Non-payment in the construction industry is so common that most states have created laws to protect payment rights for contractors, sub-contractors, and materials suppliers. In Texas, the most common protection is a contractor’s lien, also called a construction or mechanics lien, and it’s essential to understand your lien rights to qualify for this protection. In this post, we will look at a contractor’s lien rights in Texas (for private and public commercial projects) and what to expect with the process.
The Power of a Contractors Lien
Fortunately, a contractor’s lien rights in Texas are pretty straightforward. Just as long as you follow the legal deadlines and send the proper notices, you are good. Basically, if the contractor or the owner is not paying you for the work, you have the right to file a mechanics or contractor’s lien against their property. This lien affidavit is an official document stating that you’re owed money for work or materials you supplied to a construction project on their property.
Contractor’s Lien Rights– Private Construction Projects
When working as a contractor, sub-contractor, or materials supplier in private commercial construction, the mechanic’s lien comes into play when your invoice(s) are not paid on time or at all. To combat payment issues, you have the option to file a mechanics or contractors lien to recover payment. However, general contractors and subcontractors have different requirements before they qualify for lien protection. You’ll find more details on lien requirements for subcontractors in this article: How Does a Subcontractor File a Lien in Texas?
Contractor’s Lien Rights – Public Construction Projects
Mechanics liens are not available on public construction projects, which is any project where the owner of the construction project is a governmental agency such as the state or city government. Common examples of public construction projects are sewers, road and bridge construction, schools, universities, government property, public parks, utility work (if publicly owned), and bus stations.
In place of a lien, most public contracts require the general contractor to file a payment and performance bond for the public construction job. In this case,a subcontractor can file a bond claim when payment issues arise. Please note that bond claims are not available to a general contractor on public projects. Instead, a general contractor has to manage their dispute directly with the governmental agency that supplied the contract.
Beware the Lien Waiver
Once a contractor receives payment, the general contractor or the property owner will likely ask the subcontractor to sign a lien waiver form. Lien waiver forms prevent and prohibit the subcontractor from taking any further lien action on the property. In other words, if you sign a lien waiver, you are likely prohibited from filing a lien and claiming that you have not been paid. The most common scenario where this may become relevant is unpaid money owed for verbal change orders. Basically, contractors and subcontractors should be wary of waiving their right to file a lien if they have not been paid for their work.
Ready to file? Follow the Rules.
If you want to file a contractor’s lien to collect your payment, then it’s important to familiarize yourself with the information required to draft a lien affidavit and the associated deadlines. Importantly, you will want to have all of the information you need to send a pre-lien notice the letter or lien affidavit before you start preparing the paperwork.
We’ve Got You Covered
As you can see, there are plenty of conditions for properly filing a lien in Texas. We’ve made finding answers easy with our FAQ’s page, where you will see a comprehensive list of deadlines, definitions, and guidelines for filing construction liens, pre-lien notices, and bond claims.