How Mechanic's Liens Work in Texas

What is a mechanic's lien?

It is a security interest in real property, created by statute, for the value of labor or materials that improved that property. Texas recognizes it in the constitution for original contractors and in Property Code chapter 53 for everyone else; the statute supplies the procedure for both. Unlike a contract claim, which produces a judgment against a person, a perfected lien attaches to the land and building. It clouds title, shows up in every lender's and buyer's search, and can be foreclosed.

The lien does not create a debt. It secures one. If the claimant was not actually owed money, or waived it, the lien falls with the debt.

Who can claim one?

Anyone who, under a contract with the owner, the owner's agent, a contractor or a subcontractor, did one of five things (Tex. Prop. Code § 53.021): furnished labor or materials for constructing or repairing an improvement; specially fabricated materials for the project, even if never delivered; prepared plans, drawings, surveys or specifications as a licensed architect, engineer or surveyor; furnished labor or materials for landscaping installations such as retaining walls and irrigation; or performed demolition.

The statute then splits claimants into two groups, and the group decides the paperwork:

• Original contractor: contracted directly with the owner. No pre-lien notice is required; the lien is perfected by the affidavit alone.
• Derivative claimant: everyone further down the chain, including subcontractors, sub-subcontractors and suppliers. A derivative claimant must send a notice of claim to the owner and the original contractor before the affidavit, because the owner may not even know the claimant exists.

How is the lien created?

In three steps for a derivative claimant, two for an original contractor.

1. Notice of claim (derivative claimants only). A written notice in substantially the statutory form, stating the project, the claimant, the type of work, the party the claimant contracted with and the amount, sent to the owner and the original contractor by certified mail, any traceable delivery service, or in person (§§ 53.056, 53.003). Unpaid contractual retainage has its own notice (§ 53.057).
2. Lien affidavit. A sworn statement recorded with the county clerk where the property is located, containing the elements § 53.054 lists: the amount, the owner, the claimant, a general description of the work, the party who hired the claimant, a legal description of the property and, for derivative claimants, the months the work was done and the notices sent.
3. Copy of the affidavit to the owner, and to the original contractor if the claimant is not one, within five days after filing (§ 53.055).

Every step has a deadline measured from the month the work was done or the project ended. Those dates, including the changes that took effect for contracts signed on or after January 1, 2022, are set out in Texas mechanic's lien deadlines. A missed date is the most common reason a lien fails.

What is the owner liable for?

Less than most owners fear, if the owner follows the statute. The owner's protection comes from two pots of money.

Reserved funds. During the work and for 30 days after completion, the owner must reserve ten percent of the contract price or of the value of work performed (§ 53.101). Those funds are there for subcontractors and suppliers who perfect claims against them.

Withheld funds. When a notice of claim arrives, the owner may withhold the amount claimed from the next payment to the original contractor, on top of the reserved funds (§ 53.081). An owner who pays the contractor anyway, after being authorized to withhold, becomes liable for that payment if the claimant's lien is later secured and reduced to judgment (§ 53.084).

An owner who did neither, and paid the contractor in full before any notice arrived, is generally liable to derivative claimants only for the ten percent he should have reserved. That is why a subcontractor's notice is sometimes called a fund-trapping notice: it freezes money in the owner's hands.

Example

Suppose an owner in Plano hires a general contractor for a $1,000,000 office renovation and pays every draw in full, reserving nothing. A drywall subcontractor who is owed $60,000 sends a timely notice and files a timely affidavit. The owner argues he already paid for the drywall. Under the statute, the owner is liable to the subcontractor for the $100,000 he should have reserved, which covers the claim, and the owner's remedy is against his contractor. Had the owner reserved ten percent and withheld after the notice, his liability would have ended with those funds.

Are homesteads different?

Yes. A lien on a homestead is valid only if there is a written contract between the owner and the original contractor, executed before any work began and before any materials were delivered, signed by both spouses if the owner is married, and recorded with the county clerk (§ 53.254). The affidavit and the notice to the owner must also carry specific warning language. Residential projects generally also have shorter deadlines than commercial ones.

How is a lien enforced, paid or removed?

A lien is enforced by a lawsuit to foreclose it in the county where the property sits, generally filed within one year after the last day the claimant could have filed the affidavit, extendable to two years by a recorded agreement with the owner (§ 53.158). The court orders the property sold if the lien is valid, and in proceedings to foreclose or to declare a lien invalid the court awards costs and reasonable attorney's fees as equitable and just (§ 53.156).

Most liens never reach foreclosure. They are discharged of record (§ 53.157) when the claimant is paid and records a release, when the suit deadline passes without a filing, when a court orders removal, or when someone posts a bond. Any interested person may bond around a lien by filing a surety bond for twice the lien amount, or for claims over $40,000 the greater of 1.5 times the claim or the claim plus $40,000 (§§ 53.171, 53.172); the lien then attaches to the bond instead of the land, which lets a sale or loan close.

An owner who believes a lien was filed late, without the required notice, or against a homestead without a proper contract can ask the court to remove it on a summary motion. Removing an invalid lien from Texas property covers that procedure and the separate liability for fraudulent liens.

What else should a claimant or owner know?

• A lien secures only amounts for the improvement itself. Unrelated debts, interest the contract does not provide for, and amounts for work on a different project do not belong in the affidavit.
• Lien waivers in Texas must substantially follow statutory forms, and a conditional waiver is not effective until payment clears. Lien waivers in Texas covers the forms.
• Public property cannot be liened. Claimants on state and local government projects look to the payment bond instead.
• A contingent payment clause in a subcontract does not defeat the subcontractor's lien rights.
• The owner's lender holds a deed of trust lien that was usually recorded before construction began, and priority between the two is a separate question that often decides whether a mechanic's lien is worth anything.

Tina Wysk handles lien claims and lien defense for owners, contractors and suppliers as part of her construction litigation practice in Dallas.