In 2021, the Texas legislature passed Senate Bill HB 2237, which included changes to how construction contractors can file mechanics liens throughout the state. Those changes primarily focused on simplifying the preliminary notice requirements, timelines, and procedures around filing a lien. As a result of those simplifications, more businesses and professionals can now file mechanic’s and materialman’s liens and recover their money.
Understanding the ins and outs of the process can make the undertaking even simpler. If you’re not sure how to file a property lien in Texas or it’s been years since your last filing, make sure you have a clear understanding of the process, your rights and obligations, and what to expect along the way. You can also simplify your lien and notice processes using modern alternatives to conventional in-person filing processes.
Before You Learn How to File a Property Lien in Texas: Understanding Property Liens
A property lien is a legal claim that creditors and qualifying services contractors can use to pursue money owed to them by the property owner. Contractors frequently use Mechanic’s liens when they don’t get paid on time or in full. Professionals and contractors can apply legal pressure on ownership parties by placing liens on the property on which they provided work, materials, or services.
From the property owners’ perspective, property liens are liabilities. You generally cannot sell an encumbered property with a cloudy title, and liens do that precisely. Because the property is much more complicated or even impossible to sell—or be used as collateral against loans or services—property owners will generally pay the money claimed to have the lien removed.
The Texas Property Code outlines the steps that contractors and other eligible professionals must take to file a property lien in Texas. They include sending preliminary lien notices within a set time frame, filing the lien with the correct county office, and releasing the lien once the money claimed was paid. It’s essential for contractors to follow the process down to the last detail; otherwise, the right to file a lien against a property for a specific month may be lost.
Understanding Property Liens in Texas
In Texas, a property lien is a legal claim against a property that secures a debt or payment owed to a creditor. Property liens can be filed by various parties, including contractors, subcontractors, suppliers, and government agencies. Understanding property liens in Texas is crucial for property owners, contractors, and lenders to navigate the complex process of lien filing and removal. These liens serve as a powerful tool for creditors to ensure they receive payment for services rendered or debts owed. For property owners, it’s essential to be aware of how liens can affect their property, as an unresolved lien can complicate real estate transactions and limit the ability to sell or refinance the property.
Types of Liens in Texas
There are several types of liens that can be filed in Texas, each serving a different purpose:
Mechanics Liens: Filed by contractors, subcontractors, and suppliers for unpaid work or materials provided to a property. These liens ensure that those who contribute to the improvement of a property are compensated for their efforts.
Judgment Liens: Filed by creditors who have obtained a court judgment against a property owner. This type of lien allows creditors to claim the property as collateral for the debt owed.
Tax Liens: Filed by government agencies for unpaid taxes, including federal tax liens and property tax liens. These liens ensure that the government can collect owed taxes by placing a claim on the property.
Mortgage Liens: Filed by mortgage lenders to secure a loan against a property. This type of lien gives the lender a legal claim to the property until the mortgage is paid off.
Understanding the different types of liens helps property owners and contractors recognize the various legal claims that can be placed on a property and the implications of each.
[Judgment Lien Definitions](https://texaseasylien.com/lien-definitions)
How to File a Property Lien: The Lien Filing Process
If you’ve never learned how to file a property lien, understanding how to file liens is crucial for contractors and suppliers. Read through these steps to understand the process. To apply it in the real world, you’ll want to create a strict schedule for all of these steps in your project management software or work with a third-party service to ensure you stay compliant with the process (even before knowing whether you will need to file a lien or not). There are seven main steps you’re responsible for.
Step #1: Send the required notices to property owners on time before filing a lien.
The process of how to file a property lien in Texas starts well before you decide you need to file a lien. While contractors or professionals who contract directly with a property owner don’t need to send monthly pre-lien notices, first and second-tier contractors, suppliers and services providers have notice obligations.
If you don’t file these notices by their deadlines, you may lose your right to file a lien. If that happens, and if it is viable, you would have to pursue payment through civil courts. In such cases, contractors may need to pursue a judgement lien through civil courts to secure payment.
Step #2: Decide if filing a lien is the appropriate next step.
Before you can even consider putting a lien on a property, you must send your pre-lien notices, which is a necessary 1st step for subcontractors to file a property lien. However, it’s important to decide whether filing a lien is the appropriate next step at this stage. The following conditions must be met:
The services or materials you provided to the project are eligible under Sec. 53.021. of the Texas Property Code for filing of a lien (some eligible items include providing labor or materials, fabricating special materials, designing, surveying or supporting the design to improve a property)
You are current with the delivery of the corresponding preliminary notices.
You are within the allowed timespan for filing a property lien
If all three are met, you can proceed to file a property lien and pursue payment. If they are not, then you may need to use other legal mechanisms to secure payment for services and materials provided, such as a judgment lien.
Note that these are lien filing requirements for private commercial projects. If the property where you provided services is a residential homestead, there are additional requirements. These requirements are designed to provide an extra layer of protection for homeowners.
For example, you must have documentation of the contract signed by the owner (and the spouse, if any) before the work began, file the signed contract with the county clerk of the county in which the homestead is located, and ensure that the notice given to the property owner included the required language and that the original contractor delivered to the owner a disclosure statement with a list of subcontractors, among others.
Residential homestead and commercial properties have different requirements, but some of them have been simplified with the changes that started in 2022. So, if you’ve avoided filing liens on properties you work on and don’t get paid, you can now find it much easier and cost-effective than before.
Step #3: Gather all the necessary documentation.
If you’ve sent timely invoices, the agreed-upon payment is due, and the general contractors or property owners refuse to comply, start gathering the documentation you need to complete the lien affidavit because it is very possible you will have to move forward with the lien process. For a mechanic’s lien, specific documentation such as invoices and contracts related to the work performed is required. The information you will need includes:
The amount due (or the amount you’re claiming) per each individual month you are owed; only contracted fees, not any damages or anticipated legal costs
The legal name and address of the general contractor, the person or company who hired you (if you are a sub-subcontractor), and the name(s) and address(es) of the property owner(s)
A legal description of the property (ideally) and the known address of the property, including the County where it is located.
A description of the services and labor that were completed and remain outstanding, including a schedule of when those services were provided.
For specially fabricated materials, description of the fabricated items, even if the material was not delivered.
The dates and delivery method of the preliminary notices sent to the required parties.
The Texas Mechanics Lien Affidavit form has a section named ‘Contents of Affidavit’ that lists all the information you need to provide. Be sure to review this section thoroughly and have all the required information on hand. Ideally, before you even start the job.
Step #4: Fill out the Texas Affidavit of Mechanic's Lien and file it.
After collecting all the necessary details, you can either download a Texas Affidavit of Lien or use a reliable third-party lien service. Fill in all the required fields with accurate information, and make sure to carefully read the instructions provided so that the information you provide is precise, clear, and comprehensive.
After filling out the form, it needs to be signed before a notary to verify the accuracy of the information provided. Although it is not required, if you are filing with the County’s Appraisal District Office in person or by mail, you can attach documentation to substantiate your claim, like a copy of the signed work contract, invoices, and any communications indicating the other party’s refusal to pay as agreed.
If you’re using an online service, they can do the filing and mailing for you. But if you’re filing on your own, you’ll need to file your lien documents in the County’s Appraisal District Office Clerk of the county where the property you are filing a lien against is located.
For example, if you are filing a lien against a property in Dallas County (where the work took place), your business is in Denton County, but you live in Collin County, you must file the lien in Dallas County. Also, be sure you go to the correct office, so it’s recorded properly and on time. When you file the lien, you will receive a copy of the recorded affidavit with the County Clerk’s stamp and document number printed on it.
Step #5: Provide written notice that you filed a lien affidavit.
The hard part is done, but you still have to send copies of the recorded lien affidavit to the general contractor and the property owner. You are required to send these copies within five days of filing. Although it is not a requirement anymore, ideally, it is recommended to send them by certified mail and request a return receipt. Sending the copy of the lien is the colloquial “serving the lien.”
Many companies forget this step, accidentally stumbling at the finish line and putting all their hard work to waste. Ensure you complete each step with plenty of time and keep proof that every requirement was fulfilled timely and adequately. Ensuring the lien is properly recorded in property records is crucial for maintaining transparency and protecting the interests of all parties involved.
Step #6: Foreclose the lien or extend the foreclosure deadline.
