Mechanic’s and Materialman’s Lien
The attorneys at PP&T 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, meaning there is no requirement for the contractor to 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. However, this lien has some limitations:
- Limited to the Property Owner: Since the contractor needs privity of contract, they cannot enforce the Constitutional Lien against a subsequent purchaser who has no knowledge of the transaction.
- Uncommon for Subcontractors: Subcontractors rarely have a direct contractual relationship with the owner of the property, making this lien unavailable to them.
The Constitutional Lien may still 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 in Chapter 53 of the Texas Property Code. However, it is important to comply with all updated requirements to properly perfect the lien. While most original contractors meet the requirements for a lien on commercial property, the process is more complex for residential projects and subcontractors seeking to place a lien on a consumer’s homestead.
- Notice Requirements:
- Commercial Projects: Subcontractors and suppliers must send a notice to the owner and general contractor by the 15th day of the third month following each month in which labor or materials were provided and remain unpaid.
- Residential Projects: Subcontractors and suppliers must send notice to the owner and contractor by the 15th day of the second month after the unpaid work or materials were provided.
- Filing Deadlines:
- Commercial Projects: The lien affidavit must be filed with the county clerk in the county where the property is located by the 15th day of the fourth month after the month the indebtedness accrues.
- Residential Projects: The affidavit must be filed by the 15th day of the third month after the indebtedness accrues.
- Notice of Filing: After filing the lien affidavit, claimants must send a copy to the property owner and general contractor within five business days.
For both residential and commercial projects, indebtedness accrues on the last day of the month in which the contractor provides notice that the work has been completed, abandoned, or the contract completed.
Enforcing an M&M Lien
The Property Code imposes 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.
- Residential Projects: A lawsuit must be commenced within one year after the last day to file the lien affidavit or within one year of the project’s completion, termination, or abandonment, whichever is later.
- Non-Residential Projects: A lawsuit must be filed within two years after the last day to file the lien affidavit or within one year of the project’s completion, termination, or abandonment, whichever is later.
By complying with these updated rules and deadlines, contractors and subcontractors can protect their lien rights and ensure payment for their work. The experienced attorneys at PP&T are here to help navigate the complex process of filing and enforcing M&M Liens under Texas law.