What You Need to Know About Construction Liens
The construction industry can be brutal and the laws affecting it can be very complex to navigate. Unfortunately, when a contract goes south, those involved in the project can end up facing substantial financial losses. Construction business owners, service vendors, construction workers, and all others involved in a given project face serious risks when getting involved in a project.
Thankfully, there are ways to protect yourself and to obtain the compensation that is rightfully yours if something goes wrong.
Your construction law attorneys at Millin & Millin can help you get paid through a mechanic’s lien. Also known as a construction lien or contractor lien, filing a lien against a property can help to ensure that your rights are fully protected and that you obtain what is owed to you.
Our attorneys can effectively represent construction contractors or property owners facing a construction lien dispute.
What is a Mechanic’s Lien?
A lien is a document that certain parties can use as a way to obtain payment for their services rendered. The lien typically documents the amount owed, the party responsible for payment and other vital information regarding property records.
If the debt is not paid on time to the creditor, then the lien can begin to affect the debtor’s credit, as well as their ability to sell or refinance the property, along with other legal issues.
A mechanic’s (or material men’s lien) is a means by which certain parties involved in a construction project can get paid for their work. Mechanic’s liens typically cover labor, materials, supplies and any equipment used to make improvements to a given property. Depending on the specifics of the contract or project, liens can be filed before work begins and then removed once the debtor has met their financial obligation.
Mechanic’s liens can also be filed for work that has already been completed.
Who Can File a Mechanic’s Lien?
A mechanic’s lien can be filed by a wide range of parties who may have been involved in the construction project, either by providing labor, services or materials, including:
- ◙ General contractors
- ◙ Subcontractors
- ◙ Engineers
- ◙ Materials providers/suppliers
- ◙ Materials makers (i.e. specially fabricated materials)
- ◙ Manufacturers
- ◙ Distributors
- ◙ Laborers & tradespeople
- ◙ Architects
- ◙ Surveyors
- ◙ Landscapers
- ◙ Demolition specialists
How Will the Lien Help Me Get Paid?
While liens do not necessarily force the creditor to pay you immediately, they do create a legal hazard that most property owners do not want to face. Liens against a given property essentially make it difficult for the owner to sell or refinance the property until the lien is paid.
In order for the property owner to use the property effectively, they will want to pay off their creditors to obtain a clear title. Should a debtor fail to pay off what is owed, the creditor can file a lawsuit to force the sale of the property so that they can obtain payment for their services from the selling of said property. With foreclosure being such a real risk, most property owners would rather pay off what is owed.
If there are multiple liens against the same property then Texas law will determine in what order creditors are paid.
Important Dates You Need to Know
There are certain deadlines and important due dates that any individual wanting to file a lien should be aware of. Parties who are contracted directly by the property owner do NOT need to submit a preliminary notice if it is related to a commercial project. For individuals wanting to file a lien on a residential project, then the contractor must file with the county recorder.
In order to file a lien on a commercial project, a general contractor should do so by the 15th day of the 4th month after last month that they provided materials or labor to the project. For parties wanting to file a lien for a residential project, they should do so by the 15th day of the 3rd month from when they last provided materials, labor or services.
When it comes to actually enforcing the lien:
- For non-residential properties, you will have 2 years after the date in which a lien could be filed in order to enforce it, or 1 year after the completion, stoppage or discontinuation of the project.
- Parties wanting to enforce a lien on a residential property must initiate the process by 1 year after the last date the lien could be filed or by 1 year after the completion, stoppage or discontinuation of the project.
Thankfully, in the state of Texas, parties involved in a construction project have plenty of protection to secure the compensation that is rightfully theirs. However, the process of filing and/or enforcing a lien can be complex without the assistance of a qualified attorney.
If you need support with filing a lien against a party that has failed to pay you what you are owed, do NOT hesitate to seek out the guidance and assistance of the construction law attorneys at Millin & Millin. We want to make sure your business continues to thrive.