If you are a Texas contractor, subcontractor or supplier in the construction industry, you probably agree that one of the most difficult parts of your job is getting people to pay you for the goods or services you provide. Whether the project owner refuses to pay or the contractor fails to give you your fair share, it can be frustrating and damaging to your business to have to chase down your money.
Fortunately, the law provides a process that offers some protection from nonpayment and an alternative for claiming the money an owner or contractor owes you. You can place a mechanic’s lien on the property under construction that will place significant pressure on those parties to pay their debt to you.
What should I know about a mechanic’s lien
A mechanic’s lien, also called a construction lien, places a claim on the property for the amount owed to you. It is an effective way to get the attention of the owner of the project because it means you are willing to force foreclosure on the property to obtain what is rightfully yours. Because of the serious nature of the mechanic’s lien, it is important that you exhaust all other methods for collecting the payment. Additionally, you should understand these facts about mechanic’s liens:
- You may place a lien on the property even if the property owner paid the contractor in full but you did not receive your full payment.
- You may only seek the amount of money you earned for the project and not any punitive damages or legal fees.
- The lien is a matter of public record and may prevent the owner from selling the property without settling the debt.
- After a certain amount of time, a lien will expire, but an unpaid lien may remain on the owner’s credit report for several years.
- A contract may not be enforceable if it forces you to waive your right to file a lien before you receive your payment.
Exaggerating the amount of money someone owes you or filing a lien when you have already received payment is fraud, so it is important that you take the matter seriously and seek legal advice. You will also be dealing very rigid timelines for each step of the process, especially if you decide to follow through with foreclosing on the property. Working with an attorney who is familiar with Texas laws for mechanics liens is a prudent move.