Understanding Mechanic Liens
Aug. 17, 2022
Dating back to the time of Thomas Jefferson and his presidency, the nation has observed what is called mechanic’s liens to protect subcontractors, laborers, and suppliers on construction jobs from being shortchanged or denied their proper fees. They are called mechanic’s liens because, in those days, workers on the property were known as mechanics.
Mechanic’s lien laws vary state by state, and Texas earns its “Lone Star” category in its application of mechanic’s liens. The wording and qualifications outlined in the law can be confusing to the average subcontractor or supplier, even to the general contractor.
In its basic form, however, a mechanic’s lien places an obligation on the property owner – who may actually have nothing to do with the dispute – to pay the money due. This action will become part of the title to the property, which can make selling or refinancing the property virtually impossible until the lien is resolved. The owner will place pressure on the general contractor or other responsible parties to salvage the situation by paying up.
If you find yourself in a situation in Dallas, Texas, in which payment for your work or supplies delivered for a construction project has been unmet, you must file a mechanic’s lien. Contact me immediately at Uloth, P.C. for legal guidance. I have the knowledge, experience, and resources to help you press your claim. I also proudly serve clients in Addison and Plano, Texas.
The Purpose of a Mechanic’s Lien
The reason to file a mechanic’s lien is to spur into action the owner of the property to resolve the situation, which generally will mean putting pressure – even taking legal action – against the party responsible for the insufficient or nonexistent payment for services and supplies rendered. No property owner wants a lien to cloud the future by making sales and financial transactions nearly impossible.
Of course, at the same time, you can file a breach of contract lawsuit against the contractor or subcontractor who reneged on their agreement, but the mechanic’s lien puts added pressure on the responsible party to make good on the terms of the deal.
What Can Be Claimed Under a Mechanic’s Lien?
Generally speaking, mechanic’s lien claims are limited to the actual cost of labor, materials, and services provided. This means that the claim cannot include compensation for issues like pain and suffering, attorney’s fees, or punitive damages.
Say as a subcontractor, you supplied and poured the contract for the driveway and parking around the building. You can file a lien for the cost of the contract, any rental costs for equipment used, and of course, the agreed-upon labor charges.
Lien Limitations in Texas
Section 53.024 of the Texas Property Code does establish limitations on mechanic’s liens, stating:
“The amount of a lien claimed by a subcontractor cannot exceed:
“(1) an amount equal to the proportion of the total subcontract price that the sum of the labor performed, materials furnished, materials specially fabricated, reasonable overhead costs incurred, and proportionate profit margin bears to the total subcontract price; minus
“(2) the sum of previous payments received by the claimant on the subcontract.”
In other words, the lien can cover only actual costs minus any previous payments made under the agreement.
Section 53.025 further clarifies that “A lien for retainage is valid only for the amount specified to be retained in the contract, including any amendments to the contract, between the claimant and the original contractor or between the claimant and a subcontractor.”
Texas Pre-Lien Notification Requirements
Prior to filing a mechanic’s lien with the County Clerk, in which the property is located, the claimant must observe Texas’s rules for notification, which can get confusing, underlying the need to seek the help of an experienced attorney from the very start of the contracted or agreed-upon work.
In short, all contractors except the original contractor are required to submit notices to the property owner and general contractor. Two types of notices should be sent shortly after you commence work on the project: (a) Notice for Contractual Retainage claim and (b) Notice for Specially Fabricated Items. Check with your attorney on these requirements.
If you have a payment dispute, you must send a Notice of Unpaid Account to the Contractor no later than the 15th day of the second month of nonpayment and continue doing so every month. On the 15th day of the third month, you must also send the notice to the property owner and then continue doing so.
Subcontractors and others besides the original contractor must file the actual lien affidavit with the County Clerk within 30 days of completion of the work, or the 15th day of the 4th month following completion of the work or materials supplied. The deadlines depend on whether retained funds are involved. Check with your attorney.
Experienced Guidance to Protect Your Work
As you can see, the Texas law on mechanic’s liens definitely earns its distinction as a “Lone Star” example of challenging requirements. That’s why you need to seek experienced legal help from an attorney who has helped subcontractors and others with their payment disputes.
If you’re in or around the Greater Dallas Metro Area, contact me immediately at my firm, Uloth, P.C. I will provide you with your personalized service, including easy-to-understand explanations and directions going forward. Let’s work together to recover the money owed to you. I proudly serve clients in Addison, Plano, and Dallas, Texas.