For mechanic’s liens, timing is everything

Mechanics, artisans, and material men enjoy certain rights and in Texas.[i] The Texas Constitution states that “mechanics, artisans, and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of the labor done thereon, or material furnished therefor, . . .” Liens arising under Article XVI are called “constitutional liens”.

Chapter 53 of the Texas Property Code grants a statutory lien to contractors for the amount of labor, materials, and designs or drawings used in the construction, repair, survey, or demolition of real property or specially fabricated materials.[ii] Mechanic’s liens arising under the Texas Property Code are called “statutory liens”. Whether you hold a constitutional or statutory lien, you must comply with certain procedural and time requirements to enforce your mechanic’s lien[iii] in Texas.

Even after recent statutory updates, statutory construction liens are a web of categories, exceptions, and specifications, all of which impact the creation, priority, and perfection of liens.. With mechanic’s liens, there are two areas where timing is key. First is the lien’s priority compared to other similar liens. In Texas, liens generally follow the “first in time, first in right” rule, meaning that the first to record a lien has priority over later-filed liens.[iv] The Texas Property Code creates a qualified preference for properly perfected statutory liens over any “lien, encumbrance, or mortgage that attached to real property prior to the date of inception of the mechanic’s lien.”[v]

But it’s not quite as simple as it sounds (it never is). The word ‘inception’ is a bit complicated in this context. This is where its best to have a lawyer’s assistance, because the time of inception is not the same as the time the lien is filed. Since 1971, Texas has statutorily defined the time of inception of a mechanic’s lien.[vi] The time of inception is the earlier of: (1) the commencement of visible construction or delivery of materials or (2) the recording of a written agreement or affidavit acknowledging that a contractor or subcontractor has been engaged.[vii]

Second, beyond the issues related to a lien’s priority, Texas law includes several important deadlines that need to be complied with in order to perfect a lien. If you’re involved in the construction industry, you likely know that Texas recently changed Chapter 53 of the Texas Property Code related to liens. The changes should (for once) simplify the process for all involved.; however, these new rules only apply to contracts entered into after January 1, 2022.

Let’s start with the notice requirements under the Code.. Notice obligations depend on your status as an original- vs sub- contractor. Original contractor is defined as a contractor with direct contract with the property owner- while sub-contractor is a contractor who perform duties to or on behalf of the original contractor.[viii] Under the new law, except for residential homesteads (discussed below) original contractors no longer need to send property owners any kind of preliminary notice of claim. Sub-contractors, however, are required to provide statutory notice of claims.[ix] Having made these predicate determinations, in order to perfect your lien, you must give notice of your claim according to a complex (and confusing) time regime. Failure to timely file your lien notices could expose you to legal liability to the property owner.

Sub-contractors on residential projects must send preliminary notice to the owner and the original contractor by the 15th day of the 2nd month following after which labor or materials were delivered or the specially fabricated materials were to be delivered.[x] On non-residential projects, the notice must be sent by the 15th day of the 3rd month.[xi]. This eliminates the need to send multiple notices, and makes the system a bit simpler.

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Description automatically generatedIn addition to preliminary notice requirements, the contractors must file a lien affidavit in the county property records. This, too, is governed by strict time deadlines proscribed based on contractor status. For original contractors, the lien affidavit must be filed before the 15th day of the 3rd month following the end of a residential project, and before the 15th day of the 4th month for a non-residential project.[xii] Any other contractor must file its lien affidavit by the 15th of the 3rd month of ending the project.[xiii]

These deadlines are the same for both GCs and other contractors.

These deadlines serve important purposes. An action for the enforcement of any lien must be initiated within 1 year of the last date to file the lien, as calculated above,[xiv] unless both the claimant and the property owner agree to the extension in writing.[xv]

How these deadlines are enforced was also updated. Previously, if the deadline to file suit fell on a weekend or holiday, it was bumped up to the business day before the deadline. Now, the deadline is pushed to the first business day after the weekend or holiday. Generally, the new law makes things much easier for the lien holder.. With mechanic’s liens, the calendar is an essential tool; a skilled construction lien lawyer or mechanic’s lien lawyer such as Roquemore Skierski can make sure the calendar works with you and not against you.

 

[i] See Texas Constitution article XVI, § 37 and Tex. Prop. Code § 53 et al.

[ii] Texas Property Code states:

Sec. 53.021. PERSONS ENTITLED TO LIEN. A person has a lien if the person, under a contract with the owner or the owner's agent, trustee, receiver, contractor, or subcontractor:

(1) labors or furnishes labor or materials for construction or repair of an improvement;

(2) specially fabricates material, even if the material is not delivered;

(3) is a licensed architect, engineer, or surveyor providing services to prepare a design, drawing, plan, plat, survey, or specification;

(4) provides labor, plant material, or other supplies for the installation of landscaping for an improvement, including the construction of a retention pond, retaining wall, berm, irrigation system, fountain, or other similar installation; or

(5) performs labor as part of, or furnishes labor or materials for, the demolition of an improvement on real property.

[iii] We use the term “construction” or “mechanic’s” lien interchangeably throughout this article.

[v] Tex. Prop. Code § 53.123(a).

[vi] Tex. Prop. Code § 53.124(a)

[vii] Valdez v. Diamond Shamrock Ref. & Mktg. Co., 842 S.W.2d 273, 277 n. 2 (Tex. 1992) citing Tex. Prop. Code § 53.124 (a)-(b) (1984); see also, Tex. Prop. Code § 53.124(e).

[viii] Tex. Prop. Code §§ 53.001(7) & (13).

[ix] Tex. Prop. Code § 53.056(a).

[x] Tex. Prop. Code §§ 53.056(a-1)(2)(A) & (B).

[xi] Tex. Prop. Code §§ 53.056(a-1)(1)(A) & (B).

[xii] Tex. Prop. Code §§ 53.052(a)(1) & (2).

[xiii] Tex. Prop. Code § 53.052(c).

[xiv] Tex. Prop. Code § 53.158(a).

[xv] Tex. Prop. Code § 53.158(a-2).