How to Get Mechanic’s Liens Removed

The easiest way is to simply wait out the limitations period. Tex. Prop. Code § 53.158. If a suit is not filed by the contractor to foreclose the lien within one (1) year on a residential project or two (2) years on a commercial project, then the lien is automatically discharged of record. Id.; Tex. Prop. Code § 53.157 (listing ways that a mechanic’s lien becomes “discharged of record”). Title companies know about the “Discharge of Lien” statute and will generally insure around lien affidavits after the limitations period runs out.

Somewhat confusingly, a “lien” is defined as a “claim in property for the payment of a debt and includes a security interest.” Tex. Civ. Prac. & Rem. Code § 12.001, but mechanic’s lien affidavits on homesteads must conspicuously state that “THIS IS NOT A LIEN. THIS IS ONLY AN AFFIDAVIT CLAIMING A LIEN.” Tex. Prop. Code § 53.254. Since a “claim in property” is a lien and since the affidavit claiming a lien still clouds title to the property and prevents the homeowner from conveying the property with title insurance to a buyer, the distinction between a lien and an affidavit claiming a lien seems like a distinction without a difference. Title companies generally do not care that an affidavit claiming a lien is not actually a lien—they still will not insure the transaction without a release of the lien or claim of lien.

Title Companies:

Check with your title company regarding whether the company will “insure around” a lien. Generally, there must be some defect in the lien to do this. The title company will look at each lien claim on a case-by-case basis to evaluate whether to offer any options for insuring around the lien. You will probably need to execute an indemnity agreement with the title company and you may need to make a substantial deposit with the title company to satisfy any potential claims. Doing this can be a great alternative to a remedial bond under Tex. Prop. Code § 53.171. If the property owner insures around the lien, and then the statute of limitations runs out on the lien without the contractor filing suit, then generally, the property owner will be in the clear.

Remedial Bonds Under Section 53.171 of the Texas Property Code:

Under Section 53.171(c) of the Texas Property Code, a mechanic’s lien can be discharged with a bond even after the dispute has arisen and the lien has been filed. The bond must be substantially higher than the lien amounts. See Tex. Prop. Code § 53.172(3). The filing of the bond starts a one-year limitations period against any lien claimants. Tex. Prop. Code 53.175; Stoltz v. Honeycutt, 42 S.W.3d 305 (Tex. App.—Houston [14th Dist.] 2001, no writ). The statutory requirements for filing and notice regarding the bond should be followed to ensure that no problems arise.

Summary Motion for Lien Removal:

Section 53.160 of the Texas Property Code allows a property owner to file a “Summary Motion to Remove Invalid or Unenforceable Lien.” Tex. Prop. Code § 53.160. It is called a “summary” motion for lien removal because it allows for the lien to be removed as fast as twenty-one (21) days after the lien claimant answers or appears in the suit. Tex. Prop. Code § 53.160(c). This is obviously much faster than waiting for the Court to schedule a trial date. Getting a trial date; under the most common Discovery Control Plan—Level Two (2) (See Tex. R. Civ. P. 190.3); is going to take at least nine months, probably much longer, since the parties are entitled, in a Level Two case, to a nine-month discovery period starting with the “earlier of the date of the first oral deposition or the due date of the first response to written discovery.” Tex. R. Civ. P. 190.3(b)(1)(B)(ii). Even this “expedited” lien removal process tends to leave aggrieved property owners bitter. No one wants to file a new lawsuit, watch the process server spend a month chasing the defendants down, and then wait another month for the answer to get filed, and then wait another twenty-one days after that, to get an “expedited” hearing, especially in District Court since County Courts at Law in Texas generally do not have jurisdiction over “question[s] of title.” Escobar v. Garcia, No. 13-12-00596-CV, 2014 Tex. App. LEXIS 5157, at *9 (App.—Corpus Christi May 15, 2014, pet. denied); Tex. Gov’t Code Ann. § 26.043(8).

