Foreclosing Deadlines

The lien, if properly perfected, must have a foreclosure action filed no later than one year from the last day the lien affidavit could have been filed.

If you fail to bring an action inside this time period you will be forever barred from acting. Our advice: do not wait any time after filing your lien. The fact that you needed a lien should tell you all you need to know about the people that owe you money on the project. Institute suit now.

What “Foreclosing” a Lien Actually Means

A mechanic’s lien affidavit, once filed with the county clerk, creates a legal claim against the property. But the lien affidavit by itself does not compel payment. To actually collect money through the lien, the claimant must file a lawsuit in district or county court to foreclose the lien.

This lawsuit is a formal court proceeding in which the claimant asks the court for a judgment declaring that the lien is valid and ordering that the property be sold to satisfy the debt. If the court grants that judgment, the property can be sold at a court-ordered sale with the proceeds going to satisfy the lien.

This is why the advice on this page is to institute suit immediately after filing the lien. Filing the lien is step one. Filing the lawsuit is step two, and it must happen within one year of the last day you could have filed the lien affidavit, or the lien becomes permanently unenforceable.

The Foreclosure Deadline

Section 53.158(a) sets the foreclosure deadline at one year from the last day the claimant could have filed the lien affidavit under Section 53.052. That is not the same as one year from the day the affidavit was actually recorded. A claimant who records early still measures the year from the statutory last day to file, so filing early does not shorten the time to sue.

Once the foreclosure period runs out, it is gone. A lien barred by limitations is not revived by filing again, and under Section 53.158(a-1) it is not revived by a suit brought solely to discharge the lien. The deadline can be extended before it expires, however. Section 53.158(a-2) allows the claimant and the then-current record owner to sign a written agreement extending the period to as late as the second anniversary of the date the affidavit was filed. The agreement must be signed before the original deadline passes and recorded with the county clerk in the county where the lien was recorded.

Our advice is always the same: do not wait to file suit. The lien creates pressure, and a foreclosure lawsuit creates a lot more. The contractors who owed you money are not going to pay voluntarily just because you filed a lien. File the lawsuit promptly.

Filing the Foreclosure Lawsuit

The foreclosure lawsuit must name as defendants: the property owner whose property is subject to the lien; the party who owes the debt; and any other parties with an interest in the property that may be affected by the foreclosure, such as lenders holding mortgages on the property.

The lawsuit must be filed in a court of competent jurisdiction in the county where the property is located. For most DFW area projects, this means Dallas County, Tarrant County, Collin County, or Denton County district court.

In the lawsuit, the claimant seeks a judgment for the amount owed, a declaration that the mechanic’s lien is valid and enforceable, a court order authorizing the foreclosure sale of the property to satisfy the judgment, and attorney’s fees. Section 53.156 provides that the court shall award costs and reasonable attorney’s fees as are equitable and just. That standard leaves both the amount and whether an award is warranted to the trial court. Fees are not automatic and do not turn on prevailing-party status. Where the claim arises from a residential construction contract, the court is not required to order the property owner to pay them.

Priority: Where Your Lien Stands Relative to Other Claims

In many construction projects, the property is also encumbered by a construction loan or mortgage. The priority of a mechanic’s lien relative to those other liens matters because if the property is sold in a foreclosure, senior lienholders are paid first.

Texas uses an “inception of contract” rule for determining the priority of mechanic’s liens: the lien relates back in priority to the date on which the first visible work or first delivery of materials for the project began, not the date the lien affidavit was filed. This means that a mechanic’s lien filed after a construction mortgage may nonetheless be senior to that mortgage, depending on when the first work began relative to when the mortgage was recorded. Lien priority questions are highly fact-specific and require a careful review before you decide how to proceed.

What Other Collection Tools Are Available

A mechanic’s lien foreclosure is often one of several parallel remedies available to an unpaid contractor. Depending on the facts, these may include a personal judgment against the contractor for breach of contract, a trust fund misapplication claim if the party who owes you money received project funds and diverted them, and a payment bond claim if a bond was posted on the project. These remedies are not mutually exclusive. An unpaid subcontractor may pursue all of them simultaneously. See our Trust Funds and Payment Bonds pages for more.