Most contractors and material suppliers in Texas are familiar with the term construction lien, mechanic’s lien, or a property lien, but the details can be confusing; that doesn’t even include a construction lien waiver which is another important document.
Texas Construction Law provides contractors, subcontractors, and materials suppliers with the mechanic’s lien to help collect past due payments on construction jobs.
All three terms describe a legal document filed by a contractor, subcontractor, or supplier who hasn’t received payment for work they’ve done or materials they’ve delivered. Liens can be filed on new construction, remodeling, repair work, materials and services.
An Introduction to Mechanic’s Liens prepared by the Texas Bar can help you understand the basics.
When Should a Person File a Construction Lien?
As the material supplier, contractor, or subcontractor, it’s essential that you stay up to date on your billing. In addition, you need to think about payment before you begin your work or deliver supplies.
You can protect yourself by making sure you have these items before starting work:
- The legal description of the property being improved;
- The name and mailing address of the property owner and any contractors above you;
- A copy of any contracts related to the project; and
- A copy of the surety bond if there is one.
In addition, if any work or delivery was not prepaid, your contract or invoice should specify your payment terms.
Keep track of the payments you receive and the month(s) when you performed the work of any missed payments. This information will determine your lien filing deadlines.
Don’t Miss the Deadline to File a Construction Lien.
It is critical to meet the specific time requirements to file a construction lien with the appropriate government office. Notices of intent to lien must be sent to the property owner and any relevant contractors, too. If you fail to do these things properly, it makes collection efforts far more difficult.
Once your mechanic’s lien is filed, unless you get paid and release the lien, it will be difficult or impossible to sell or refinance the property. Construction liens often take a higher priority in debt settlement, too.
Liens protect the payment rights of those who’ve worked on the property. However, it is the property owner’s responsibility to resolve the problem if they have a dispute with the general contractor or other subcontractors.
What is the Meaning of a Construction Lien Waiver?
A lien waiver relinquishes your rights to file a mechanic’s lien for the amount stated in the document.
Typically, lien waivers are signed when a payment is made in full and provide proof of payment. Therefore, the contractor, subcontractor, or supplier should sign it only in exchange of actual payment. Contractors must also make sure the amount described in the lien waiver is the same as the payment received.
Are there different Lien Waiver Forms in Texas?
Yes, there are conditional and unconditional lien waiver forms available in Texas.
Conditional lien waivers are signed when payment is received, and you are sure the check has cleared. Unconditional lien waivers mean the lien rights are released when the waiver is signed—whether the claimant is paid or not.
You must use Texas mandated lien waiver forms found here. Up until December 31, 2021, the forms are required to be notarized to be valid. However, this requirement will be removed starting in 2022.
Once a lien waiver is signed, the rights to file a mechanics lien are lost. Therefore, you should never sign a lien waiver before you are paid. Under section 52.283 of the Texas Property Code, making anyone sign any type of unconditional lien waiver is illegal if they have not been paid.
Texas Easy Lien is experienced in all aspects of the complicated process of preparing, filing and releasing construction liens. For answers to other questions, you may have, please refer to this page. When you use our services, you can be confident that each step of the lien process is completed accurately and efficiently.