At the summary lien removal hearing, the lien claimant has the burden of proving that the notice of claim and affidavit of lien were furnished to the owner and original contractor (if applicable) as required. Tex. Prop. Code § 53.160(d). The movant has the burden of establishing that the lien should be removed for “any other ground authorized by this section.” Id. Despite the title of the code section, the lien cannot be removed simply because it is invalid or unenforceable. Instead, the “grounds for objecting to the validity or enforceability of the claim or lien for purposes of the motion are limited to” the seven (7) grounds listed in Texas Property Code § 53.160(b). The seven grounds are:

“(1) notice of claim was not furnished to the owner or original contractor as required by Section 53.056, 53.057, 53.058, 53.252, or 53.253;
(2) an affidavit claiming a lien failed to comply with Section 53.054 or was not filed as required by Section 53.052;
(3) notice of the filed affidavit was not furnished to the owner or original contractor as required by Section 53.055;
(4) the deadlines for perfecting a lien claim for retainage under this chapter have expired and the owner complied with the requirements of Section 53.101 and paid the retainage and all other funds owed to the original contractor before:
(A) the claimant perfected the lien claim; and
(B) the owner received a notice of the claim as required by this chapter;
(5) all funds subject to the notice of a claim to the owner and a notice regarding the retainage have been deposited in the registry of the court and the owner has no additional liability to the claimant;
(6) when the lien affidavit was filed on homestead property:
(A) no contract was executed or filed as required by Section 53.254;
(B) the affidavit claiming a lien failed to contain the notice as required by Section 53.254; or
(C) the notice of the claim failed to include the statement required by Section 53.254; and
(7) the claimant executed a valid and enforceable waiver or release of the claim or lien claimed in the affidavit.”

If the property owner’s reasons for wanting the lien removed do not neatly fit into any of these categories, then the property owner should try simply depositing “all funds subject to the notice of a claim” into the court’s registry, and getting the lien removed under Tex. Prop. Code § 53.160(5). Doing this can be cheaper than a remedial bond since the remedial bond must be substantially higher than the lien amount. See Tex. Prop. Code § 53.172(3).

One potential hiccup with the summary lien removal motion is Tex. Prop. Code § 53.161, which provides that the Court must allow the lien claimant to stay the removal of the lien by posting a bond that is a “reasonable estimate of the costs and attorney’s fees the movant is likely to incur” and that does “not exceed the amount of the lien claim.” The bond must be posted within thirty (30) days of the order. If the bond is not posted by the deadline, then the property owner can file a certified copy of the order along with a certificate from the clerk of court stating that no bond was filed within thirty (30) days after the date the order was entered by the Court and no order staying the order to remove the lien was entered by the Court. Tex. Prop. Code § 53.161(f). Upon filing the foregoing, creditors or subsequent purchasers for valuable consideration can take an interest in the property free of the lien claim. Tex. Prop. Code § 53.161(g). At this point, the property owner should have no problem selling or encumbering the property with title insurance from any title company.

If the lien claim is removed under the summary lien removal statute, but the lien claimant ultimately wins at trial, establishing the validity of the claim and getting an order for foreclosure of the lien, then the claimant can file the final judgment with the county clerk and get the lien revived. Tex. Prop. Code § 53.162.

Action on Fraudulent Lien on Property:

Property owners, real estate developers, and anyone else dealing with mechanic’s liens need to know right off the bat that the “Action on Fraudulent Lien on Property” under Tex. Gov’t Code § 51.903 is NOT a panacea for every mechanic’s lien dispute. In fact, it rarely applies. The Court dealing with this section CANNOT “make a finding as to any underlying claim of the parties involved.” Tex. Gov’t Code § 51.903(a). If a “substantive evidentiary claim” must be decided by the Court, then this procedure is unavailable. Tu Nguyen v. Bank of Am., N.A., No. 01-15-00587-CV, 2016 Tex. App. LEXIS 12595, at *7 (App.—Houston [1st Dist.] Nov. 29, 2016). For the procedure to be available, the fraudulent nature of the claim must, pretty much, be determinable by review of the document alone. Id. (citing David Powers Homes, Inc. v. M.L. Rendleman Co., 355 S.W.3d 327, 339 (Tex. App.—Houston [1st Dist.] 2011).

