Texas Mechanic's and Materialmen's Liens: A Guide for Self-Employed Contractors and Construction Workers
Note: This publication is written for self-employed contractors and construction workers, but is reproduced here so that consumers can also learn more about these types of liens.
All too frequently, property owners fail to pay contractors, subcontractors, construction workers and others in the building trades for the work they’ve completed. What legal tools are available for people in these trades to help guarantee payment for labor and materials? Leaving a project unfinished won’t force an owner to pay, and may create even more legal problems. It would be costly and impractical for a mason to demolish a newly-built wall. A painter can’t un-paint a house. Custom cabinets made to order can’t be used in another remodeling project.
This is a practical guide for people in the building trades on how file a Mechanic’s and Materialmen’s lien, (called an M & M Lien or Mechanic’s lien) as a way to secure payment for their work. A mechanic’s lien covers nearly everything associated with the building trades from start to finish, including surveys, labor, materials, rental equipment, and other resources used in building, remodeling, and repairs. to real property. Collectively, these are referred to as “improvements” to real property. A mechanic’s lien is a cost-effective method for contractors to collect from owners, and for subcontractors to collect from contractors. It can even be used by self-employed construction workers to recover unpaid wages.
Some notes on the organization of this guide:
- The legal requirements and procedures involved in getting a mechanic's lien vary depending upon whether the property is commercial or residential and on the role of the claimant. For ease of use, this guide is organized according to the role of the lien filer - original contractor, subcontractor, or maker of specially fabricated materials.
- Where the laws or procedures are the same, the information is repeated under each section.
- Certain topics, like contractual retainage agreements or liens on public works are beyond the scope of this guide.
- All legal citations are to specific sections (“§”) of Chapter 53 of the Texas Property Code unless otherwise stated.
Reminder: Texas Mechanic’s lien laws can be a complicated. This guide contains general legal information only. It cannot substitute for sound legal advice from an attorney about your specific situation.
What is a lien?
If you are working in the building trades and have not paid for your work, you have three basic options: do nothing, file a lawsuit, or file a mechanic’s lien against the property.
A lien is a sworn legal document used by certain creditors as a way to guarantee payment. It describes the debt and how much is owed. If the lien is against real estate, the creditor files the lien document in the property records of the country in which the owner’s property is located. When the lien is filed, information about the debt becomes public record. If the debt isn’t paid on time, it can affect the owner’s credit, ability to sell or refinance the property and other consequences.
There are several types of liens. For example, a mortgage creates a mortgage lien against the property. In this case, the bank or mortgage company is the creditor. If the owner fails to make house payments, the bank can foreclose on the mortgage. A local taxing authority can file a property tax lien against an owner for unpaid property taxes. Failure to pay federal income taxes might cause the Internal Revenue Service to file a federal tax lien against the property.
A contractor, subcontractor, or construction worker hired for a specific job can protect their right to be paid by filing a special type of lien, called a mechanic’s and materialmen’s lien, against the property. The lien covers almost all labor, materials, supplies, and equipment involved in making improvements to real property. The lien can be filed before the project begins, and released (removed) once payment has been made. It also can be filed as a way to get paid for work already done. For people in the building trades, a mechanic’s and materialmen’s lien is often the least expensive and most effective option way to get paid.
Examples of “improvements” to property for a mechanic’s lien:
- You build a deck for a home.
- You build a fence for an apartment complex.
- You paint a building.
- You replace the roof for a building.
- You provide lumber for an addition to a home.
“Mechanics” and “materialmen” are the legal names for building tradespeople who have provided labor or materials to make improvements to real estate. These can include contractors, subcontractors, and certain suppliers. If you are a construction worker who has provided labor for a specific project, you can file a mechanic’s lien to get paid for your work.
