Home>Levelset Community>Legal Help>I was contracted by a business owner who is a tenant renting from property owner (TX, USA). I submitted notice to the property owner of intent to place a lien and received a letter from their attorney stating that we do not have a contract with the property owner and that they would sue us if we proceeded with a lien. Is this accurate? Do I legitimately have no right to place a lien?

I was contracted by a business owner who is a tenant renting from property owner (TX, USA). I submitted notice to the property owner of intent to place a lien and received a letter from their attorney stating that we do not have a contract with the property owner and that they would sue us if we proceeded with a lien. Is this accurate? Do I legitimately have no right to place a lien?

TexasRight to Lien

I was contracted by the business owner to make modifications inside his rented space. The business owner made it clear upon completion of work that he would not be paying. I went through the small claims process and a judgement was determined in my favor, but he still has no intent to pay. Prior to small claims I reached out to the property management team to inform them of my intent to place a lien and they responded with a threat to sue if we proceeded with a lien stating that, without a contract with the property owner, I have no right for a lien. If a mechanic lien is my right as a contractor, and the work was contracted with the proper business owner, do I really have no right to place a lien? Or is this incorrect?

1 reply

Mar 26, 2019

That's an interesting question. First, it's worth mentioning that with a small claims judgment in hand, it might be possible to obtain a judgment lien against the nonpaying party - with a judgment lien, the party who has won a judgment is able to encumber the property of the losing party in order to pay the judgment that is owed. Unlike a mechanics lien, a judgment lien can attach to property wholly unrelated to the actual improvement that took place. So, in a situation where the party who authorized work was not the owner of that property, a judgment lien can help to go directly after the property of the party who authorized the work. For more information on the availability of a judgment lien, this resource might be helpful: Judgment Liens on Property in Texas. Further, asking a Texas attorney who's more familiar with judicial liens in the state could be helpful, too. Avvo and Lawyers.com make it easy to ask legal questions in fields other than construction law, and the lawyers there might be able to provide some additional insight. Anyway, looking to mechanics liens, when an improvement has been undertaken at the direction of a tenant, rather than the owner of the property, extra considerations come into play, which we've discussed in this article: What Happens to Mechanics Lien Rights If My Project is a Tenant Improvement? As mentioned in that article, a key distinction to make when evaluating the ability to file a lien based on an improvement set out by a tenant is what the lien will attach against. On one hand, if the improvement was solely undertaken by the tenant with no direction or involvement from the owner, a mechanics lien against the tenant's interest in the property (i.e. the lease) may be possible. So, instead of attaching to the underlying property (like a traditional mechanics lien), a lien against the tenant's interest would attach to the lease/right to use the property. But, if an owner is particularly involved in the improvement of the property, even if the work is technically contracted by the tenant of the property, a mechanics lien against the underlying property itself could be possible if the tenant could be considered as acting as the agent for the property owner. Note, though, that the mere fact that there isn't a contract between a lien claimant and a property owner will not defeat the right to lien - but rather, if the work was in no way authorized by the owner of the property, then the right to lien their property may be unavailable. Note also that it's extremely common for an owner's first response to a potential lien is often to challenge the rights of the claimant, which zlien discusses here: My Lien Was Challenged — What Do I Do? Lastly, for more on the Texas lien and notice rules, this resource might be helpful: Texas Lien & Notice Overview.

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