Section 51.903 of the Texas Government Code provides that a property owner with “reason to believe” that a previously filed “document purporting to create a lien or claim” against “real or personal property” is “fraudulent” may submit a “Motion for Judicial Review of Documentation or Instrument Purporting to Create a Lien or Claim” to the District Clerk. The motion, supporting affidavit, certificate of acknowledgement, and order on the motion should all follow the statutory formats listed in Tex. Gov’t Code § 51.903. The motion “may be ruled on by a district judge having jurisdiction over real property matters in the county where the subject document was filed.” Tex. Gov’t Code § 51.903(c). The Court’s review can be “ex parte without delay or notice of any kind.” Id. Moreover, the appellate court should “expedite review” of the trial court’s finding. Id. In filing the motion, keep in mind that documents or instruments meeting the criteria of Tex. Govt’ Code § 51.901(c) are “presumed to be fraudulent.” Tex. Gov’t Code § 51.901(c) provides that instruments are presumed fraudulent when:

“(1) the document is a purported judgment or other document purporting to memorialize or evidence an act, an order, a directive, or process of:
(A) a purported court or a purported judicial entity not expressly created or established under the constitution or the laws of this state or of the United States; or
(B) a purported judicial officer of a purported court or purported judicial entity described by Paragraph (A);
(2) the document or instrument purports to create a lien or assert a claim against real or personal property or an interest in real or personal property and:
(A) is not a document or instrument provided for by the constitution or laws of this state or of the United States;
(B) is not created by implied or express consent or agreement of the obligor, debtor, or the owner of the real or personal property or an interest in the real or personal property, if required under the laws of this state, or by implied or express consent or agreement of an agent, fiduciary, or other representative of that person; or
(C) is not an equitable, constructive, or other lien imposed by a court with jurisdiction created or established under the constitution or laws of this state or of the United States; or
(3) the document or instrument purports to create a lien or assert a claim against real or personal property or an interest in real or personal property and the document or instrument is filed by an inmate or on behalf of an inmate.”

Ordinary Certificate of Acknowledgement Instead of Short Forms for Certificates of Acknowledgement. Interestingly, a “Motion for Judicial Review of Documentation or Instrument Purporting to Create a Lien or Claim,” under Tex. Gov’t Code § 51.903(a), requires use of the “Ordinary Certificate of Acknowledgment,” (See Tex. Civ. Prac. & Rem. Code § 121.007) and not the commonly-used “Short Forms” (See Tex. Civ. Prac. & Rem. Code § 121.008).

Statutory Damages for Fraudulent Liens. If the Action on Fraudulent Lien on Property applies, then the movant should probably also file for relief under Section 12.002 of the Texas Civil Practice & Remedies Code. Under Tex. Civ. Prac. & Rem. Code § 12.002, anyone filing a claim knowing it to be fraudulent is liable to each person injured by the claim for the greater of $10,000.00 or actual damages, plus court courts, attorney’s fees, and exemplary damages. Tex. Civ. Prac. & Rem. Code § 12.002(b). With mechanic’s liens, there is no liability under this section unless the contractor “acts with intent to defraud.” Tex. Civ. Prac. & Rem. Code § 12.002(c).

This is also a great statute to know about when you pay off a collateralized loan and have a lender or bank that drags their feet in providing the release of lien that is indisputably required. A well-written demand letter that cites the applicable lien release statutes tends to get results.

Criminal Law on Fraudulent Liens. Refusal to execute a release of a fraudulent lien or claim, under Tex. Penal Code § 32.49, is a Class A misdemeanor. Also see Bowles v. State, NO. 14-99-01396-CR, 2001 Tex. App. LEXIS 6311, at *11 (App.—Houston [14th Dist.] Sep. 13, 2001). The owner, holder, or beneficiary of a purported lien or claim that is fraudulent, under Text. Gov’t Code § 51.901(c), who does not provide a release of lien by the twenty first (21st) day after the receipt of actual or written notice by certified mail or fax requesting release of the claim faces criminal liability. If that person fails to execute a release of the claim within twenty-one (21) days, then the person is “presumed to have had the intent to harm or defraud another.” Tex. Penal Code § 32.49(b). The violator could also be looking at a perjury charge depending on circumstances. Tex. Penal Code § 37.01(2)(A).

Disclaimer: This blog is for informational purposes only. Do not rely on any part of this blog as legal advice. Instead, seek out the advice of a licensed attorney. Also, this information may be out-of-date.

How to Avoid Mechanic’s Liens

Usually, the lawyer gets a phone call when a problem with a mechanic’s lien has already arisen. However, there are preventative measures that property owners can take to avoid getting into mechanic’s lien situations in the first place. One method is to obtain advance or periodic mechanic’s lien waivers from your contractors. Another is to bond around any potential mechanic’s liens. Both methods require strict compliance with the relevant sections of the Texas Property Code to ensure effectiveness.

