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
IV. Gathering Information
Before commencing work on any project, it is helpful to obtain the following information from the owner, general contractor, or subcontractor with whom you have an agreement or written contract:
- the legal name and business or residence address of the property owner;
- the legal name and business or residence address of the party with whom you have an agreement or written contract (if this information is not provided in the written contract already);
- a copy of the general contract for the project
- the legal name and business or residence address of the general contractor;
- an accurate legal description of the real property where the project is located;
- a copy of any surety bond and the surety’s name and address; and
- any documents evidencing any encumbrances on the real property.
The party with whom you contracted is required is provide this information to you upon written request, and you are entitled to rely upon the information provided in filing your mechanic’s and materialman’s lien (this will be explored in future blog posts). However, it is always the best practice to access the real property records of the county where your project is located to verify the information for yourself.
V. Property to Which Lien Extends
A mechanic’s and materialman’s lien extends to the house, building fixtures, or improvements and to each lot of land necessarily connected or reclaimed. However, the lien does NOT extend to sidewalks, streets, and utilities that are public property because the owner does not have title to that real property. Additionally, Texas Homesteads trigger certain restrictions on the right to file a mechanic’s and materialman’s lien against residential property. A homestead is the piece of real property where the owner resides and that the owner has designated as its homestead. The additional requirements for a lien against a Homestead are numerous.
- The person who is furnishing materials or performing labor to a homestead property must execute a written contract with the owner setting forth all relevant terms of the agreement.
- The written contract must be executed prior to furnishing the material or labor subject to the lien.
- If the owner is married, the contract must be signed by both spouses.
- If the contract is executed by a general contractor, the contract inures to the benefit of all persons who labor or furnish material under the general contractor
- The contract must be filed with the county clerk of the county in which the real property is located.
- An affidavit claiming a lien on Homestead property must contain certain other enumerated provisions as well as an additional statement (these requirements will be explored in future blog posts).
Drafted and researched with assistance from Christopher McKeon, J.D. Candidate at Berkeley Law, Class of 2022
These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.