Once your company has been hired as a contractor or subcontractor to build, repair or renovate a structure for others, it may become necessary to file a mechanic’s lien on the property to ensure that you’ll be promptly paid for all your labor and materials. This type of lien must be filed with the County Recorder or Clerk in the county where the property is located. When a company fails to file this type of lien before the property worked on is sold – it can become more difficult to enforce your rights against the party who contracted with you.
As the State Bar of Texas explains in one of its publications addressing mechanic lien rights, shortly after you begin your work – and long before you ever need to send out any invoices — you should also consider sending out two notices to the other parties to your contract. These are known as a Notice of Contractual Retainage Agreement and a Notice of Specially Fabricated Materials.
Since mechanic’s liens can be rather detailed and are drafted a bit differently in most states, it’s always wise to obtain legal advice on how this document should be appropriately worded. However, it’s usually not best to begin trying to collect all funds owed to you by filing this type of lien. Your first step in the process of seeking payment should be to simply mail your final invoice and other pertinent statements to the party that hired your company.
Additional Steps That Should Precede the Filing of a Mechanic’s Lien
It’s a good idea to send your initial invoice and statements via certified mail so you can later document the amount of time the other party has had to pay all that’s owed. If you receive no response, you should directly call the party who initially agreed to pay your company for its work. If you still cannot obtain the money owed, you should ask your Texas business attorney to send a formal yet polite demand letter using the law firm letterhead, seeking immediate payment of all sums owed.
Once a late-paying client is aware that you have a law firm acting on your behalf, they will often submit prompt payment. If you still cannot recover all sums owed to you, be sure to ask your attorney how quickly you must file a mechanic’s lien – so that a sale of the property on which you worked cannot occur so quickly that it might compromise your rights.
Consider Filing a Lawsuit after Filing a Lien
As your lawyer will tell you, Texas is a bit different than many other states because our state’s laws providing the right to file a contractor’s lien are set forth in our state constitution. In fact, Article XVI, Section 37 of the Texas Constitution protects the rights of all mechanics, artisans and others who handle materials while building, repairing or renovating another party’s property. These rights are further set forth in Chapter 53 of the Texas Property Code.
Unfortunately, Chapter 53 is rather long and its description of your mechanic’s lien rights can be difficult to interpret at times. Nevertheless, an experienced attorney can provide you with answers to your questions that cannot be readily answered by reading that material. Common questions regarding liens often revolve around the types of contractors and subcontractors who can file a valid mechanic’s lien.
Texas law clearly indicates that most companies – even those who only briefly work on the property while planting a few trees or providing their landscaping skills — are entitled to file a lien.
Should You Also File a Lawsuit?
This is always a matter that you must discuss with your attorney. When it’s recommended, it’s normally done in addition to filing a mechanic’s lien against each of the appropriate parties to your contract. If you pursue this remedy, your lawyer will present several arguments. Chief among them will be the assertion that the party who directly hired you has breached your contract by failing to timely pay all reasonable amounts owed.
Our firm recognizes that it’s often difficult to understand all Texas mechanic’s lien rights, even if you’ve been working as a contractor or subcontractor for many years. Therefore, we welcome the chance to meet with you, so we can provide all the guidance you may need to obtain full and timely payment for all the services you have rendered to others.