Mechanic’s Liens Texas Style: Deadlines & Forms of Notice to Get Paid - Texas Webinar

In this blog, presented by SunRay Construction Solutions and Rebecca A. Hicks, Managing Partner, Hicks Law Group, construction professionals in Texas can learn in detail the mechanic’s lien law deadlines and what forms are required to file a valid mechanic’s lien.  

Step One: Get Good Project Information

One of the first steps that you should be carrying out is to gather as much information as possible about the project. Typically, there are three big questions that should be answered:

• What kind of project is it, and who is the owner?

• What is your position in the construction chain?

• Is there a payment bond?

As you are aware, a mechanic’s lien can be filed only on private projects. So, if you are working on any state, local, or federal government work, then the rules of a mechanic’s lien do not apply. Also, it is important to know who the project owner is because that will determine the rules to be applied.

Another key information to know is your position in the construction chain. If you do not know where you sit in the construction chain, then you don’t know whom to send the notices to, and you might end up skipping someone, which could have an impact on the validity of your mechanic’s lien.

Finally, you need to ask whether there is any payment bond on the project. Typically, payment bonds are related to public works; however, many private projects also nowadays have a payment bond. So, you need to check if the private project that you are working on also has a payment bond attached to it.

Let’s look at each of these three questions in detail.

A) What kind of project is it?

Typically, there are four different types of projects:

• Private works project – These are projects that are privately owned by a company or private individuals.

• State or local public works project – These are projects owned by a state entity, such as road works.

• Federal public works project—These are projects owned by the federal government, such as if you are working on an army base.

• Public private partnership (P3 or PPP) project – These are projects that are jointly owned by a private entity and a government entity. These projects are also considered as government projects which means that a mechanic’s lien is not applicable in such projects.

A private project means any project that is owned by a private entity. So, this entails commercial construction projects, shopping centers, residential projects, etc. You will find all the related rules to these private projects in Chapter 53 of the Texas Property Code.

B) What is your position in the construction chain?

A traditional construction model is basically about who contracted with whom. It would look something like this:

• At the top of the construction chain is the owner who contracts with the prime/general/original contractor.

• The prime contractor then contracts with the first-tier subcontractor, such as the plumber, electrician, etc.

• The first-tier subcontractor contracts with the second-tier subcontractors.

• The second-tier subcontractor contracts with the third-tier subcontractors who are typically the suppliers who provide the product to the second or first-tier subcontractors.

So, you need to know the order until you get to your position in the construction chain.

C) Is there a payment bond?

Government jobs are always bonded; however, it is not mandatory for a private job to be bonded. It depends on what is agreed upon by the owner and the general contractor. You would ideally see these payment bonds on large private jobs, such as if you are working on a private hospital or development of a large subdivision. Most small types of private construction jobs will not have a payment bond; but you will not know about it unless you ask. This is why you must always ask whether there is a payment bond on the project.

So, what exactly is a payment bond?  

• In simple terms, it is an insurance policy purchased by the general contractor to protect the owner by ensuring that materialmen and subcontractors are paid.  

• As per the payment bond, if the general contractor fails to make the payment to the suppliers and subcontractors, the surety will ensure to make the payment as long as a valid claim perfected properly up to the amount of the bond is presented.  

• The payment bond has to be in the full amount of the job which means it should be in the full amount of the contract between the general contractor and the owner.  

Sometimes, if it is a large job, the general contractor will require the subcontractors to also post a payment bond for the construction professionals who are below them in the construction chain. This type of bond is called a subcontractor bond, and it is another way to get paid on these construction jobs.  

Another common concept that you may come across when you ask for a copy of the payment bond is that you will notice two types of bonds in the same document— a performance bond and a payment bond.

A performance bond is of no use to you, and it is there only to protect and benefit the owner. It is a separate insurance policy purchased by the general contractor to protect the owner. As per this bond, if the general contractor fails to complete the work, the surety will step in either complete the job itself or hire a replacement general contractor to complete it.

You can find out what type of bond it is by looking at the title and remember that you are concerned only with the payment bond.

Best Practices to Verify Job Information

Having all the required information about the project is key to perfecting your mechanic’s lien claim. Here are the best practices to verify job information:

• Use a Job Information Sheet: Start every project by completing a job information sheet with all essential details.

• Collect Information Early: Don’t wait until there's a payment issue—get accurate details at the beginning of the project.

• Confirm the Project Address: Make sure the address provided is the actual job site, not just a delivery location.

• Include a Legal Description: Whenever possible, obtain a full or partial legal description of the property for lien purposes.

• Verify Through the Customer: Ask the customer or contracting party to assist in completing the job information sheet.

• Ask the Right Questions: Contact the contracting parties and ask:

• Who is your contract with?

• Who owns the project?

• Is there a payment bond?

• Research Online: Many general contractors list project information on their websites.

• Check Ownership Records: Use public property records or real property deeds online to confirm the legal property owner.

Here is a sample job information sheet that you can use:

One of the most important steps is to find a good address because that is where you are going to send your notices. Texas law still requires you to send notices via certified mail, return receipt and requested. So, how are you going to find the right addresses for the parties in the construction chain?

