Suspending Work for Nonpayment in Texas
Contractors and subcontractors working on public and private construction projects will in many cases have the right to suspend work when they have not been appropriately paid. If the deadline for timely payment passes, contractors and subcontractors can submit a notice of intent to suspend performance to the owner, lender, and/or prime contractor. This notice must inform the offending party that all work will stop in 10 days if timely payment is not facilitated.
Contractors and subcontractors cannot be legally penalized for suspending work when they have not been paid. When this right has been exercised, contractors and subcontractors do not have to return to work until they have been paid the full amount that is owed plus any reasonable demobilization and remobilization expenses associated with the stoppage. Contractors and subcontractors cannot be held responsible for damages caused to the project as a result of a suspension of work unless the property owner or prime contractor explicitly informs them of potential consequences in writing prior to the stoppage.
Suspending work can be an extremely useful negotiating tactic, but it does not come without inherent risks. Our firm can advise you on how a suspension is likely to play out and serve as your advocate in any communications and negotiations with a project’s property owner or prime contractor.
Perfecting a Mechanic Lien in Texas
A mechanics lien is a legal tool that allows contractors, subcontractors, material suppliers, and any other construction professionals the right to seize an involuntary security interest in the property they work on. In other words, a mechanics lien allows contractors and subcontractors to secure compensation when payment is being withheld. However, navigating how to perfect and enforce a mechanic lien can be extremely confusing.
In most situations, a mechanics lien will automatically “attach” to a property when a contractor starts work. However, this lien will not encumber the property until you take formal steps to “perfect” it.
You may need to consider perfecting a mechanics lien if you fail to receive payment for work completed. If you are a prime contractor, you do not necessarily have to inform the property owner of your intention to perfect the lien. If you are a subcontractor, you are required to send one or more notices before you can take steps to perfect the lien. We can determine your notice requirements and make the necessary filings.
Once the appropriate notices have been delivered, a contractor or subcontractor will need to file their lien with the appropriate county recorder office. The lien will take effect after being served to the property owner.