We are selling items to a "Hub" customer and that customer then turns around and sells it to another customer for a job, do we still have lien rights or are we then out of the equation since we technically aren't a part of that job?
1 reply
Dec 19, 2018
That's a fair question. Typically, a supplier-to-a-supplier will not have lien rights, but exceptions do exist, and the rules will vary by state. Looking to Texas...Under § 53-021 of the Texas Property Code, when a "person labors, specially fabricates the material, or furnishes the labor or materials under or by virtue of a contract with the owner or the owner’s agent, trustee, receiver, contractor, or subcontractor" for the improvement of real property, that person will have the right to file a mechanics lien. At first blush, that section wouldn't appear to provide lien rights for those who supply materials to another material supplier. However, looking to the definition of "subcontractor" makes this a little less clear. § 53-001(13) defines a subcontractor as "a person who has furnished labor or materials to fulfill an obligation to an original contractor or to a subcontractor to perform all or part of the work required by an original contract." Thus, one could argue that a supplier who has provided material to another supplier has, under the terms of the Texas Property Code, provided that material to a "subcontractor" since a "subcontractor" is anyone who provides labor or materials to an original contractor or other "subcontractor". Of course, it's worth noting that where materials aren't being sent for a specific project and those materials are merely being sent along to be used as inventory, etc. then lien rights would very likely not arise. For a little more background information about Texas lien rights, this resource might help: Texas Lien and Notice FAQs.