Waiver:

Residential Advance Waivers. Statutory mechanic’s liens generally cannot be waived in advance by the contractors. See Tex. Prop. Code § 53.286. However, a big exception to this rule exists for single-family homes. Under Tex. Prop. Code § 53.282(a)(3), a waiver of mechanic’s lien is enforceable if it is in a “written original contract . . . for the construction, remodel, or repair of a single-family house . . .” and is “made before labor or materials are provided under the original contract.” So, generally you can have your contractors waive their rights to file mechanic’s lien affidavits to cloud your title if it is a single-family residential project and the waiver is in the original contract signed before labor or materials or provided. Developers doing residential rehabs should consider including this waiver language in their original contracts with each of their contractors to avoid mechanic’s liens.

Statutory Progress Payment Waivers. Another waiver worth mentioning here is the statutory form waivers for progress payments. In Section 53.284 of the Texas Property Code, property developers can find a form for waiving mechanic’s liens upon the making of a progress payment. In a multi-stage development project, use of these forms contemporaneously with the payment of each draw is a best practice. Keep in mind that you cannot tell the contractor that you will not pay the contractor unless the contractor signs the waiver. You have to pay the contractor first, and then get the waiver signed. See Tex. Prop. Code § 53.283. You could tell the contractor that the contractor may not do any additional work or receive any additional payment until the contractor signs the waiver for the draws that have already been completed and paid. This way, you are waiving liens in stages as the project nears completion so that you do not get stuck with a large lien claim at the end of the project.

Fraudulent Lien Law Issues. One final note on waivers, filing a mechanic’s lien affidavit despite a valid waiver does violate the Texas Fraudulent Lien Law (Tex. Civ. Prac. & Rem. Code § 12.002), but only if the property owner sends “a written explanation of the basis for nonpayment, evidence of the contractual waiver of lien rights, and a notice of request for release of the lien to the claimant at the claimant’s address stated in the lien affidavit” and “the lien claimant does not release the lien affidavit” within fourteen (14) days. See Tex. Prop. Code § 53.282. If the reason for the lien being fraudulent does not relate to waiver, then the Fraudulent Lien Law is violated at the time that the lien claim is filed, not when the claimant refuses to release it. Vanderbilt Mortg. & Fin. v. Flores, 692 F.3d 358 (5th Cir. [Tex.] 2012).

Prompt Payment Act. It should also be noted that liability for 18% interest on unpaid amounts under the Texas Prompt Payment statute cannot be waived in a residential construction contract, but can be limited to payments not made by 60 days after the date that the owner receives the written Tex. Prop. Code. § 28.002(a) request from the contractor. Also, on residential contracts, the prompt pay good faith withholding allowed is 110%, not 100%. Tex. Prop. Code § 28.003.

Bonding Around Mechanic’s Liens:

An appropriate preventative bond will keep mechanic’s liens from arising during a project. After a dispute arises and a lien has already been filed or attempted, however, the cloud on title can still, generally, be cleared with a remedial bond.

The Texas Department of Insurance can be a good place to start looking for the right bonding company:

http://www.tdi.texas.gov/commercial/pcbond.html#type

Preventative Bonds:

Though rarely used for small residential projects, mechanic’s and materialman’s liens can be stopped with a bond that complies with Sections 53.201–53.211 of the Texas Property Code. Under § 53.201 of the Texas Property Code, “If a valid bond is filed, a claimant may not file suit against the owner or the owner’s property . . . .” “If a payment bond meets the statutory requirements, a claimant may not file lien claims against the property owner or seek foreclosure of the claimant’s lien on the owner’s property. Tex. Prop. Code § 53.201. Instead of looking to the property, claimants must look to the payment bond.” Laughlin Envtl., Inc. v. Premier Towers, L.P., 126 S.W.3d 668, 671 (Tex. App.—Houston [14th Dist.] 2004). Furthermore, “For a property owner to reap the benefits of Tex. Prop. Code § 53.211 and thereby enjoy the protections it affords, there must be a bona fide attempt to comply with the statutory requirements. Id. Under Section 53.211 of the Texas Property Code, attempted compliance with the bonding requirements of Section 53.202 of the Texas Property Code and other applicable law may be sufficient even if technical compliance is not present. Regardless, the prudent property owner or original contractor will try to strictly comply with the requirements of Section 53.202 of the Texas Property Code.

