My question relates to the impact of TX Constitution Art 16, Sect. 50(a)(5)(C)’s impact on filing a mechanics lien in TX

4 months ago

Hello, I have a question regarding the validity of a TX mechanic’s lien in light of the TX Constitution Art. 16, Sect. 10(a)(6) requirements. I am trying to decide whether my contractor-client can in good faith file an Affidavit for mechanic’s lien, when his underlying contract does not comply with the Texas Constitution (see above cite). The TX Constitution seems to prohibit a lien against a residential homestead if various requirements are not met (like both spouses must sign). In particular, Sect. 50(5)(C) requires the notice of 3 day rescission (which seems an overriding federal requirement) (only exception is immediate health and safety issue). Does your legal team have any comment on whether these requirements, if absent in a contract, would mean that my guy should not even file a Mechanic’s lien affidavit because there are penalties to claiming one has a lien when one really doesn’t. Thank you.

Senior Legal Associate Levelset

That’s an excellent question. Many businesses fail to consider homestead requirements when deciding on whether or not to proceed with filing a mechanics lien claim on residential property. Those requirements are reflected at § 53.254 of the Texas Property Code, which Levelset discusses here. However, I believe the section you’re referring to does not affect mechanics liens that involuntarily arise as a result of construction work performed but unpaid.

The section of the Texas Constitution cited above appears to relate to voluntary liens granted in exchange for the improvement of property. As in, when a contractor would accept an interest in the property, voluntarily, in exchange for the promise of payment. While, on its face, the section doesn’t limit itself exclusively on voluntary construction liens – most of the content available online relating to Art. 16, Sect. 10(a)(6) refers to things like voluntary loans and refinancing – including this one from Fannie Mae. Plus, I’m a bit wary of its applicability considering that, under section(D), to give rise to a homestead lien, the contract could be executed “only at the office of a third-party lender making an extension of credit for the work and material, an attorney at law, or a title company.”

So, it appears that in order to enter into a contract that grants a lien on the homestead project property in exchange for work performed, the requirements under Art. 16, Sect. 10(a)(6) must be met. But, the requirements for filing an involuntary mechanics lien against a homestead are contained at § 53.254 of the Texas Property Code.

| 0 Upvotes
Guest
Anonymous

Good afternoon,

What can be done if the lien was filed under fraud and no work was done

Chief Legal Officer Levelset

If a lien in Texas is thought to be invalid or otherwise unenforceable, Texas provides an interested party the opportunity to file a motion to have the lien removed. A homeowner may file a suit to have the lien removed (or wait to see if the lien claimant initiates a suit to enforce the lien) and, if certain bases for objecting to the lien apply, file a “Summary Motion to Remove Invalid or Unenforceable Lien.” The acceptable grounds for objecting to the lien are listed in § 53-160.

Some of the acceptable reasons for summary removal of the lien include the failure to comply with the specific homestead contract requirements.

If none of the applicable reasons for summary removal apply, the ultimate validity of the lien is likely to be determined by the court in a more “complete” proceeding. However, as mechanics liens expire and become unenforceable after a certain point, if no sale or refinance of the property is contemplated, it is always an option to wait to see if the claimant decides to file an enforcement action and then respond at that time.

Additionally, there are potential causes of action against the claimant of a fraudulent mechanics lien. Slander of title, breach of contract, and other potential actions may be appropriate, and if made clear to the claimant, may result in the lien being removed of the claimant’s own accord.

If suit or threatened suit against the contractor is contemplated, a local attorney should be retained to fully examine the situation and assist with the necessary filings and strategy.

| 0 Upvotes
Your answer or comment:
Are you a Registered Expert?
You are not logged in and will be posting
anonymously. Log in Now