Obtaining A Mechanic’s Lien in Texas

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.

Think Twice Before Hiring Close Family Members & Friends

Creating a positive work environment always requires careful planning. Everyone must feel equally valued to do their best work. While it can be tempting to hire a close family member or friend who’s highly qualified, you must carefully consider how well the new person might fit in with your current employees.

Fortunately, there are some steps you can take to minimize potential problems. However, before making this type of choice, you should always confer with your business partners and hiring manager about the types of risks set forth below.

Unexpected employee jealousies & tensions can lower workplace morale

  • Current employees may fear they’ll never be given a fair chance again to compete for choice assignments and promotions once the new person comes on board;
  • Many or most of your conversations with this new individual may cause others to fear that their competing opinions will cease to matter or be respected;
  • Employee morale may suffer if your family member or friend is granted any special privileges regarding work hours, early promotions or salary;
  • Your new hire must be prepared to receive the “cold shoulder” from others. He or she must be prepared to avoid reacting in an angry or defensive manner;
  • Regular chains of command should be honored so that even your friend or family member must remain open to job performance feedback from other employees.

Ways you can try to minimize problems and help your family member or friend succeed

  • Openly discuss this hiring possibility with any equal partners in the business, as well as your hiring manager. If any of these people have serious misgivings, always consider hiring a well-qualified newcomer instead. If you’re the company’s only higher-level boss, talk about this hiring idea with another close family member or friend who will confidentially let you know if you’re being reasonably objective;
  • Plan on introducing the new person in a staff meeting, clearly noting who he or she will work with on a regular basis. Also, note that the new person is eager to obtain helpful advice from all those already onboard;
  • Have a private meeting before hiring the person, explaining the fact that the two of you must exercise strong boundaries at work each day. Topics only important to the two of you concerning family members or other friends should only be discussed during non-work hours to minimize conflicts;
  • Require your family member or close friend to sign a binding work contract if all others had to sign one when hired. If no written contracts are being used, make sure this person knows that they’ve been hired for a set trial period, especially if this holds true for all other employees. Clearly explain how you’ll need to end the work relationship if too many special privileges are requested — or sub-standard work is turned in;
  • Provide early and regular feedback to your family member or regarding their work. Let this person know that you’ll probably need to let the regular supervisor also offer constructive criticism;
  • Do not tolerate any special requests that go beyond what you grant to other employees. This type of activity will undermine your good relationships with other staff members.
  • Be realistically prepared to fire this person– sooner rather than later – if others are having to do extra work since your family member or friend isn’t working hard enough.

Fortunately, carefully chosen family members and friends will try hard to succeed if you insist they treat everyone else with respect.  Just remember to remain open to what other employees may tell you about the quality of the new person’s work – and do all you can to help your friend or family member stay open to suggestions for improvement.

Please feel free to contact one of our Murray Lobb attorneys regarding any questions you may have about both routine and complicated employee management issues. We’ve had the opportunity to provide useful legal guidance to businesses of all sizes for many years now.