Remedial Bonds:

Remedial bonds, under Section 53.171 of the Texas Property Code, do not prevent mechanic’s liens from arising. Remedial, or indemnity, bonds can, however, clear title as to a specific lien after the claim has been filed.

Disclaimer: This blog is for informational purposes only. Do not rely on any part of this blog as legal advice. Instead, seek out the advice of a licensed attorney. Also, this information may be out-of-date.

Mechanic’s Lien Law Basics

The State of Texas is a good place to be a contractor and building material supplier. The rights of these “mechanics” and “materialmen” to place liens upon real estate improved by their labor or materials arise not just from any statute, but from the Texas constitution itself. Article XVI, Section 37 of the Texas Constitution provides that “Mechanics, artisans and materialmen, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.” The Texas Legislature followed its constitutional mandate with the mechanic’s lien laws in Title 5, Chapter 53 of the Texas Property Code.

Mechanic’s Liens Cloud the Property Owner’s Title, Which Can Induce the Property Owner to Pay the Contractor:

Mechanic’s lien laws are complex, can cloud title even without a lawsuit and associated lis pendens, and are quite favorable to the contractor or material supplier. Without the mechanic’s lien laws, a contractor wanting to assert rights to a mechanic’s lien would need to file a lawsuit in a Court with appropriate jurisdiction and file a lis pendens in the real property records for the county that the property is located in. This procedure is cost-prohibitive because the suit generally needs to be filed in a District Court because District Courts generally have exclusive jurisdiction over title disputes. See Escobar v. Garcia, 2014 Tex. App. LEXIS 5157, *3 (Tex. App.—Corpus Christi May 15, 2014, pet. denied). District Courts are the highest level of trial Courts in the State of Texas and tend to be the most burdensome and expensive Courts to litigate in from an attorney’s fees standpoint.

Corporations and Limited Liability Companies Must Have an Attorney in Court. To cloud title through a lis pendens, a contractor would need to hire an attorney unless the contractor has not incorporated his business. Only a contractor doing business as a sole proprietor may represent himself in District Court on a pro se basis, or in other words, without an attorney. Corporations and other legal entities may not appear in Court without an attorney, even if the company is owned and operated by a single person. See Kunstoplast of Am. v. Formosa Plastics Corp., USA, 937 S.W.2d 455, 456 (Tex. 1996); Marin v. Gilberg, No. V-07-62, 2008 U.S. Dist. LEXIS 53341, at *8 (S.D. Tex. 2008).

A lis pendens is a notice of pending lawsuit that is filed publicly in the real property deed records of the county in which the property is located. The lis pendens must be indexed under the name of each party to the proceeding so that it shows up in a title search performed by an attorney or title company. The lis pendens generally has the effect of putting the world on notice of the claim and of subordinating any future unrecorded claims to the claim recorded in the lis pendens. See Tex. Prop. Code § 12.007 (2015).

Consequently, a contractor seeking to cloud title to real property, without the protections of the mechanic’s lien laws, would need to hire an attorney, file a District Court lawsuit, draft and file a proper lis pendens, and complete service of the foregoing using a private process server. For attorneys, lawsuits can be like marriages—easy to get in, hard to get out. Any attorney who makes an appearance as lead counsel under Tex. R. Civ. P. 8 must be “responsible for the suit” until such attorney withdraws from the case. Making an appearance is as simple as appearing in court on behalf of someone or filing any written document with the court. Withdrawing from the suit, on the other hand, is much more time-consuming. The attorney wanting to withdraw must follow Tex. R. Civ. P. 10, which requires the attorney to (1) show good cause, (2) submit a written motion to the court, (3) prove that the withdrawal is not sought for delay only, (4) deliver a copy of the written motion to the client, (5) notify the client in writing of the client’s right to object to the motion, (6) find out whether the client is opposed to the motion or not, (7) state the client’s last known address and (8) list all pending settings and deadlines. Moreover, the court can impose conditions before granting leave to withdraw. Finally, the notice to the client must be made by regular and certified mail.

