How to respond to a fraudulent lien claim?

2 weeks ago

To give a little back story, we filed a lien on a property which we provided materials and labor and did not receive payment. The executor of the estate for the property has hired a lawyer because they are trying to sell the house, which is in an estate (prior to our work, during and currently the property was in the estate) to complicate matters even more.

The lawyer is claiming that the lien we filed is fraudulent in accordance with Tex. Civil Practices & Remedies Code Chapter 12. They are claiming the lien is fraudulent because we were told to stop work, which we were not told to stop anything. Additionally, payment is still owed for labor and materials which was all for a job which was initiated way prior to the point they are claiming they told us to stop. We are seeking payment for work done and materials purchased for a job which began prior to the point they claim they told us to stop, which does not seem relevant to me especially since we were never told this to begin with. To add insult to injury the lawyer included a lien release document stating a settlement of $10 compensation would be given to us in return for the release of the lien.

Bottom line, these are my questions:

1. I know we didn’t file a fraudulent lien and therefore I can not even begin to wrap my mind around these accusations, what am I missing?

2. They claim to take us to court to remove the lien under the above mentioned code if we do not sign the enclosed document to release the lien in exchange for $10. It’s really confusing to us why a lawyer would threaten this, Can they lie and actually do this?

3. How are we supposed to respond to the lawyers document requesting us to accept $10 to release the lien on the house? (especially since we have no plans of releasing the lien without full payment or at least somewhere really close)

Thank you in advance for any help you might be able to provide!

Senior Legal Associate Levelset

When a mechanics lien is filed, it’s extremely common for the property owner or their attorney to challenge the validity of the lien – regardless of whether there’s any issue with the claim. Levelset discusses that idea in detail here: My Lien Was Challenged: What Do I Do?

It’s entirely possible that the attorney who challenged the lien claim has been misled by their client to believe that work actually was ordered to be stopped. Further, it’s also possible that the attorney is simply trying to establish a hard-lined first offer. Potentially, in their eyes, an attempt at coercing a lien claimant to release their lien might be worthwhile, even if the alleged flaws with the lien are taken completely out of leftfield.

As for whether an attorney is allowed to do that: attorneys are entitled to vigorously defend their client’s position, even when it looks like their chance of success is less than perfect. Further, an attorney is generally entitled to operate based on the information their client has given them as long as the client hasn’t been clearly misleading them. For a number of reasons, an attorney can attempt to settle a dispute for far less than what seems reasonable to the other side of the dispute.

How to respond to a mechanics lien challenge

It’s hard to give one blanket answer for how to respond to a lien challenge. But, in a situation where the challenge seems bogus, or where it’s truly unclear what the alleged issue is with the lien, it might be a good idea to request more information about the issue. Asking for any documentation, communication, or other info that’d support the claim that there’s a flaw with the lien claim might provide some clarity.

And, where an owner or their attorney flatly refuses to justify their position, that might be a good indicator that they’re simply doing whatever they can to try and get the lien removed. Or, it might serve as an indication that it might be a good time to consult with a local Texas construction or real estate attorney to evaluate the lien claim for potential flaws. They’ll be able to take a deeper look into the situation and give advice on how to move forward.

Validity of the mechanics lien

I’m not able to conclusively judge whether or not there’s an actual issue with the lien filing in your situation. If there was an order to stop work at some point, then the work after that point might not necessarily be lienable. But even in that situation – the work that was properly authorized and performed prior to the instruction to stop would still likely be lienable.

If there was never any instruction to cease work, if all work was authorized but unpaid, and if all other Texas mechanics lien law requirements were followed, then the filed lien would presumably be valid and enforceable. But again – it’d be helpful to consult with your attorney since they’d have better access to the relevant documentation, communications, etc. and since they’d be able to provide you legal advice for moving forward.

Additionally, albeit unrelatedly: It’s always worth remembering that if there is some issue with a lien claim, there’s a difference between fraud and an honest mistake. So, even in a situation where a lien is accidentally overstated, that doesn’t automatically mean the claimant would be liable for a fraudulent lien filing.

I hope this information has been helpful! If you’ve got other questions regarding Texas mechanics lien rights: Texas Mechanics Lien Guide and FAQs.

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