The last step to filing a property lien in Texas was sending out those notices. However, if the claim is not paid, there are some additional steps you should take. Contractors typically get paid soon after filing the lien. After all, property owners don’t want to have lingering liens on their property, especially if it’s a project meant for resale. Foreclosing a lien is often necessary to recover unpaid debts when the property owner fails to settle the claim.
But when this doesn’t happen, there are generally two pathways forward:
Hire an attorney to enforce the lien and foreclose on the property: Claimants have up to one year from the last available date for filing a lien to proceed with foreclosure. Unfortunately, this can be a lengthy (and costly) legal process. As a precursor, sending a Notice of Intent to Foreclose as a final nudge could be helpful.
Agree to extend the foreclosure date: If the other party is earnestly trying to pay you back and even making partial payments, you could consider extending the deadline. You and the other party can make a new agreement regarding payment and services (provided the foreclosure deadline has not passed) for approximately an additional year. This new option went into effect for projects contracted after January 1, 2022.
Hopefully, this step ends with a fair amount of funds back in your pocket.
Step #7: Release the lien.
Once you have received payment, it is important to remember that there is still one task remaining on your to-do list. The lien on the property will not dissolve automatically, and only the person who filed the lien can remove it. Therefore, it is likely that the property owner will request the lien removal. If you receive a written request, you must complete this task within ten days of receiving the notice.
The lien release form does not have to be complicated, but it must be filed in the same County where the lien was recorded. Additionally, it must be notarized and should include, at the very least, the property information, its owner, and the recording number assigned to the lien by the county clerk at the time of recording. Once you release the lien, the matter will be fully settled.
Protecting Your Rights as a Property Owner
As a property owner in Texas, it is essential to understand your rights and responsibilities when it comes to property liens. Here are some key points to keep in mind:
Notice Requirements: Property owners must receive proper notice before a lien is filed against their property. This ensures that owners are aware of any potential claims and can take appropriate action.
Lien Validity: Property owners have the right to challenge the validity of a lien if they believe it has been improperly filed. This can involve disputing the amount claimed or the legitimacy of the lien itself.
Lien Removal: Property owners can negotiate with creditors to settle debts and have liens removed. This often involves paying the owed amount or reaching a settlement agreement.
Lien Filing Process: Property owners can also file a lien against a contractor or subcontractor who has not been paid for work or materials provided. This can be a useful tool for ensuring that all parties involved in a project are held accountable.
By understanding these rights and responsibilities, property owners can better navigate the lien filing process and protect their property from unwarranted claims.
Removing Liens on a Property
Removing a lien on a property in Texas can be a complex process, but it is essential to clear the title and ensure the property can be sold or refinanced. Here are the steps to remove a lien on a property:
Pay the Debt: The most straightforward way to remove a lien is to pay the debt in full. This satisfies the creditor’s claim and allows for the lien to be released.
Negotiate with the Creditor: Property owners can negotiate with the creditor to settle the debt and have the lien removed. This may involve reaching a payment agreement or settling for a lesser amount.
File a Lawsuit: Property owners can file a lawsuit to challenge the validity of the lien and have it removed. This can be a lengthy process but may be necessary if the lien is believed to be unjust.
Obtain a Lien Release: Once the debt is paid or settled, the creditor must provide a lien release document. This document must be recorded in the county records office to clear the title and officially remove the lien.
By understanding these steps, property owners can effectively manage and remove liens on their property, ensuring a clear title and the ability to proceed with real estate transactions.
Is it Expensive to File a Property Lien in Texas?
Filing a property lien can be expensive. If you hire an attorney to prepare the documents, the increasing cost can make contractors wonder if the issue is worth pursuing rather quickly. Third-party online filing services can simplify and make the process much more affordable.
File a Property Lien in Texas the Easy Way with Texas Easy Lien
Learning how to file a property lien in Texas can be overwhelming. Even after the simplifications that became effective in 2022, the process still involves a lot of details. It is not difficult to make a mistake when sending out notices or filing lien affidavits. Texas Easy Lien simplifies and streamlines the process. Just enter the information about your project, and we handle the rest. Reach out today so that filing a property lien in Texas is the easiest part of your business.