Accordingly, most attorneys will not file a new District Court lawsuit without a substantial, up-front retainer of several thousand dollars. Even a relatively simple District Court lawsuit will cost the attorney a tremendous amount of time, energy, paperwork, and organization. Due to Tex. R. Civ. P. 8 and 10 and because getting a new attorney up to speed on the details of a case requires expenditure of substantial time and effort, finding an attorney who will file a District Court lawsuit and lis pendens for a low, flat-rate fee is highly unlikely for the aggrieved contractor.

Statutory Mecahnic’s Liens Can be Recorded Without Filing a Lawsuit:

Fortunately for contractors, Title 5, Subtitle B, Chapter 53, Subchapter C of the Texas Property Code (§§ 53.051–53.080) provides a way around the necessity of a District Court lawsuit and lis pendens. Many contractors see this as a Do-It-Yourself1 way to cloud the property owner’s title in hopes of cajoling payment from the recalcitrant property owner. Essentially, the contractor can file a mechanic’s lien affidavit in the real property deed records of the county. This affidavit will cloud the title and prevent most title companies from closing on a sale of the real property. The owner who wants to sell the property will then face a conundrum—whether to settle with the contractor or figure out a way around the lien affidavit. Often, when a property is being rehabbed, the eventual purpose of the rehab is a sale of the property with the improved rehab value. Accordingly, the lien affidavit tends to get contractors paid. The rules for how to properly perfect a mechanic’s lien using a mechanic’s lien affidavit are exceedingly complex. Accordingly, those rules are beyond the scope of this article. However, even an improper mechanic’s lien affidavit can cause enough problems at the property owner’s title company to induce the property owner to make a settlement offer to the contractor.

Work Stoppage Issues:

On the owner’s side, if the contractor is fired, then the owner should be prepared to show that the contractor was given reasonable notice. Tex. Bus. & Com. Code § 2.309. The prudent owner should set concrete deadlines or conditions and make it clear, and expressed in writing, that the failure to comply will result in termination of the contract. The prudent owner will give as much advance written notice to the contractor as possible if the owner is considering a lock-out to avoid a submission of the issue of reasonable notice to a jury.

On the contractor’s side, the contractor, if the property is not a detached residence and the contractor intends to use a work stoppage, i.e., suspension of work, due to nonpayment, then the contractor should make sure to give written notice, following the statutory requirements, to the owner and owner’s lender. See Tex. Prop. Code § 28.009. Failure to follow the rules in Tex. Prop. Code § 28.001–28.010 could result in losing the special rights granted to contractors by the Texas Prompt Payment Statute, like 18.00% interest on unpaid amounts due. The owner, upon receipt of the foregoing notices, may need to list specific reasons in writing for nonpayment to the contractor. Tex. Prop. Code § 28.009(d).

The following is a table showing the rules for contractors who are trying to perfect mechanic’s liens:

Mechanic’s Lien Rules Matrix

Original Contractor

Subcontractor

Residential

Provide the disclosure statement. Tex. Prop. Code § 53.255.

Provide the list of subcontractors and suppliers. Tex.
Prop. Code § 53.256.

For homesteads, get the contract signed by both spouses,
file it with the county clerk, and make sure to include the
notice in Tex. Prop. Code § 53.254(f) on the lien
affidavit.

File the lien affidavit by the 15th day of the
third calendar month after job completion or termination.
Tex. Prop. Code § 53.052(b).

Send copy to owner within five days. Tex. Prop. Code §
53.055.

Make sure that the original contractor complied with Tex.
Prop. Code § 53.255 & 53.256.

Give written notice by registered or certified mail of
unpaid balance to original contractor and the property
owner by 15th day of second month after “each
month in which all or part of the claimant’s labor was
performed or material . . . was delivered.” Tex. Prop. Code
§ 53.252(b), with the notice required by Tex. Prop. Code §
53.254(g) if homestead.

For homesteads, make sure to include the notice in
53.254(f) on the lien affidavit.

To trap funds, the notice must also contain the statements
in Tex. Prop. Code § 53.252(c).

File the lien affidavit by the 15th day of the
third calendar month after job completion or termination.
Tex. Prop. Code § 53.052(b).

Send copy to owner and original contractor within five
days. Tex. Prop. Code § 53.055.

Commercial

File the lien affidavit by the 15th day of the
fourth calendar month after job completion or termination.
Tex. Prop. Code § 53.052(a).