• Any sort of incorporated entity or limited liability company must be registered with the Texas Secretary of State.

• They have to provide basic information about their company including the principal place of business and an address for a registered agent or company.

• The easiest way to find this information in Texas is to access the SOS Direct service. This is a subscription service where you need to pay some amount for each search.

• Once you have the names of those who you believe are in the construction chain, you run it through the SOS Direct website, and you get that principal place of business address and the registered agent address.

Step 2: What is my Deadline?

Deadlines are one of the most important things to bear in mind while filing your mechanic’s lien because if you miss a deadline, then you can end up losing your lien rights. Here is a brief overview of the lien deadline:

• The general contractor or any person who has contracted directly with the owner has only one deadline to follow. They need to file their mechanic’s lien affidavit by the 15^th day of the fourth month after the last time they did substantive work (not punch list work) on that job.

• The first tier, second tier, and anyone below the general contractor have to follow a two-step process. First, they need to send a Fund Trapping Notice Letter (FTNL) by the 15^th day of the third month after each month that they do work on the job.  

• Next, they need to file their lien by the 15th day of the fourth month after the last month you did work on the job.

• Keep in mind that these dates do not run from your pay application date or invoice date. They run from the month you performed the work or the month in which you delivered the product.  

• The FTNL goes to everyone who is above you in the construction chain. This is why you need to know where you sit in the construction chain and who is above you.

• If you keep working on a job and you are not getting paid, you may have to send more than one fund trapping notice letter because you have to send it on the 15^th day of the third month after each month that you haven't been paid for.

• But you will need to file only one mechanic’s lien because that 15^th day of the fourth month deadline for the mechanic’s lien runs only from the last time you perform some substantive work on the project or the last time you delivered product for the project.

• For example, if you have performed work or provided materials in the month of January, then you must ensure that the notice goes out to everybody above you in the construction chain on or before 15^th April. The mechanic’s lien will have to be filed on or before 15^th May.  

A) Subcontractor

As mentioned earlier, for a subcontractor, it is a two-step process:

• The fund trapping notice letter should be sent by the 15^th day of the third month after each month that you haven’t been paid for to the owner, GC, and subs above you.

• The lien affidavit should be filed by the 15^th day of the fourth month after the last day you did the work on the job.

• You also need to send the notice of your filed lien affidavit within five days of filing it. The lien affidavit is a sworn form that contains certain information that is required by the statute, and it is filed with the real property records in the county where the project is located.  

Most of the filing is now done electronically, but you can still physically record a mechanic’s lien if you have an original signature and you physically provide it to the county clerks. Once you file the lien, it is recorded against the piece of real property where the project is, so it shows up in the real property records like a mortgage.

B) Original or General Contractor

If you are a party that is contracting directly with the owner, then there is only one deadline to follow.

• The lien should be filed by the 15^th day of the third month after the last day you performed work.

• If you miss this deadline, then there is a concept called constitutional lien in Texas. This is a self-executing lien applicable only for general contractors. So, if you miss the statutory deadline, then as a general contractor, you have this additional lien claim that you can make.

Step 3: How to Perfect a Claim on a Private Project?

The final step is to perfect your mechanic’s lien claim. Here’s what you need to do to perfect your mechanic’s lien:

• Send the third-month notice to the owner, GC, and anybody above you in the construction chain.

• File the mechanic’s lien affidavit on or before the 15th^th day of the fourth month.

• Send the notice of the filed lien within five days of filing the lien.

• If the lien gets paid, then you need to sign a release of lien.

• If the lien does not get paid, then you will have to file a lawsuit to foreclose on the lien. The deadline to file suit to foreclose the lien is one year from the date of filing the lien.

A) Ch.53 Statutory Form 3^rd Month Notice

In Texas, everybody was using their own version of the statutory form by including the required information in the notice. There was no specific instruction on how the notice should look. However, now the legislature has provided a word-to-word form that needs to be used. There is also a part of the statute that says that if you send a notice that's substantially different than our form, then it is not going to be enforceable.

So, make sure that you are using this statutory form and not any other version of it. The only thing you are going to be adding to this form is the addresses at the top with the certified mail numbers. So, you are going to be adding certified mail numbers and addresses for everybody above you in the construction chain to the letter.

The statutory form will include the below details:

• The first part of the form will have a warning, and if this warning is not at the top, then you will not have a good claim.

• Date  

• Project description and/or address

• Claimant’s name

• Type of labor or materials provided—you don’t have to provide a detailed description listing out all the technical details.

• Original contractor’s name

• Party with whom claimant contracted if different from original contractor—so, if you are a second-tier subcontractor, then this is where you will put in the first-tier subcontractor’s name with whom you have contracted.

• Claim amount—you must ensure that you are entering the exact claim amount.

• Claimant’s contact person—if a legal entity is representing you, then you put in their name here.

• Claimant’s address

You can also include invoices, unpaid pay applications, billing statements, etc.

B) Who gets the 3-month notice?

In short, everybody who is above you in the construction chain should get the 3^rd month notice, and you want to include all the addresses possible based on the party.

