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Do contract terms between GC and Sub on a private job trump Texas payment statutes?

TexasConstruction ContractNotice of Intent to LienRetainage

We are a GC doing a private job in Texas. Our contract terms with the Sub are "we pay when paid". Our contract outlines that once we receive owner payment, we then turn around and pay the subs. A sub of ours just filed a Notice of Intent to file a lien, but we are still waiting on final owner payment before we release the sub's retainage (also specified in the contract). Does our contract protect us or do Texas lien laws trump our contract terms?

3 replies

Feb 23, 2021
If the subcontract complies with the "pay if paid" provisions set out in Texas case law, then Texas law will require that the subcontractor await the owner's payment. However, the subcontractor is entitled to file a mechanic's lien (if done so properly) to apply pressure on the owner to resolve the subcontractor's claim. Retain a construction attorney to evaluate your subcontract and to provide advice. Good luck.
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Feb 24, 2021
The Texas M&M lien statute makes no exceptions for pay when paid provisions. While actual payment pursuant to such a provision can possibly be later than otherwise, it does not negate the statutory time limits for a sub to provide notice and thereby secure rights to a lien if not paid.
Stanley
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Mar 4, 2021
I own a shopping center and would like to do a facade renovation. I am looking to enter into a contract with a construction company who will act as a general contractor. How do I protect myself against mechanics liens from suppliers or subcontractors.
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