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Texas Mechanics' Lien Law

By By Steven E. Kennedy, Esq. 1

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The 2011 Legislative Session brought a number of changes to the Texas mechanics lien statute, Property Code Chapter 53.  The changes deal primarily with timing for a notice for a lien on retainage and forms required to secure a release of lien.  These changes are effective for contracts entered after September 1, 2011 and are summarized below:
Retainge Notices – Texas Property Code § 53.057 – Derivative Claimant: Notice for Contractual Retainage Claim

The requirements for perfection of a lien on contractual retainage for a subcontractor or supplier have been rewritten.  The former Tex. Prop. Code § 53.057 required claimants to give notice of a retainage agreement to the owner by the fifteenth of the second month following the first delivery of materials or performance of the work under an agreement including retainage.  Because of this early notice requirement, many subcontractors and suppliers failed to send a retainage notice.  Even if a notice was sent under the prior statute, claimants were still faced with the challenge of actually filing the lien on or before thirty days after final completion, which often caused an owner’s title to be clouded by a lien before an owner was obligated to pay the prime contractor its retainage under their contract.  Changes to Tex. Prop. Code § 53.057 attempt to cure these problems by changing the notice requirement trigger to completion of the subcontract work or the prime contract.  This eliminates the early notice requirement, but places on the owner a greater risk of claimants perfecting a lien for retainage at the end of the project.  The full text of the revised § 53.057 is set forth below, with the changes indicated.  Note that the deadlines for filing the claimant’s lien for retainage have also been revised.  Because of the complexity, and breadth of the changes, it is recommended that all parties involved in a construction project review the new notice provisions and lien deadlines in detail. 

§ 53.057. Derivative Claimant: Notice for Contractual Retainage Claim

(a)  A claimant may give notice under this section instead of or in addition to notice under Section 53.056 or 53.252 if the claimant is to labor, furnish labor or materials, or specially fabricate materials, or has labored, furnished labor or materials, or specially fabricated materials, under an agreement with an original contractor or a subcontractor providing for retainage.

(b)  The claimant must give the owner or reputed owner notice of thecontractual retainage not later than the 15th day of the second month following the delivery of materials or the performance of labor by the claimant that first occursearlier of:

(1) the 30th day after the date the claimant's agreement providing for retainage is completed, terminated, or abandoned; or

(2) the 30th day after the date the original contract is terminated or abandoned .

(b-1) If thean agreement for contractual retainage is with a subcontractor, the claimant must also give the notice within that timeof contractual retainage to the original contractor within the period prescribed by Subsection (b).

(c)  The notice must generally state the existence of a requirement for retainage and contain:

(1)  the sum to be retained; the name and address of the claimant; and

(2)  the due date or dates, if known;  and (3) a general indication of the nature of the agreement is with a subcontractor, the name and address of the subcontractor.

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     FOOTNOTES

 

1 Steven E. Kennedy is an attorney practicing in Dallas, Texas, as well as licensed architect. Mr. Kennedy’s practice is concentrated in the area of construction law, contract disputes, and commercial litigation and arbitration. He is a Shareholder and Director of the firm of  McGuire, Craddock & Strother, P.C


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