• Owners – For owners, you will generally send it to the address that is on the Central Appraisal District (CAD), address on the deed pulled from the real property records, the address provided on the job information sheet, registered agent and the principal place of business (PPB) addresses found on the Texas SOSDirect website. Although email notices are not legally effective, you can still include the email addresses for anyone that you have contact with at the owner.

• General Contractor – For GC’s, you will send it to the address present on the job information sheet, registered agent and the principal place of business (PPB) addresses found on the Texas SOSDirect website, and email addresses.

• First-tier Subcontractors – For first-tier subcontractors, you will send it to the address present on the job information sheet, registered agent and the principal place of business (PPB) addresses found on the Texas SOSDirect website, and email addresses.

• Customer – For customers, you will send it to the address on the Credit App, registered agent and the principal place of business (PPB) addresses found on the Texas SOSDirect website, and email addresses.

C) Forms of Delivery for Lien Notices

Below are the acceptable forms of delivery of lien notices:

• Registered mail and Emails  are not acceptable.

• Best and cheapest way to send these notice letters and ensure that they are effective under the Texas law is to send them via certified mail return receipt requested.

• FedEx, UPS, etc., are also acceptable but they are more expensive.

D) Next Step – File a Mechanic’s Lien

Let’s assume that you have sent out all the required notices, used the statutory form, but you still haven’t been paid. You are no longer working on the job, so the next step is to get your mechanic’s lien filed by the 15^th day of the fourth month after your last performed work.

• A mechanic’s lien is a sworn affidavit that must be filed with the county clerk and recorded in the real property records.

• You can e-record in most counties in Texas, but you have to sign up with the e-recording service in order to do it. Use Sunray’s easy and efficient e-recording service.

• Some counties still require physical filing, which means you must have a notarized original signature mechanic’s lien affidavit and physically deliver it to the county as per the deadline.

• You need to check in advance whether you can e-record it or not because if you wait until the 15^th day to figure it out, you will not be able to get that physical copy there in time.

• You also need to know about the filing and recording times and fees involved. County clerks charge a filing fee for these affidavits for mechanics.  

• There is usually a fee for the first page and then a fee for every page after that. If you don't pay the fee, or if you must send a physical copy and you don't send that money with the affidavit, they won't report it, and you would have missed the deadline.

E) Mechanic’s Lien Affidavit

The legislature does not provide a word-to-word form for a mechanic’s lien affidavit. So, you just have to ensure that the form you are using includes all the information listed out in the statute that it's required to include. Below is the information that should be included in the affidavit:

• A sworn statement of the amount of the claim

• The name and last known address of the owner or reputed owner

• A general statement of the kind of work done and materials furnished by the claimant and, for a claimant other than an original contractor, a statement of each month in which the work was done and materials furnished for which payment is requested

• The name and last known address of the person by whom the claimant was employed or to whom the claimant furnished the materials or labor

• The name and last known address of the original contractor

• A description, legally sufficient for identification, of the property sought to be charged with the lien

• The claimant’s name, mailing address, and, if different, physical address

• For a claimant other than an original contractor, a statement identifying the date each notice of the claim was sent to the owner and the method by which the notice was sent

Apart from the above information, the affidavit may also include:

• A copy of any applicable written agreement or contract and a copy of each notice sent to the owner.

• You don’t need to set forth individual items of work done, or items furnished or specially fabricated.  

F) E-Record

E-record your lien affidavits.  

G) Next Step – Send Notice of Filed Lien

Once the lien has been filed, you have to notify everybody who is above you in the construction chain.

• Make sure that you send out the notice about the filed lien within five days of filing it.

• You can also send a copy of the lien on the same day you file it.

Key Takeaway

The Texas Mechanic’s Lien law is quite vast and complicated. However, being on top of these key aspects, such as deadlines, what forms to use, what questions to ask to validate your lien claim, and knowing how to perfect your lien claim can help you to successfully record and file your mechanic’s lien.  

Common Questions Contractors Ask

1: Can a lien be filed on a homestead in Texas?

Yes, but only if strict contractual requirements are met. The contract must be in place before any work begins and must include specific language as laid out in Chapter 53 of the Texas Property Code. If the property is owned by a married couple, both spouses must sign the contract. Additionally, certain documents must be recorded in the real property records. There’s also a separate mechanics lien form for homestead projects that includes unique language requirements.

2: Are lien deadlines the same for homestead and commercial projects in Texas?

No. The deadlines for homesteads are one month earlier than for commercial jobs. Both the notice deadline and the lien filing deadline are accelerated, so it’s crucial to plan accordingly.

3: What language should be included in a contract to protect against tariff or material cost increases?

You should include an escalation clause. This provision allows for price adjustments if material costs increase beyond a certain threshold (e.g., 7% or 10%). There are various ways to draft escalation clauses depending on your specific tolerance for price changes.

4: Does a mortgage take priority over a recorded mechanics lien?

Generally, yes, if the mortgage was recorded before construction began. However, if any work—such as dirt work—began before the mortgage was officially recorded, the lien may take priority. It’s critical to compare the start date of construction with the recording date of the mortgage. Errors by title companies can create opportunities to assert lien priority.