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How to file an injunction to prevent a mechanic lien if contractor used deceptive trade practices.

TexasMechanics LienNotice of Intent to LienRight to Lien

A company performed emergency water restoration services. The insurance company suspected the contractor was charging inflated fees and performed unnecessary serves. The insurance company had na independent audit completed and confirmed that this company was guilty. Further, the only document I signed was to permit the company to receive payments directly from the insurance company. The insurance company paid for reasonable charges as determined by the audit. The company has since billed us for the difference. The want to lien against our homestead even though my husband and I did not sign a contract and consequently the contract was not filed. What remedies do I have?

1 reply

Dec 5, 2019
It's relatively common for an insurance company and a contractor to have differing views on the value of the work provided on a restoration job. On one hand, insurers can be aggressive when auditing and undercutting contractors in attempt to pay out less for the job. On the other, when insurance is paying, some contractors may inflate the cost of the job. Unfortunately, owners get caught in the middle. I'll discuss some details applicable to lien disputes below, but note that the dispute ultimately may come down to the contract for the work - whatever that contract entails. An insurer can't back out of a contract it signed simply because they'd prefer a lower price, and a contractor can't inflate their price on a whim, either.

Fending off a Texas mechanics lien claim

Generally, it's not an easy task to prevent a mechanics lien filing before one occurs. But, if an owner can identify flaws in their contractor's claim for payment, and if the owner can show they'll fight vigorously against a potential claim, then they may be able to convince the contractor to stand down or to at least pursue a different means of recovery. As you hinted at above - there are strict requirements that must be followed in order to preserve the right to file a mechanics lien against homestead property. And, as you mention above, a crucial step there is to file the contract with the county clerk. So, if the contract isn't filed, then a lien on a homestead won't be available. But beyond that - there must also be a written contract between the owner and the contractor, plus that must be signed by both spouses in order to give rise to mechanics lien rights on a homestead. So, there may be an open question as to whether a lien would be possible at all based on the contract requirements, regardless of the contract being filed. Further, note that a contractor who overstates what they're owed in a filed lien claim could end up with an invalid and unenforceable lien claim. And, even worse, they could end up facing penalties for a fraudulent mechanics lien claim (including potential penalties up to $10,000). By informing a contractor of the flaws with their prospective claim and redirecting them to take issue with the insurance company, an owner may be able to avoid having a lien filed on their property. Additionally, notifying the contractor that the lien will immediately be contested and informing them of the potential fallout from their claim could help to have them rethink their approach to collecting the debt.

The insurer isn't out of the woods just because it isn't their property being liened

It may also be worth putting pressure on an insurer. Because the insurance company is the one responsible for payment, and because their dispute is putting the project property's title in jeopardy, the owner should have legal claims against their insurer - or they should at least be able to bring the insurer into the dispute if a lien gets filed. So, putting an insurer on notice that they'll also be dealing with the payment dispute going forward may help to some degree, too.

Bottom line

Until a mechanics lien is actually filed, a Texas owner has limited resources to combat the prospective lien. But, once the lien gets filed, a Texas owner is entitled to challenge the lien claim or even bond it off. But, by informing both sides to the payment dispute that they'll be held accountable and will not be able to dodge legal liability, an owner may be able to push one side to resolve the matter. For the most clarity on what options are available, and for the best insight into how to proceed, it'd be wise to consult a local construction or real estate attorney. They'll be able to review all of the relevant project documents and communications, then provide advice on how best to move forward. Here are some other resources I think will be valuable here: - I Just Received a Notice of Intent to Lien – What Should I Do Now? - A Mechanics Lien Was Filed on My Property – What Do I Do Now?
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