5 Important Questions About Mechanic's Liens
Mechanic's liens are documents that protect the rights of construction professionals. They are designed to ensure they are rightly compensated for the work or materials they have provided for construction work. Filing mechanic’s liens online can be a bit confusing which is why we need to properly understand how to proceed.
Here is some basic information you should understand about Mechanics Liens.
1. What is a Mechanic's Lien?
A mechanic's lien, also known as a construction lien, is a legal claim against a property for unpaid labor or material improvements. Mechanic’s liens are typically used by contractors, subcontractors, and suppliers. They are a legal claim against property that has been built or improved. These types of liens are filed in the real property records of the county where the project was located.
E.g. If you have remodeled your office building and the supplier of the materials was not paid then this supplier would be filing a lien against your building to try to recover his money. In cases when sub-contractors and suppliers aren't paid for their work, project owners are ultimately responsible for these payments.
Many times, when contract agreements are between a general contractor and the project owner, the owner does not come in contact with the lien claimant until the lien process was initiated. As a result of filing a mechanic’s lien, the property owner will face difficulties in selling or refinancing the property without first paying off the debt.
2. Who is eligible to file a lien?
A Mechanic’s lien can be filed by any construction professional who has not been paid for their work or material which includes labor, supplies, or materials for construction work, repair, building, remodeling, more. Eligible people can be:
• Flooring Installers
Moreover, Texas law also allows construction liens to be filed for custom materials specific to a project that was not delivered to the property but cannot be used anywhere else, including tinted paint, specially sized windows, doors, etc.
3. Which is the important information needed to file a valid lien?
A number of items and information are needed in order to file a valid lien. Failing to provide any of the information can make your lien invalid. Some of the important information required is mentioned below:
• The property owner’s name and address
• The general contractor’s name and address
• The project address and legal description of the property
• A brief description of the work that was done or materials supplied
• The month when the work was provided or when the materials were supplied
• The amount owed
4. What is the process to file a lien?
For commercial projects, subcontractors and sub-subcontractors, prior to a lien filing, preliminary notices must be sent to property owners and the general contractors. This gives them an opportunity to resolve their claims prior to filing a lien affidavit.
For residential projects, the first notice that is sent is the formal intent to file a lien, sent to general contractor and owner. This is sent on the 15th day of the second month after the first work was done or materials were supplied that you owned money for. These notices are to be sent certified with the specific statutory language.
For a residential project, a notice has to be sent to the general contractor stating the pending dues for the work done, letting them know that they owed money for the project. This notice must be sent by the 15th day of the third or second month after the unpaid work was done or materials were supplied. The next letter is formal intent to lien which is sent to both general contractor and property owner. The notice needs to be sent on the 15th day of the third month after unpaid work was performed or materials supplied.
A lien filed without sending notices is invalid.
The next step if to file an Affidavit of Mechanic Lien, for your delayed payments. The affidavit is an official document claiming the lien and must be filed in the real property records of the Country Clerk's office in the county where the project is located. Importantly, the timelines to file a lien have different start dates than the notice letters. Also, as the claimant, once you have filed an M&M lien, you also need to file a court of action to enforce the lien within one year for residential liens and two years for non-residential liens.
5. How to know your deadlines in order to remain within guidelines to file a valid lien?
Missing out one deadline even by a day in Texas would result in an invalid lien. Since all the deadlines & recipients vary depending on the project. You need to be very much sure that the deadlines are met on time so the lien is valid.
This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter.