As the area’s population grows, construction projects in Dallas are growing to keep up. That can seem like a good thing for construction companies – but periods of growth are actually some of the riskiest for contractors. In fact, subcontractors are three times more likely to fail in a growing economy than during an economic downturn. To make matters worse, Texas has some of the most complex laws governing mechanics lien filings in the US. Contractors must keep up to date with state laws to protect their lien rights on every project. During August, payment disputes in Dallas reached a 4-month high.
The 5 biggest liens in Dallas (August 2019)
From May to July, the average number of payment disputes on construction projects was 211. In August, total liens shot up to 306: a 45% increase in slow or late payments. Some of the biggest liens filed in Dallas for the month of August feature big developments, including several luxury apartment complex projects and hotels. No matter what type of project you’re working on, a mechanics lien is a critical tool in case you’re not paid. As evident from these liens in Dallas County, apartment projects can get messy, and contractors could end up filing multiple liens during apartment construction.
1. $2.7 million lien against W3 Luxury Living in Farmers Branch
Lien Amount: $2,796,646.85
Claimant: NAPCO Precast, LLC
Hiring Party: W3 Luxury Living
Property Address of Lien: 1790 Mercer Pkwy East, Farmers Branch, TX
Property Owner: Western Rim Investors
NAPCO Precast, LLC filed the largest lien in Dallas County for August 2019, totaling $2.8 million. The concrete contractor has locations in San Antonio, TX and Broken Arrow, OK. NAPCO Precast, LLC designs, manufactures, delivers and installs precast and prestressed concrete products.
W3 Luxury Living is a subsidiary of Western Rim Investors, a developer based in the Dallas-Fort Worth area. They hired NAPCO Precast to work on the Luxe at Mercer Crossing Apartments in Farmers Branch, Texas. Western Rim was busy in the summer of 2019 with two other residential projects happening in Rowlett and San Antonio.
According to their Contractor Profile, Western Rim Investors are considered a medium payment risk. In the last year, Western Rim Investors has experienced 16 payment disputes or slow payment incidents, including four mechanic lien filings and 12 slow payment claims. According to payment document data, contractors working with Western Rim Investors experience payment issues on 27% of jobs. That’s a good reminder that getting hired on a big construction project doesn’t always mean a big payday.
2. $1.1 million lien against RBHV Dallas in Dallas
Lien Amount: $1,196,793.11
Claimant: Signal USA LLC
Hiring Party: RBHV Dallas
Property Address of Lien: 13131 North Central Expressway, Dallas, TX
Property Owner: RBHV Dallas
Signal USA claimed the second-largest payment dispute of the month, filing a $1.2 million lien against RBHV Dallas. Signal USA is a building restoration service in Troy, MI that services both commercial and residential job sites. The company offers emergency services, environmental services, cleaning and repair, construction services and personal property services.
Work on this million-dollar lien case took place at the Embassy Suites by Hilton Dallas Park Central Area in Dallas, TX. RBHV Dallas hired Signal USA for their restoration assistance. RBHV Dallas operates as a hotel with Embassy Suites by Hilton. The hotel is located about 12 miles north of downtown Dallas and 13 miles from Dallas Love Field Airport.
This case is a good reminder that working on projects across state lines requires deep understanding of the construction laws in that state. Even though Signal USA is based out of Michigan, they were able to navigate the complicated monthly notice requirements in Texas to protect their right to file a lien.
3. $782k lien against Independent American Construction in DeSoto
Lien Amount: $782,598.35
Claimant: THB Construction, LLC
Hiring Party: Independent American Construction (IAC)
Property Address of Lien: 1013 Vista Lane, DeSoto, TX
Property Owner: Wildwood Development Company
This is actually THB’s third lien for $782k against IAC on the same property – a unique situation for sure, and one that’s not entirely clear. They filed the other two back in June, each with a different property description. It looks like their lawyer wasn’t sure which property description to use, so he filed both. That’s definitely not a good practice. This lien is the third, and includes an itemized list of expenses. Hopefully the third time’s the charm for THB, and they get their payment!
