Texas mechanics' lien and bond claims.
Saturday, January 1 2005
Texas is perhaps the most difficult state in which to perfect a mechanics'/materialman's lien or a claim against a surety's payment bond. Many a subcontractor or supplier has not received payment for equipment or material provided, because when a customer does not pay, the claimant has not secured a lien or a bond claim.
Generally, subcontractors and suppliers do not care whether their customer or a third party (i.e., a project owner or a general contractor) pays for equipment or material provided, so long as bills are paid; perfecting a lien or a bond claim helps achieve that goal. Therefore, here's a primer on Texas lien and bond laws:
1. Privately-Owned Projects
A. Progress Payments
If your customer is the general contractor (i.e., you are a "first-tier" subcontractor or supplier), no later than the 15th day of the third month after each month in which you furnish equipment or material, you must notify the project owner the amount of progress payments your customer owes you. Your notice letter to the owner must be sent by certified mail, return receipt requested, with a copy of the letter to your customer, the general contractor.
Notice letters to project owners must contain "warning language" advising the owner he may be personally liable and his property subjected to a lien unless your claim is paid or otherwise settled. The notice must also inform the owner your claim has accrued under a particular provision of the Texas Property Code or is past-due according to an agreement between you and your customer.
If your customer is a subcontractor (i.e., you are a "second-tier" subcontractor or supplier), no later than the 15th day of the second month after each month in which you furnish equipment or material you must notify the project's general contractor the amount of progress payments your customer owes you. Your notice letter to the original contractor must be sent certified mail--return receipt requested.
This "fast notice" to the prime contractor must be followed by a notice letter to the project owner--discussed above--by the 15th day of the third month after each month in which your furnish equipment or material for which you are not paid. Again, notice to the project owner must contain very specific language and advise the owner how much your customer owes you.
