When you subcontract to work on a construction project, you take a risk, especially if you have never worked for the contractor before or the contractor’s reputation for payment is sketchy. There is always the chance that the owner of the construction project will not pay or that the contractor will not pass along to you what you deserve for the work you completed.
This is where a mechanic’s lien can come in handy. A mechanic’s lien, or contractor’s lien, is an option Texas law provides to ensure contractors and subcontractors receive fair pay for their work. Employing such a lien is complex, but since the success of your business depends on you getting paid, it may be worth it to learn how you can benefit from filing one.
How does it work?
A mechanic’s lien works by placing a lien on the property where you completed the work. The lien prevents the owner of the property from refinancing or selling it until you receive your pay for the work you did. To this end, you may have to file a lawsuit to force the sale of the property.
Even if the owner of the property paid the contractor in full but the contractor failed to pay you your share, you still have the right to place a lien on the property. The law then allows the property owner to file his or her own lawsuit against the contractor to recoup any losses.
What are the steps?
To file a lien for nonpayment, you must first have sent an invoice for payment to the property owner or contractor, whichever party had contracted you for the work. If you do not receive payment, you have a limited amount of time to provide to the owner of the property, the contractor and anyone else involved in the project a written notice that you intend to put a mechanic’s lien on the property.
The notice you send must include specific information and go to the correct parties. For example, you must be sure to identify the actual owner of the property and include details about the work you did and the payment you expect. You will then have to wait until the deadline passes for receiving payment before you can file the lien in the appropriate county office.
If you do receive payment after taking this action, you will have to file a court action to remove the lien from the property title. However, if, after filing the lien, you still receive no payment, you will have to take court action against the property owner before the lien expires. If a mechanic’s lien is a tool you feel will help you get the payment you deserve, you may benefit from seeking guidance from an experienced attorney.