Send copy to owner within five days. Tex. Prop. Code §
53.055.

Give written notice by registered or certified mail of
unpaid balance to original contractor by 15th
day of second month after “each month in which all or part
of the claimant’s labor was performed or material
delivered.” Tex. Prop. Code § 53.056(b).

Give same notice to owner and original contractor by the 15 th day of the third month. Tex. Prop. Code §
53.056(b).

File the lien affidavit by the 15th day of the
fourth calendar month after job completion or termination.
Tex. Prop. Code § 53.052(a).

Send copy to owner and original contractor within five
days. Tex. Prop. Code § 53.055.

1Fraudulent Lien Law Warning. While many contractors in Texas try to perfect mechanic’s liens without the assistance of a licensed attorney who has studied this area of law, such Do-It-Yourself attempts should be highly discouraged. The mechanic’s lien laws are highly complex. Additionally, under Texas fraudulent lien law (Tex. Civ. Prac. & Rem. Code § 12.002; Tex. Gov’t Code § 51.901(c) and Tex. Penal Code § 32.49), the contractor can incur civil liability of the greater of $10,000.00 or actual damages (no actual damages necessary, See Harris County, Texas v. MERSCORP, Inc., 791 F.3d 545 (5th Cir. 2015); Vanderbilt Mortg. & Fin., Inc. v. Flores, 692 F.3d 358, 370, 372 (5th Cir. 2012)), plus costs and attorney’s fees, and exemplary (punitive) damages. Section 12.002(c) of the Texas Civil Practice and Remedies Code provides some protection to the uninformed lien-filing contractor by stating that “intent to defraud” is required, but “intent to defraud” can arise from claiming a larger amount than what is, in fact, owed (Taylor Elec. Servs. v. Armstrong Elec. Supply Co., 167 S.W.3d 522, 530 (Tex. App.—Fort Worth 2005, no pet.), but see RMDG Construction, LLC, et al. v. Oakwood Custom Homes Group, Ltd., 2014 Tex. App. LEXIS 6032 (Tex. App.—Waco June 5, 2014, no pet.)), refusing to release the lien, among other things (Gray v. Entis Mech. Servs., LLC, 2012 Tex. App. LEXIS 3278 (Tex. App.—Houston [1st Dist.] Apr. 26, 2012, no pet.)), or re-filing a previously released lien (Roberts v. Dixon, No. 12-15-00181-CV, 2016 Tex. App. LEXIS 2449, at *6 (App.—Tyler 2016)). Refusal to release a fraudulent lien is also a Class A misdemeanor. See Tex. Penal Code § 32.49. While courts may differ on what conduct sufficiently demonstrates “intent to defraud,” the wise and prudent contractor should consult with a competent, licensed Texas attorney in conjunction with any attempts to perfect a mechanic’s lien.

Disclaimer: This blog is for informational purposes only. Do not rely on any part of this blog as legal advice. Instead, seek out the advice of a licensed attorney. Also, this information may be out-of-date.

Related Case Pleadings in Dallas, TX, a Potential Pitfall for Temporary Restraining Orders (TRO)

Local Rule 1.06-1.08 of the Dallas County Civil Courts local rules adopted January 15th, 2014 provides a related-case requirement that can potentially prevent a Temporary Restraining Order from being granted. Under Rule 1.06, the Judge in the earliest case filed of any related cases has the option of consolidating the later-filed cases into the earliest case. Rule 1.07 defines later cases and the definition is quite broad. Rule 1.08 requires the filing attorney to make a detailed disclosure of the related case in the pleadings. Rule 1.08 requires the answering attorney to point out any failure of the filing attorney to make this disclosure in the pleadings. Moreover, both filing and answering attorneys, by failing to properly disclose related cases, certified that there are no prior related cases.

In the event that a party files for a Temporary Restraining Order (TRO), either ex parte or otherwise, and fails to make the proper related case disclosure for an eviction case, title dispute, or other applicable related case, then the TRO may be denied on the grounds of failure to include the related case in the pleadings. Due to the certification by nondisclosure rule, the failure to disclose the related cases could result in parties waiving rights to contest transfers or failures to transfer.

Disclaimer: This blog is for informational purposes only. Do not rely on any part of this blog as legal advice. Instead, seek out the advice of a licensed attorney. Also, this information may be out-of-date.