The rules related to residential projects are very different from those that apply to non-residential contracts.
A residential construction project is a project for the construction or repair of a new or existing residence, including improvements appurtenant to the residence, as provided by a residential construction contract. A residential construction contract is a contract between an owner and a contractor in which the contractor agrees to construct or repair the owner’s residence, including improvements appurtenant to the residence.
A “residence” is a single-family house, duplex, triplex, or quadplex or a unit in a multiunit structure used for residential purposes that is owned by one or more adult persons and used or intended to be used as a dwelling by one of the owners.
Property Code Subchapter K applies only to residential construction projects. However, a person must comply with the other applicable provisions of the mechanic’s lien chapter as well as Subchapter K to perfect a lien that arises from a claim resulting from a residential construction project.
Residential Notice
Texas Property Code Subchapter K requires contractors and subcontractors on residential projects to provide specific notices to the property owner. These notice requirements are in addition to, not a substitute for, the standard pre-lien notice requirements of the rest of Chapter 53.
For subcontractors and suppliers on residential projects, a written notice of unpaid claims must be sent to the property owner no later than the 15th day of the third month following each month in which the claimant furnished labor or materials for which payment has not been received. A separate notice of contractual retainage claim must be sent to the owner and the original contractor no later than the 30th day after the date the subcontractor’s contract is completed, terminated, or abandoned.
All notices must be sent by certified mail, return receipt requested. The consequence of missing residential notice requirements is severe. A failure to send required notice on time can bar the claimant from perfecting a lien entirely on that residential project, regardless of how much is owed or how well-documented the work is.
Homesteads
Texas provides some of the strongest homestead protections in the nation. A homestead is a Texas property owner’s primary residence, and homestead protection attaches automatically to property used as a person’s primary residence.
A mechanic’s lien can attach to a homestead property in Texas, but only under very specific constitutional and statutory requirements. To be valid against a homestead, the work must be performed under a written contract that satisfies all of the following: (1) the contract must be in writing; (2) the contract must be signed by the homestead owner and by the owner’s spouse, if married; (3) the contract must describe the work to be done and the materials to be used; (4) the contract must be filed with the county clerk before any work begins.
If any of these requirements is not met, the mechanic’s lien will not attach to the homestead, even if the work was performed and the amount owed is undisputed. On residential projects, this is the mistake we see most often, and an expensive one.
Working on a Homestead?
A mechanic’s lien cannot attach to a Texas homestead unless the work was performed under a written contract signed by both spouses and filed with the county clerk before work begins. Tell us what you have and we will tell you where you stand.
Residential Disclosure Statement
Texas Property Code Subchapter K requires an original contractor entering into a residential construction contract to provide the property owner with a written disclosure statement before or when the contract is signed. The disclosure must advise the property owner of their lien rights, the right to receive a list of all subcontractors and suppliers, the right to require a final payment affidavit, and the owner’s potential liability to subcontractors if the owner pays without properly withholding funds.
The disclosure statement must be in writing and prominently captioned. Failure to provide it can affect the contractor’s lien rights and give the owner certain defenses. Contractors performing residential work should include the disclosure statement in every residential contract as a matter of course.
Residential Loans
When a residential construction project is funded by a construction loan, additional considerations apply. The lender who funds the construction typically holds a deed of trust lien on the property as security for the loan. The priority of that lender’s lien relative to mechanic’s liens is determined by the inception of contract rule: the mechanic’s lien relates back in priority to the date on which visible work or material delivery first began on the project.
Subcontractors should be aware that signing a lien waiver in connection with a draw payment, even if payment has not yet been received, can affect their lien rights. A conditional lien waiver (conditioned on actual receipt of payment) is appropriate; an unconditional waiver should not be signed until payment has actually been received and cleared. See our Lien Waivers page for more.
Disclosure of Subcontractors on Residential Projects
Texas Property Code Subchapter K requires an original contractor on a residential construction project to provide the property owner with a list of all subcontractors and suppliers who provided labor or materials on the project, upon the owner’s written request. The list must include the name and address of each party and the amount owed to each, if not yet paid in full.
Property owners: before making final payment to your general contractor on a residential project, send a written request for the subcontractor and supplier disclosure list. Review it carefully and require evidence of payment, lien waivers from each subcontractor and supplier, before releasing the final payment. Done consistently, this is the best protection a property owner has against mechanic’s lien claims.
Frequently Asked Questions
Are lien rules different for residential construction in Texas?
Yes, significantly. Property Code Subchapter K applies only to residential projects and imposes additional notice requirements, shorter deadlines, homestead protections, and disclosure requirements that do not apply to commercial projects. Failing to comply with Subchapter K on a residential project can void the lien entirely, even if the affidavit itself was perfectly filed.
Can I file a mechanic's lien on a Texas homestead?
Yes, but only under strict constitutional and statutory requirements. The work must be performed under a written contract that is signed by both spouses (if the owner is married), describes the work to be done, and is filed with the county clerk before any work begins. A verbal agreement or a contract signed by only one spouse will not support a valid lien on a Texas homestead, regardless of how good the work was. This is the most common and most costly mistake contractors make on residential projects.