There may be several tiers of contractors and materialmen involved in the construction of an improvement.
The owner has a contract or agreement for the construction with one or more original contractors, commonly referred to as general contractors. A general contractor may subcontract a part of the work and enter into other contracts for materials. A subcontractor may, in turn, subcontract part of the work and enter into contracts for materials.
The owner has a direct relationship with a general contractor, the nature of the improvement and the contract price are part of the bargain of the parties, and the owner is able to plan to meet the obligations imposed by the agreement. If the owner fails to meet those obligations, it is appropriate for the owner to respond in damages and to subject his or her property to a lien.
On the other hand, the owner does not have a direct relationship with the second and third tier contractors and materialmen; the owner has little, if any, control over the price of their contracts, and the party primarily liable for the satisfaction of their claims should be the one with whom they have contracted. Any money paid to these claimants by the owner should come from funds held by the owner for payment on a contract with the general contractor. The owner should not be liable, and the owner’s property should not be subject to a lien for more than the amount bargained for when the original contract or contracts were made.
Who Has the Right to File a Mechanic’s Lien in Texas
Texas law gives lien rights to any person who provides labor or materials for the construction or repair of an improvement to real property, including architects, engineers, and surveyors who prepare plans or plats. In practical terms, this covers general contractors, subcontractors, sub-subcontractors, materialmen, suppliers, equipment lessors, and specialty trade contractors at every tier of the project.
A large general contractor and a small tile subcontractor have the same lien rights under Texas law. The statute does not distinguish between claimants based on the size of their claim. The procedural requirements, however, differ depending on your tier.
Owner Liability to Subcontractors
The person or entity that owns the project is personally liable to subcontractors, and the owner’s property is subject to their lien, but only to the extent of the funds the owner should have withheld from the general contractor under the trapping provisions of the Property Code and the general retainage provisions.
If the owner properly withholds trapped funds, they may be paid on demand to the claimant unless the contractor objects. Moreover, an owner who prematurely pays funds to a general contractor, and is then personally liable to a subcontractor, has a right of action against the general contractor. This may be a hollow right, because the contractor primarily liable to the claimant generally makes the necessary payment, before or after suit, or is without the resources to respond.
How Payment Bonds Eliminate the Need for Retainage
An owner may avoid the need for retaining any funds at all by requiring the general contractor to post a payment bond. When this is done, subcontractors have no claim against either the owner or the property, and are directed to the fund created by the bond. See our Payment Bonds page for a full explanation of how bond claims work.
Final Payment Affidavits
Before making a final payment on a construction contract, an owner may require the builder to provide an affidavit stating that the builder has paid each of the subcontractors, laborers, or materialmen in full for all labor and materials provided to the builder for construction. If the builder has not paid each of the subcontractors, laborers, or materialmen in full, the affidavit must state the amount owed and the name of each person to whom payment is owed.
The affidavit may include a waiver or release of lien rights by the affiant that is conditioned on the receipt of actual payment; a warranty that certain bills will be paid from funds paid in reliance on the affidavit; and an indemnification by the affiant for any loss resulting from false or incorrect information in the affidavit.
Criminal and Civil Liability for False Affidavits
Intentionally, knowingly, or recklessly making a false or misleading statement in such an affidavit is a Class A misdemeanor. A person signing an affidavit is personally liable for any loss or damage resulting from any false or incorrect information in the affidavit. The mechanic’s and materialmen’s statutes are liberally construed for the purpose of protecting laborers and materialmen.
Note: A mechanic’s lien may only be foreclosed by a judgment of a court of competent jurisdiction.
Residential Construction Projects: Subchapter K
In 1997, the legislature amended the Property Code lien provisions to include a new Subchapter K applying only to residential construction projects. However, a person whose projects are governed by that subchapter must also comply with other applicable provisions of Property Code Chapter 53 in order to perfect a lien that arises from a claim resulting from a residential construction project. Provisions relating to homesteads have been absorbed into Subchapter K. See our Residential Projects page for a full discussion of the residential rules.
Lien Deadlines
All lien rights in Texas are subject to strict deadlines. Those deadlines are not suggestions; they are statutory cutoff dates. A claimant who misses the filing deadline loses the right to claim a lien permanently, even if the work was performed, the debt is undisputed, and the contractor has documentation proving every dollar owed. Courts cannot extend lien deadlines. The parties cannot agree to extend them. They expire.
For that reason, contact Cook Keith & Davis the moment you believe you are not going to be paid voluntarily. Every day of delay is a day closer to the loss of your lien rights.
Frequently Asked Questions
Who has the right to file a mechanic's lien in Texas?
Any person who provides labor or materials for the construction or repair of an improvement to real property has lien rights, including general contractors, subcontractors, sub-subcontractors, materialmen, suppliers, and architects and engineers. The procedural requirements differ depending on your position in the contract chain.
Can an owner completely avoid lien exposure?
Yes, by requiring the general contractor to post a payment bond before work begins. When a valid payment bond is in place, subcontractors and materialmen have no claim against the owner or the property. Their sole remedy is against the bond fund.