Dealing with payment disputes can be a huge headache. Luckily, subcontractors and material suppliers are allowed to file a mechanics lien to ensure that they get paid for the work that they’ve done. A mechanics lien limits a property’s market value and is very effective in prompting property owners to release payments and settle the dispute.
However, filing a mechanics lien requires construction parties to follow strict rules and regulations. In Texas, these rules vary depending on your role in a project. This guide will walk you through the requirements and process for filing a Texas Affidavit of Lien for subcontractors and material suppliers working on residential projects.
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- Preliminary Notice Requirements for Residential Subcontractors and Material Suppliers in Texas
- How to file a Texas Affidavit of Lien for residential subcontractors and material suppliers
- Best practices when filing a Texas Affidavit of Lien for residential subcontractors and material suppliers
Preliminary Notice Requirements for Residential Subcontractors and Material Suppliers in Texas
Texas is one of the states with complex preliminary notice requirements to ensure that construction parties do not abuse their lien rights. If you are a Texas subcontractor or material supplier working on a residential project, you are required to serve a preliminary notice for every month that you furnish services to a project.
The Texas preliminary notice for residential subcontractors and suppliers must be sent to the property owner and the general contractor. The deadline for serving this preliminary notice is the 15th day of the second month following each month that you work on a project.
If, for example, you worked on a project in March, you must serve preliminary notice for March by May 15. Remember that the preliminary notice requirement is recurring, which means that you must serve multiple preliminary notices if you work on a project for more than one month.
While there is no prescribed form for the Texas preliminary notice, it must generally contain 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
Serving the preliminary notice in Texas must be done by registered or certified mail. Keep in mind that you must adhere to Texas’ preliminary notice requirements if you want to protect your lien rights. Failure to serve a preliminary notice for a given month will prohibit you from recording a valid and enforceable mechanics lien in Texas.
How to file a Texas Affidavit of Lien for residential subcontractors and material suppliers
1. Prepare the Affidavit of Lien form
The mechanics lien or Affidavit of Lien in Texas must contain the following pieces of information:
a. A sworn statement of the amount claim
This is the amount of the payment that you are claiming. It does not include lien-related costs, attorney fees, and other miscellaneous expenses not related to your construction services.
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 may be the physical address of a property or the legal property description. It has to be sufficient so the property is identifiable based on the description alone.
e. A general declaration of the materials furnished or labor performed
This is the description of the services that you provided, and it must be itemized per month.
Note that you must have your Texas Affidavit of Lien form notarized before you file it. Make sure 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
Once your Affidavit of Lien form is ready, you have to record it in the clerk’s office in the county where the project is located. You may attach to your mechanics lien copies of your work contract as well as copies of the preliminary notices that you have served. Attaching these documents implies that you have complied with the requirements and that you have a valid payment claim.
The deadline for recording an Affidavit of Lien for residential subcontractors and suppliers is the 15th day of the 3rd month after your last day of work.
Note that filing an Affidavit of Lien may be done by visiting the local county clerk’s office and having the mechanics lien recorded in person, or it may also be filed by mailing all the documents. If you are mailing your mechanics lien, make sure that you include the exact filing costs associated with recording the mechanics lien. You may call the county clerk’s office to know how much it costs to file a mechanics lien.
3. Serve a copy of the Affidavit of Lien on the property owner and the general contractor
After filing the Affidavit of Lien, you have five days to serve a copy of it on the property owner and the general contractor. This notifies the higher-tier parties that a mechanics lien has been recorded on the property and that they need to take action to get rid of it.
Note that this is a required step; failing to serve a copy of the mechanics lien on the property owner and the general contractor within 5 days of the recordation date will invalidate your lien rights.
4. Release/enforce the Affidavit of Lien
After recording a mechanics lien, you will either receive your payment or you won’t. If you do receive your payment, the party making the payment will likely send you a request to cancel the mechanics lien. Once you receive such notice, you have 10 days to release the Affidavit of Lien.
Releasing an Affidavit of Lien is done once payment has been received and the mechanics lien has therefore been satisfied. You do it by filing a lien release form in the same county clerk office where the original Affidavit of Lien was filed. By filing a lien release, you communicate to potential buyers and financiers of a property that the payment dispute has been settled.
It is also possible for the higher-tier parties to fail to produce the payment. When this happens, the next best step is to enforce a mechanics lien. Enforcing your Texas Affidavit of Lien means initiating a foreclosure lawsuit. If you win the suit, you can recover your payment from the foreclosure auction of the property.
Residential subcontractors and material suppliers in Texas must enforce their Affidavit of Lien by the following days, whichever is later:
- Within 1 year of filing the Affidavit of Lien
- Within 1 year of the termination or completion of the project
Note that when the deadline has passed, an Affidavit of Lien will no longer be enforceable. This means that you will likely lose a foreclosure lawsuit and the mechanics lien is no longer effective in limiting the property’s market value. Make sure to enforce your Affidavit of Lien before the deadline so all your hard work is not put to waste.
Best practices when filing a Texas Affidavit of Lien for residential subcontractors and material suppliers
1. Establish a regular schedule for serving your monthly preliminary notice
The rules in Texas require you to serve a preliminary notice for every month that you spend working on a project. By establishing a regular schedule for serving your monthly preliminary notices, you are less likely to miss a month and will, therefore, ensure that your lien rights are fully protected.
2. Attach copies of the contract and monthly preliminary notices to the Texas Affidavit of Lien
When recording your Affidavit of Lien, attaching copies of your written contract as well as the preliminary notices that you have duly served will strengthen your claim. These attachments are not required, but they act as proof of your compliance with the rules and that they communicate to any third party viewing your mechanics lien that you have a strong and valid claim.
3. Serve a copy of the mechanics lien on the higher-parties on the same day of filing
To ensure that your Affidavit of Lien is enforceable, you are required to serve a copy of it on the property owner and the general contractor within 5 days of recording. It is best practice to serve these copies on the same day of filing to make sure that you do not miss this very important step. Remember that failing to complete this step will invalidate your Affidavit of Lien.