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Contract with "owner" but leasing property

Hello, We are considering filing a lien on a project in Texas . We have contracted with the owners of the company but they lease the property. Per the requirements listed on your website for this job it says that our notices are optional. We wanted to know specifics around this and get a full understanding of the requirements.

2 replies

May 5, 2020

Parties hired directly by the owner on a commercial project won't need to send preliminary notices to preserve their right to a mechanics lien. That may seem a little odd considering other TX claimants have significant notice requirements. But, at least for commercial jobs, Texas GC's seem to be off the hook. If the project is residential, however, a disclosure statement must to be sent. And if you'll be hiring any subs and suppliers, you'll need to provide the owner with a written list of those parties providing work. Plus, owner-occupied residential jobs may have additional homestead requirements. For a full breakdown of other Texas notice requirements, this page will help: Texas Notice Guide and FAQs.

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May 5, 2020

If you were hired by the tenant, rather than the owner, of the property - mechanics lien rights would likely be limited. Apologies if the above answer wasn't quite on the nose - based on the phrase "they lease the property" I wasn't sure if the question was regarding a lessor or a lessee. Texas follows the general rule when it comes to tenant improvements, which Levelset discusses here: What Happens to Mechanics Lien Rights If My Project is a Tenant Improvement? When work is done for a tenant (and not the owner), then mechanics lien rights will generally attach only to the tenant's interest (i.e. the lease) - and not to the owner's. So, a lien claimant could have lien rights against that tenant's leasehold interest, but not the fee ownership of the property. It's worth noting, though: Filing a lien against the lease could put the tenant in breach of their lease agreement and put pressure on them to resolve the matter. If necessary, the lien could still be foreclosed. Additionally - if the fee owner was involved in the project, then lien rights might be available against that owner in addition to the lien on leasehold rights. But, this will typically require that the owner's pretty heavily involved, like where the lease requires the tenant to improve the property or when the owner's otherwise taken a particularly active role in the job.

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