Texas Mechanic's and Materialman's Liens--The Basics. (Construction Corner).

INTRODUCTION

The statutory scheme governing the construction industry in Texas is very complex due to the Texas Legislature's efforts to create a system that is fair to all segments of the construction industry. Since the days of the Republic of Texas, the premise behind Texas lien law has been that anyone who improves an owner's real property should have a lien on that property to the extent of the value that was added to the property to ensure that the property owner does not receive added value without paying for it. This general principal was clearly set out in the Texas Constitution as early as 1869. Consistent with the Constitution, the Texas Legislature has enacted the Texas Property Code to protect contractors, suppliers and subcontractors. This article is intended to give a broad overview of the most important features of Texas Mechanic's and Materialman's Lien law.

DISTINCTIVE FEATURES OF TEXAS LAW

Texas lien law is more complicated than comparable law in many other states. Depending on a claimant's position in the construction chain, there are often multiple notice and filing deadlines that must be complied with in order to perfect a lien claim. For example, in certain circumstances following the delivery of materials or the performance of work, a second tier subcontractor or supplier must provide a preliminary notice to the original contractor within two months, then provide a fund trapping notice to the owner within three months and then file a lien affidavit and give notice of same within four months, in order to properly perfect a lien claim.

Also unique to Texas is the self-executing constitutional lien provided for in the Texas Constitution' that may be claimed by original contractors and exists without any notices or filings.

Finally. Texas is extremely protective of the "homestead," and the legislature has created additional requirements which must be strictly complied with by contractors, subcontractors and materialmen in order to create a lien for the construction or repair of a homestead.2

DEADLINE SUMMARY:

Prefiling Before Construction

Under current Texas law, the only instance when a pre-construction filing is necessary is when the project involves constructing or repairing a homestead. In these cases, the owner and spouse must execute and file a written contract before labor or materials are furnished. (3)