Can retainage be included in monthly notices in Texas?

4 weeks ago

We send out our preliminary notices for all jobs we wish to have a claim on retention for, but do we need to also send the monthly notices for the invoices billing that retention? A customer was under the impression that we have no claim on retention and therefore cannot send the monthly notices, however I am pretty sure we can issue notices for retention. I wanted to confirm with you and possibly gain some insight as to reasoning and rules.

Senior Legal Associate Levelset

Texas monthly notices include the unpaid balance between the party sending the notice and their customer. Because retainage represents amounts that the construction business has earned but has not been paid for, including retainage amounts in a monthly notice is acceptable. In fact, under § 53-057(a) of the Texas property code (which creates the Notice for Contractual Retainage requirement), the right to recover retainage amounts can be preserved by monthly notice, by sending a Notice for Contractual Retainage, or by sending both.

It makes logical sense that monthly notices can include retainage. Even if retainage isn’t expected until some later date, it is an amount that’s been earned but remains unpaid. And, unless that amount was shown through a monthly notice or through a retainage notice, the right to ultimately file a mechanics lien on that retainage amount, if necessary, would not be available.

So, Texas construction businesses can preserve their right to claim a mechanics lien on retainage amounts by including retainage in monthly notices, by sending a Notice for Contractual Retainage, or by doing both.

I hope this was helpful! For more background on Texas lien claims, notices, and retainage requirements: Texas Lien Construction Payment Resources.

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