The attorneys at Payne & Truitt can help you or your business collect unpaid debts. Contractors who provide goods and services for buildings, or articles attached to buildings, utilize the Mechanic's & Materialman's Lien ("M&M Lien"). Texas law provides a Constitutional Lien and a Statutory Lien. The M&M Lien, when properly executed, is a powerful tool used to help a contractor recover money.
The Constitutional Lien
The Constitutional Lien is automatic and self-executing, which means there is no requirement that the contractor file a notice of lien or comply with the provisions of the Texas Property Code for properly executing the lien. The contractor only needs privity of contract with the owner of the building or article at issue. Since the contractor needs privity of contract, he may not enforce the Constitutional Lien against a subsequent purchaser who has no knowledge of the transaction. Furthermore, a subcontractor rarely has a contractual relationship with the owner of the property. The Constitutional Lien may be enforced against the owner upon non-payment for goods or services.
The Statutory Lien
Contractors and subcontractors should use the Statutory Lien set forth by Chapter 53 of the Texas Property Code; however, it is important to make sure that all requirements are met to properly perfect the lien. Most original contractors meet the requirements for a lien on commercial property. The situation is more complex when dealing with residential property and is very involved for a subcontractor seeking to place a lien upon a consumer's homestead.
For a commercial project, a contractor must file an affidavit claiming a lien with the county clerk in the county where the property is located and send notice to the owner not later than the 15th day of the fourth month after the day the indebtedness accrues. Indebtedness accrues on the last day of the month in which the contractor provides notice that the work has been completed or abandoned, or the contract is completed. The contractor for a residential project must file an affidavit claiming a lien not later than the 15th day of the third month after the day the indebtedness accrues. The notice of affidavit must be sent to the owner by certified mail no later than the fifth day after the affidavit is filed.
A subcontractor of a commercial project must provide an additional, earlier notice to the contractor on or before the 15th day of the second month in which all or part of the labor or material was provided (this notice is specific and varies from case to case). The subcontractor must then provide notice of a claim to the owner of the property during the third month and should file the lien affidavit and send notice of filing to the owner and contractor during the fourth month. For a residential project, the subcontractor must provide notice of claim to the owner and contractor during the second month and should file the lien affidavit and send notice of filing during the third month.
Enforcing an M&M Lien
The Property Code provides very strict requirements for the affidavit claiming a lien and demands substantial compliance with deadlines. Once these requirements are met and an owner or contractor refuses to pay, a contractor or subcontractor must enforce the lien by judicial foreclosure. A lawsuit must be commenced within one year of the last day to file the lien affidavit, or within one year of completion, termination, or abandonment of the project.