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Some states spell out exactly what kind of language must be contained in a valid mechanics lien.  These states may even provide templates in their statutes that unpaid contractors and subcontractors can use in a mechanics lien.  Other states, such as Texas, lay out the general requirements a valid mechanics lien affidavit must follow, and so long as the affidavit “substantially complies” with those requirements, the lien will be valid.

What is “Substantial Compliance” Under Texas Mechanics Lien Law?

Under Texas mechanics lien law, a valid lien affidavit must be in writing and substantially comply with the requirements described in the statute, such as what information the lien must contain and who must sign the lien.

What, however, constitutes substantial compliance under Texas mechanics lien law?  Specifically, what sort of information can a mechanics lien not contain and still be considered valid by Texas courts, or what requirements can go unmet and still validate the mechanics lien affidavit?

The leading case on this issue is Mustang Tractor & Equipment v. Hartford Accident and Indemnity,which was heard just a few years ago before the Court of Appeals of Texas, Austin.  In that case, the court held that when determining if a party substantially complied with the requirements under Texas mechanics lien law for a lien affidavit, courts should distinguish between excusable “mere technical defects” and non-excusable substantive errors.  The test for a non-excusable error is whether, if overlooked, those errors are in direct conflict with the statute or would prejudice another party.

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Texas courts have held that excusable errors include sending only one copy of a mechanics lien affidavit instead of the required two, sending a copy of a lien affidavit before, not after, the affidavit was actually filed, and including a lien claimant’s mailing address on the back of the affidavit as opposed to the front of it.

Applying the Statute in a Recent Texas Mechanics Lien Law Case

Although given this flexible standard courts analyze whether a mechanics lien is valid on a case-by-case basis, a recent case, LTG Real Estate Company v. D & D Utility Supply, sheds some light on the question of whether a lien affidavit substantially complies with Texas mechanics lien law.

Given the flexible standard, courts analyze whether a mechanics lien affidavit is valid on a case-by-case basis.

In that case, Houston Earthworks contracted with FCA Construction and Lifetime Fitness to perform plumbing work on a new gym in the Houston area.  Houston Earthworks then subcontracted with J & G Plumbing Services when it was unable to complete the work.  J & G finally hired D & D Supply to provide materials for the plumbing project.  Subsequently, FCA terminated its contract with J & G and, thus, with D & D as well.

After the contract was terminated, D & D filed two liens for a total of nearly $135,000 in unpaid invoices.  D & D later reduced this amount to $123,777.  Since the trial court held that, amongst other findings, D & D substantially complied with the information a valid mechanics lien must contain, it granted D & D’s motion for summary judgment and ordered LTF’s surety to pay both the lien and D & D’s attorney’s fees.

On appeal, LTF and its surety alleged that D & D had not filed a valid mechanics lien affidavit because it had committed errors in the affidavit that directly contravened Texas law as well as prejudiced LTF.  The Court of Appeals agreed and reversed the lower court’s grant of summary judgment in favor of D & D’s lien.

Stating what month or months a subcontractor supplied materials to a project is an essential part of a valid mechanics lien affidavit. Why exactly did the court find that D & D had indeed not substantially complied with Texas mechanics lien law?  In this case, one serious flaw was enough: D & D “did not set forth the month that D & D delivered the materials to Houston Earthworks” in its affidavit.  Even though D & D properly included other information such as the amount of its lien, a description of the property, and the last known address of the property owner, D & D should have included which month or months it delivered materials to the project because that information is “essential” in a valid lien.

Once the validity of its mechanics lien affidavit fell, so did the trial court’s award of attorneys fees.

Moving Forward From D & D

Although we still don’t know exactly what kinds of mechanics lien affidavits comply with Texas mechanics lien law and which do not, the case does let potential lien claimants know that no matter they include, the month or months in which labor or materials were furnished must be included in the affidavit.  Additionally, since the court noted that other elements — such as the amount of the lien, the addresses of both the claimant on the property owner, and a description of the property — were proper, lien claimants should also include that information.