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Can a lien be assigned to 2 entities?

Company A (with 2 principals) is closing down and has outstanding liens that have been filed. It's like a business divorce. The 2 principals each have started their own companies (Company B and C). They cannot agree who should take over the lien and they both refuse to sell it to the other party. Ugh! They've asked me to determine whether a lien can be assigned to 2 entities (their new companies). I've looked all through the Texas Property Code, but cannot find any mention of this. Please help me solve this problem. Thanks!

1 reply

Jul 30, 2019

I'm sorry you're having to deal with this - it sounds like a frustrating situation!

First - unlike some other states, it doesn't look like the Texas Property Code has any specific provisions relating to the assignment of lien claims. As Levelset discusses in this article, that generally means that filed lien claims can be assigned since they're unregulated. However, assigning a lien claim to more than one party is an interesting proposition.

Functionally, it doesn't make much sense to allow a lien claim to be broken up into two separate potential causes of action, and it's unlikely that creating two separate causes of action (where there was previously only one) to pursue a lien claim is even allowable. Courts are interested in judicial efficiency, and completely separate lien claims are typically grouped together if a lien enforcement action becomes necessary anyway. Doing the opposite and expanding the number of separate claims would probably not be acceptable. Plus, even if dividing the debt were acceptable, pursuing two separate paths to recover the debt would likely result in everyone being grouped back together, anyway, in the event of a lawsuit.

An option that makes much more sense might be to agree to split the proceeds of the claim rather than to try and split the claim itself. The debt can be pursued in a normal basis, and upon payment, each party would only be entitled to what was agreed to beforehand. But, assigning portions of a lien claim to separate parties certainly seems like overcomplicating a simple situation at best, and it's probably not allowable anyway.

With the above being said, it might be helpful to consult a local attorney familiar with assigning and foreclosing Texas liens for a little more clarity. They may be more in tune with what is and isn't allowable in the state.

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