Licensed image from Thinkstock/Nastco

Compared to prime (general) contractors, it is much more difficult for subcontractors to perfect lien and bond claims on private projects.  Subcontractors must give timely notice of non-payment to the owner.  If the subcontractor claimant does not have an agreement with the prime contractor, notice must also be given to the prime contractor.  Failure to comply with the pre-lien notice requirements is fatal to a subcontractor’s lien claim

Prime contractors, on the other hand, are not burdened with pre-lien notice requirements.  They can still claim a lien (even if no affidavit is recorded) and the value of their lien claim is not affected by retainage.

The reasons for this disparate treatment stems from the fact that a general contractor’s lien rights derive from the Texas Constitution, common-law, contract and statute.  Subcontractors’ lien rights are derived solely from statute and are totally dependent upon compliance with these statutes. This system creates many obstacles and pitfalls for subcontractors that properly provide labor and materials.
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Licensed image from Thinkstock/Wavebreakmedia, Ltd
Licensed image from Thinkstock/Wavebreakmedia, Ltd

After struggling to cobble together your mechanic’s lien affidavit, you’ve driven 150 miles to reach the county clerk’s office before close of business. Today is the filing deadline.  No worries, you made it!! But now you stand toe-to-toe and face-to-face with a clerk that refuses to record your claim.  WHAT NOW???

More often than you might imagine, this same scene plays out across Texas.  I’ve had to send my fair share of post-filing fight flowers to mend fences with clerks that do not understand the limits of their own discretion.  The fights are not limited to affidavits claiming mechanic’s liens.  I’ve witnessed clerks refuse to accept indemnity bonds, statutory payment bonds and other time critical records.

I will guarantee that posted in the office of every clerk is a sign advising,
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Image courtesy of Flickr (Licensed) by © Mike Licht, NotionsCapital.com
Image courtesy of Flickr (Licensed) by © Mike Licht, NotionsCapital.com

Perfecting a statutory mechanic’s and materialman’s lien under current Texas law is difficult.  The statutes are less than clear and chocked full of traps and deadlines that trip up many contractors and material suppliers.  Fortunately, lien perfection typically results in payment or pre-trial settlement once foreclosure is threatened.  However, when payment is not forthcoming, a claimant must timely file a lawsuit to foreclose the lien. 

On more than one occasion I’ve represented contractors who managed to dot every ‘i’ and cross  every ‘t’ necessary to perfect a lien claim only to have a trial court deny foreclosure because he “just didn’t feel right about it”, “foreclosure seems vindictive” or because in their experience, “its customary that the lien will get paid whenever the property is sold.”  WHAT?!?  My unstated response is: “You can’t do that!”  or “Judge, you are rewriting the law based upon whims and feelings.  My client has no way of getting paid without foreclosure.”  Unfortunately, most of my clients were either unwilling or unable to appeal.

This week lien claimants won an important victory in Crawford Services, Inc., v. Skillman International Firm, L.L.C., when the Texas Fifth Court of Appeals published an opinion reversing and rendering judgment from Dallas County.  Specifically, the appellate court held that a Dallas County District court abused its discretion by refusing to foreclose a perfected mechanic’s lien.
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Compliance with pre-lien notice requirements for private, non-residential construction projects.

Image courtesy of Flickr (Licensed) by LendingMemo.com
Image courtesy of Flickr (Licensed) by LendingMemo.com

On regular basis I find myself face-to-face with a subcontractor that hasn’t received payment for several months and is now afraid payment will never occur.  Most contractors know that they may enjoy some lien or bond rights.  Often clients just don’t know the steps needed to take advantage of this powerful tool or they misunderstand the rules and make a fatal mistake.


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