A mechanic's lien can be filed by any person who provides labor, materials, machinery, fixtures, or tools for construction, repair, or improvement to a house, building, levee, or embankment. Most work that you would associate with home or commercial building is covered. §53.021(a); 53.023(1). Other eligible people include:
- Makers of specially fabricated materials, even if the material is not delivered or installed. 53.021(b)
- Architects, engineers, and surveyors who prepare a plan or plat under a written agreement with the owner. §53.021(c); 53.023(3)
- Landscapers and related tradespeople under a written contract to provide labor, plant material or other supplies for installation or construction of a retention pond, retaining wall, berm, irrigation system, fountain, or other similar services. §53.021(d)
- Demolition specialists who provide labor or materials for demolition of a structure on real property under a written contract with the owner. §53.021(e)
Every lien starts with an agreement or contract. Whether a lien to get paid requires a written contract depends on several factors, including:
- Whether you are a contractor or subcontractor;
- The type of work you are doing;
- Whether the property that you’re working on is commercial or residential; and
- If residential, whether the property is a homestead.
A lien carries with it a threat of foreclosure. In the extreme case, a creditor can file a lawsuit (“foreclosure suit”) to force a sale of the property, then paid from the proceeds of the sale. Most property owners would rather pay the debt secured by the lien than run the risk of foreclosure.
The document is a type of affidavit or sworn statement by you stating that the owner owes you money. The document is filed in the property records with the clerk of the county where the property is located. These records are open to the public. Liens against a piece of property create a “cloud” on the title, which means the owner will have a hardtime selling or refinancing the property until the lien is paid. A lien filed in public records creates a strong incentive for the owner to pay the debt and regain clear title.
Once filed and perfected, a mechanic’s lien creates a security interest in the property for the amount the creditor is owed. The lien is not against the owner, it is against the owner’s property. A mechanic’s lien might be one of several creditor liens filed against a single piece of real estate. If there is more than one lien against the same property, the law determines the order in which each lien is paid.
Often it is enough to send a letter demanding payment for your work. The demand letter warns the owner (and contractor, if you are a subcontractor) that you will file a mechanic’s lien against the property if you are not paid by the deadline. Filing the lien won’t force the owner to pay you right away, but it will make it difficult for the owner to do anything with the property as long as the lien exists. The lien is in the public. Depending on the amount of money at stake, you can choose to a lawsuit to “foreclose” on the lien. A foreclosure lawsuit forces the sale of the property in order to pay creditors. You may be one of many creditors with liens on the same property. In the case of several liens, the law determines who gets paid first (often in the order of filing).
Yes. The work you were hired to do must be “substantially complete” for the lien to be valid. This means that the work must be substantially finished. If you are a maker of specially fabricated materials (something that cannot easily be used in another project), you are entitled to a lien even if the materials have not been delivered or the item has not been installed.
- Glossary of Terms - Page 5
- Contracts - Page 9
- Introduction to Liens - Page 11
- Original and General Contractors - Page 14
- Subcontractors and Other Claimants - Page 19
- Makers of Specially Fabricated Materials - Page 24
- Constitutional Liens - Page 27
- Calendar of Lien Filing Deadlines - Page 28
- Checklist for Getting Paid - Page 29
- Forms - Page 30
- Contract for Construction Services - Page 31
- Formal Request to Furnish Information - Original Contractor to Property Owner - Page 34
- Formal Request to Furnish Information - Subcontractor to Original Contractor - Page 35
- Notice of Specially Fabricated Materials - Page 36
- Notice to Property Owner of Unpaid Balance and Demand for Payment for Labor Performed and/or Materials Provided - Page 37
- Notice to Original Contractor of Unpaid Balance for Labor Performed and/or Materials Delivered - Page 39
- Notice to Subcontractor of Unpaid Balance for Labor Performed and/or Materials Delivered - Page 40
- Affidavit for Mechanic's and Materialmen's Lien - Page 41
- Notice of Mechanic's Lien Filing - Page 44
- Release of Mechanic's Lien - Page 45
- Disclosure Statement for Residential Construction Contract - Page 46
- Waiver of the List of Subcontractors and Suppliers - Page 49
- List of Subcontractors/Suppliers - Page 50