Wednesday, February 22, 2017

5 Questions to Help You Understand the Basics of Mechanic's Liens

By The Cromeens Law Firm, PLLC, on Friday, January 13, 2017

Mechanic's liens exist to protect the rights of construction professionals and to help ensure they are properly compensated for work or materials they have provided. While the purpose liens serve is beneficial, maneuvering through the process in Texas can be complicated and tricky. To get you started with understanding the basics, the construction attorneys at The Cromeens Law Firm, PLLC, answer these five questions: 

1. What is a mechanic's lien?

mechanic's lien, also known as a materialman's lien (M&M lien), is a legal recourse construction professionals can utilize to enforce payment for their labor as well as any materials or supplies purchased for a project or improvement to a property. These types of liens are filed in the real property records against the property where labor and/or materials were used.

The M&M lien is like an involuntary mortgage the property owner did not agree to, but if done correctly, the owner will be forced to pay. Often times, since project agreements are usually made through the general contractor, the property owner may not have ever met or come in contact with the lien claimant until the lien process was initiated. Additionally, as a result of an M&M lien, the property owner will face difficulties in selling or refinancing the property without first paying off the debt.

2. Who can file a lien?

An M&M lien can be filed by any construction professional who has not been compensated for providing labor, supplies or materials for a construction, repair, building, improvement or renovation to a property, including:
  • Builders
  • Contractors, subcontractors
  • Suppliers
  • Architects
  • Engineers
  • Surveyors
  • Landscapers
  • Demolition crews
Additionally, Texas law also allows an M&M lien to be filed for custom materials specific to a project that were not delivered to the property but cannot be used anywhere else, including tinted paint, specially sized windows, doors, etc.

3. What information do I need in order to file a valid lien? 

There are a number of items and pieces of information that need to be included in order to file a valid lien. Failure to produce any of the following information could result in an invalid lien:
  • The property owners name and address
  • The general contractors name and address
  • A legal description of the property
  • A brief description of the work that was done or materials supplied
  • The month when the work was provided or when the materials were supplied
  • The dates and manner in which you sent previous payment notices
  • A sworn statement that the lien amount is due
4. How do I start the process?

Before a valid M&M lien can be filed, preliminary notices must be sent to the property owner and the general contractor by the predetermined deadlines. These notices give the owner and general contractor a chance to resolve the claim prior to filing a formal lien.

For a non-residential project, the first notice that is required to be sent is only a statement to the general contractor with the amount you are due, letting them know you are owed money for the project. This notice must be sent by the 15th day of the second month after the first work was done or materials were supplied that you are owed money for.

The next letter is the formal intent to lien and is sent to both the general contractor and the property owner. This notice needs to be sent the 15th day of the third month after first work done or material supplied that you are owed money for.

For residential projects, the first notice that is required to be sent is the formal intent to lien and needs to be sent to the owner and general contractor by the 15th day of the second month after the first work was done or materials were supplied that you are owed money for.

These notices must be sent certified, not filed with the County Clerk's office, and require that specific statutory language is included. If the notices were not sent, a lien should not be filed. Any lien filed without sending the required notices is invalid.
After providing the notices, the next step is to file an Affidavit of Mechanic's Lien in order to collect on your delayed payments. The affidavit is the document claiming the lien and must be filed in the real property records of the County Clerk's office in the county in which the property is located. Keep in mind the timelines for filing a lien have a different start date than the notice letters.

Additionally, as the claimant, once you have filed an M&M lien, you must also file a court action to enforce the lien within one year for residential liens and two years for non-residential liens.

5. How do I know what my deadlines are in order to remain within the guidelines to file a valid lien?

In Texas courts, missing just one of the deadlines even by a day can result in an invalid lien.

Since notification types, deadlines and recipients all vary depending on project types, it is strongly recommended to seek guidance from experienced construction attorneys in order to guarantee all deadlines are met and the lien is valid.

At The Cromeens Law Firm, PLLC, we are expert construction attorneys, and work to protect you rights. If you have provided services or materials for a project and have not been paid for that work, contact us today, and we can help you determine the right strategy to implement.

This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney. 

Collecting a Judgement in Texas

Texas law provides different methods to collect on a court judgment regardless of whether the judgment originates from the state of Texas or another state. When a person or entity recovers money damages in a court, it will primarily be in the form of a judgment. A judgment is merely a piece of paper that declares a person or an entity owes another person or entity money. In order to collect on that piece of paper, consider the following methods and rules:

1. Abstract of Judgment, Domestication and Time Concerns
First, determine whether you have a judgment from a Texas court or another state's court.
If you have a Texas judgment, you can begin the collections process immediately by filing an abstract of judgment in the Real Property Records of the county where the judgment debtor may own non-exempt real property. Once the abstract of judgment is filed and properly recorded then a judgment lien is created which will automatically attach to any non-exempt real property owned or thereafter acquired by the debtor and located in that county. The practical effect of this to warn all potential buyers of a piece of real property that there is an outstanding balance due to the judgment creditor which needs to be paid out of the proceeds of any sale of the property.
If you have a foreign judgment, as in a judgment from another state, then before abstracting the judgment domestication must occur. To domesticate a judgment, file an affidavit filing a foreign judgment, attaching a certified copy of the judgment from the foreign court to said affidavit and a notice of filing a foreign judgment with the county clerk. Be sure to send this a copy of the notice to the debtor. This provides the debtor and public notice of the foreign judgment. Once domesticated in Texas, the judgment creditor can begin employing any and all methods of collection available for a Texas judgment, including but not limited to, abstracting the judgment in particular counties.
Please be aware that a judgment becomes uncollectable ten years following rendition. However, abstracting the judgment within the first ten years after the judgment is rendered will keep it alive for another ten years after abstracting. It starts the ten-year clock over. So if a judgment is rendered on November 10, 2002, then the judgment creditor should abstract the judgment by November 9, 2012. Assuming the abstract is renewed via refiling on November 9, 2012, then the judgment can still be collected until November 9, 2022. This process continues, theoretically, forever. Remember to renew the judgment by refiling the abstract within ten years after the initial filing of the abstract to avoid losing the power to collect on the judgment.

2. Writ of Execution
Secondly, after abstracting the judgment, the judgment creditor can find non-exempt personal or real property in a specific county in Texas and request a writ of execution from the county clerk. The clerk of the county will then send a writ to the judgment creditor. This writ can be sent to a constable or sheriff in the county who will then physically go to the location of the property who will then levy and sell the property on the first Tuesday of the month along with the other foreclosure sales.

3. Writ of Garnishment
Thirdly, along with abstracting the judgment in a county and executing a writ on property, a judgment creditor can collect on the judgment by freezing and taking assets found in a debtor's bank account by executing a writ of garnishment. This allows a creditor to demand a bank turnover any assets found in its customers' account to partially or totally satisfy the judgment.

4. Turnover Order
Fourthly, the most extraordinary of collection methods is to ask a court to appoint a receiver. This receiver will use its court appointed power to find and turnover assets to the creditor where such assets are unattainable through normal collection means. This is the most powerful option, yet the rarest due to its power.
These four methods provide effective ways for judgment creditors to collect on their money judgments. As with many areas of the law, an attorney can be an excellent and sometimes necessary asset in navigating these processes. If you need help collecting a judgment, please call The Cromeens Law Firm, PLLC, and our attorneys will be happy to help.

This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.