Texas Mechanic’s & Materialman’s Liens: Understanding the Basics
I. Who is Entitled to Lien?
Under the Texas Property Code, the class of persons who fall under the definition of “Mechanics and Materialmen” is broader than the phrase may suggest. Mechanics and materialmen include any person who has provided labor, services, or materials for the improvement of real property (e.g. general contractors, subcontractors, sub- subcontractors, and suppliers).
You are entitled to claim a mechanic’s and materialman’s lien if you:
- provided labor or materials for construction, repair, landscaping, or demolition of a structure or real property pursuant to an agreement with the owner, the general contractor, or a subcontractor;
- fabricated materials specially for incorporation or use in an improvement to real property pursuant to an agreement with the owner, the general contractor, or a subcontractor, even if the material is not delivered;
- are an architect, engineer, or surveyor who prepared plans, reports, drawings, or specifications relating to any improvement to real property under a written contract with the owner, the general contractor, or a subcontractor;
- provided labor, plant material, or other supplies for the installation of landscaping for a house, building, or improvement, including the construction of a retention pond, retaining wall, berm, irrigation system, fountain, or other similar installation, under a written contract with the owner, contractor, or subcontractor; or
- performed labor as part of, or furnished labor or materials for, the demolition of a structure on real property under a written contract with the owner of the property, contractor, or subcontractor.
The persons entitled to a lien are wide-ranging. But it is important to note that for the last three categories a written contract is required.
II. Accrual of Indebtedness
General Contractor: Indebtedness accrues upon the occurrence of one of two scenarios:
- The general contractor or owner provides Notice of Termination of the general contract to the other party, in which case the owner’s indebtedness to the general contractor accrues on the last day of the month in which the Notice of Termination is received.
- Absent any Notice of Termination, the owner’s indebtedness to the general contractor accrues on the last day of the month in which the general contract is completed, finally settled, or abandoned.
Subcontractor: The general contractor’s indebtedness to its subcontractor who has furnished labor or material(s) to or for the general contractor accrues on the last day of the last month in which the subcontractor provided such services. The same rule applies to the accrual of indebtedness between a subcontractor and a sub-subcontractor, but a sub-subcontractor is subject to more stringent pre-lien notice requirements (as further discussed below).
Specifically fabricated materials: Indebtedness to a party who fabricated materials specifically for the project accrues on the last day of the:
- last month in which materials were delivered to the property;
- last month in which delivery of the last of the material to the property would have been required normally; or
- month of any material breach or termination of the general contract or of the subcontract agreement under which the specially fabricated material was furnished.
III. Deadlines for Notice and Recording
The Texas Property Code lays out specific mandatory deadlines for sending pre-lien notices of claims and filing the Affidavit Claiming Mechanic’s & Materialman’s Lien. For more information on these all-important deadlines see: M&M Lien Notice Time Table (more…)