each month will cost you your lien rights over that specific month. Setting a monthly mailing schedule will greatly help to ensure that you regularly comply with the requirements.
3. Serve a copy of the Affidavit of Lien on the property owner on the same day of filing
Failing to notify the property owner after a mechanics lien has been filed is a common mistake among non-residential subcontractors and material suppliers. To avoid making this mistake, you can mail a copy of the Affidavit of Lien on the property owner on the same day that you file it. This way, you complete two important steps on the same day.
Further reading
- Property code Chapter 53. Mechanic’s, contractor’s, or materialman’s lien. (n.d.). Texas Constitution and Statutes. https://statutes.capitol.texas.gov/Docs/PR/htm/PR.53.htm
- Property code Chapter 53. Mechanic’s, contractor’s, or materialman’s lien. (n.d.). Texas Constitution and Statutes. https://statutes.capitol.texas.gov/Docs/PR/htm/PR.53.htm
- Property code Chapter 53. Mechanic’s, contractor’s, or materialman’s lien. (n.d.). Texas Constitution and Statutes. https://statutes.capitol.texas.gov/Docs/PR/htm/PR.53.htm
- Property code Chapter 53. Mechanic’s, contractor’s, or materialman’s lien. (n.d.). Texas Constitution and Statutes. https://statutes.capitol.texas.gov/Docs/PR/htm/PR.53.htm