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.
Continue Reading Sham Contracts and the Constitutional Mechanic’s Lien