In the last year, Independent American Construction has experienced five payment disputes or slow payment incidents, including two mechanic lien filings and four slow payment claims.
Homestead at Daniel Farms is a housing subdivision located about 14 miles south of downtown Dallas. Wildwood Development has developed more than 30 subdivisions, comprising over 2,500 lots. They’ve been operating in neighborhoods throughout the Dallas/Fort Worth area since 1998.
This is an interesting lien case, and a reminder that even lawyers get the filing wrong.
4. $701k lien against W3 Luxury Living in Farmers Branch
Lien Amount: $701,166.28
Claimant: NAPCO Precast, LLC
Hiring Party: W3 Luxury Living
Property Address of Lien: 1890 Mercer Pkwy, Farmers Branch, TX
Property Owner: Western Rim Investors
In total for the month of August, NAPCO Precast is owed about $3.4 million by W3 Luxury Living for more work conducted in Farmers Branch, TX. This time around with W3 Luxury Living and Western Rim Investors, NAPCO Precast worked on a project at the Towers at Mercer Crossing Apartments and filed a lien of over $700,000. The apartments are located just under 16 miles north of downtown Dallas and only 1.4 miles down the road from the Luxe at Mercer Crossing Apartments (the property where they filed the 2nd largest lien of the month).
5. $577k lien against NorthPoint Development in Dallas
Lien Amount: $577,373.42
Claimant: MACON, Inc.
Hiring Party: NorthPoint Development
Property Address of Lien: 9314 W Jefferson Blvd, Dallas, TX
Property Owner: NorthPoint Development
The fifth largest payment dispute in Dallas County was filed by MACON, Inc. They filed a mechanics lien for almost $600k against NorthPoint Development.
MACON, LLC is a structural steel fabrication and erection company with headquarters in the Dallas-Ft. Worth area. The project took place at the Dallas Global Industrial Center, which is an industrial and manufacturing warehouse located in Dallas, TX.
MACON, Inc. was hired by the property owner in NorthPoint Development, which is based in Riverside, MO. The company was established in 2012 and is a privately held real estate development firm specializing in the development of Class A Real Estate facilities. The Dallas Global Industrial Center project was completed in 2019 and is an 800k square foot building. The warehouse also includes 45 dock positions and 42 drive-in docks.
Based on the data available, NorthPoint Development works on about 14 jobs per year in 7 states. Their customers experience payment issues on 7% of jobs. Relative to other contractors in the country, NorthPoint Development is considered a medium payment risk.
Developers Plan More Construction As Population Grows
Overall for the month of August, 242 different companies filed 306 liens for a total of $13,899,712.24. The largest payment dispute in Dallas was over $2.7 million, while the smallest was for $406.25. That should be a reminder that no matter how small the amount, non-payment hurts contractors.
Over 500,000 new residents are moving to Texas each year. According to U.S. News, Dallas’ population grew by nearly 1.8% from 2017 to 2018 – an increase of roughly 132,000 people. As a result, the housing market and the hospitality industry are straining to keep pace. In this month, four out of the five top payment disputes in Dallas involved either a hotel project or a luxury apartment.
As December of 2019, Dallas is seeing yet another massive apartment project coming its way. According to news reports, Atlanta-based Wood Partners is in the midst of building over 300 apartment units in North Dallas. Assuming they’re able to build the complex without any delays, it’s scheduled to open in early 2021. Also in December, California-based T2 Hospitality purchased property in Dallas to build a 19-story, 230-room hotel.
As bidding for these residential or hospitality building projects continues to flare in Dallas County, it’s important for contractors to know and understand about their right to file a mechanics lien during slow payment. Before you bid on a new project in Dallas (or anywhere), use Levelset’s Contractor Profiles to do some background research on the companies you’ll be working with. Take a closer look at the property owner and GC on the project. If the risk of non-payment is too high, invest your money into jobs that make payday less stressful.