Things to Know about Texas Mechanic’s Lien

In an ideal world, everyone is paid for the work done on time. In the real world, unfortunately, payment problems often occur. Whether it is a delay in payment, lack of money, or simply the arrogance of the client, the contractor knows best, but so do all those who work for them.

In Texas, there is a legal tool that a contractor can use to collect their receivables. It is a mechanic’s lien, and it refers to everything that can be characterized as improvements to the property. That’s an excellent way to collect payment from the debtor without having extra costs. 

Visit the link below and see how to handle clients who don’t want to pay:

https://www.proremodeler.com/how-handle-clients-refusal-pay 

Many people are unfamiliar with how the mechanic’s lien actually works. While there are similarities, the process in each state is slightly different. Each state must abide by a specific set of laws. These regulations in Texas can be a bit confusing, so do your homework before using this legal tool.

Know Your Rights

Just because a mechanic’s lien is a legal tool doesn’t mean that absolutely everyone has a right to it. That’s good to know before you even start a business so that you can plan what to do next in case of non-payment. You have the right to filing a claim if you provide any work or make material that will be used to improve someone’s property. This group also includes engineers, surveyors, and architects.

Another requirement is meeting deadlines. You really shouldn’t overlook this step because just one missed submission of notice can mean that your lien is invalid. The law in Texas can be confusing as there are several types of ‘pre-lien warnings.’ Also, you might get confused about deadlines. So study these regulations very carefully before embarking on an adventure called filing a mechanic’s lien.

Be Careful with Deadlines

The procedure of filling in the mechanic’s lien is not as demanding as the preparation for it. That means sending reminders to your debtors on a regular basis. It’s one of the main prerequisites to protect your lien rights. In case of incomplete or unverified information, even a minor mistake can bring huge consequences.

General contractors are generally exempt from sending notices (optional). Subcontractors and suppliers are in bigger trouble because they have a multitude of notice requirements. Many of them will be confused and mistaken because notices are sent to multiple addresses, multiple times.

Who, When

The most common mistakes made by mechanics and materialmen are sending a notice to the wrong address and missing deadlines. The law stipulates that the first notice should be sent by the 15th day, in the second month after completing residential projects. 

In the case of commercial projects in Texas, that deadline is three months. Also, keep in mind that if the deadline for sending notices is on Sunday or holiday, you should send it on the previous day. If interested how your claim will affect the property you’ve worked on, check this page.

Lower-tier parties, i.e., those who aren’t working for a contractor, can be especially messed up. All laws related to pre-lien notices apply to them. Plus, they have to send new warnings every time invoices go unpaid for too long. 

How to Make It Official

Depending on the state’s specific requirements, the lien may be registered with the county clerk or recorder. Before that, you can find forms for filing a Texas mechanic’s lien online. When you’re already there, look for addresses of county recorder offices.

As soon as your claim is recorded (or immediately before that), you must inform the debtor about it. In the state of Texas, the deadline for this is five business days. The lien will remain active until the debt has been fully paid. Once the debt has been paid, the lien is released. 

If filing the claim doesn’t make the debtors settle their debts, the next step is to file a lawsuit and go to court. That’s something you should avoid, as your costs will be significantly increased. Of course, in the case of a favorable verdict, everything will be compensated, but a lot of time can pass until then.

A mechanic’s claim is almost a free legal tool that can help you get what you’ve earned. If you use it wisely and with caution, you can avoid courts and high trial costs. Only resort to this in case the debtor ignores numerous warnings.