Texas has some of the most confusing notice requirements in the country. Subs and suppliers must provide monthly notices about outstanding amounts in order to retain their right to file a lien. They must also send a Notice of Contractual Retainage to protect their right to file a lien on retention funds.
When a project is complete, an Affidavit of Completion (also referred to as a Notice of Completion) can be filed at the county clerk’s office to establish the exact completion date. If filed, the date on the affidavit is used to establish the deadline for filing liens on retainage, which is the 40th day after the date on the notice. If the notice is filed more than 10 days after completion, the lien deadline calculation starts on the date the notice was filed, not the completion date noted on the affidavit.
- The name and address of the owner
- The name and address of the prime contractor
- A description of the property
- A description of the improvements under the original contract
- A statement that the improvements under the original contract have been completed and the date of completion
- A statement that “a claimant may not have a lien on retained funds unless the claimant files an affidavit claiming a lien not later than the 40th day after the date the work under the original contract is completed.”
Generally, liens on retainage must be filed no later than the 15th day of the fourth month (third month for residential projects) following the month in which the lien claimant last furnished labor or material to the project AND not later than 30 days after the entire project is completed, abandoned, or terminated — whichever is earlier.
However, this deadline can be changed if the property owner takes specific action, such as:
- If the owner files and serves an Affidavit of Completion: The claimant must file by the 40th day after the date stated in the affidavit of completion as the date of completion of the work under the original contract.
- If the owner sends a notice of termination or abandonment: The claimant must file by the 40th day after the date of termination or abandonment of the original contract.
- If the owner sends a demand that the claimant file the lien affidavit: The claimant must file by the 30th day after the date the owner sent the claimant to the claimant’s address provided in the notice for contractual retainage.
In order to have a lien against the retained funds, and make the owner personally liable for their payment, the claimant must give the Notice of Contractual Retainage as set forth above, and file a lien affidavit.
NOTE: Due to Texas HB2237, The effect of shortening the retainage lien filing deadline will no longer apply on projects where the original contract is entered into after January 1, 2022.
In Texas, filing an Affidavit of Completion is voluntary. It’s usually filed by the project owner but can also be filed by the general contractor.