Home>Levelset Community>Legal Help>RE: depth of lien rights on material supplier: Does a Material Manufacturer have lien rights on a project once they have sold the materials to a reseller?
RE: depth of lien rights on material supplier: Does a Material Manufacturer have lien rights on a project once they have sold the materials to a reseller?
We are a material supplier have received a TX notice on materials we purchased (from a manufacturer) and resold.
1 reply
May 22, 2018
That's an interesting question. It's possible that a supplier to a supplier could have lien rights in Texas.
Under § 53-021 of the Texas Property Code, lien rights are pretty broadly available. If a party has provided labor or materials "under or by virtue of a contract with the owner or the owner’s agent, trustee, receiver, contractor, or subcontractor." A "subcontractor" is a broad term under the Texas Property Code, though - it includes "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." So, because a material supplier is considered a subcontractor, and because a subcontractor hired by a subcontractor may file a lien in Texas, a supplier to a supplier may quite likely also file a mechanics lien.
If a supplier to a supplier has gone unpaid and sent a Texas notice, it might be wise to assume their claim could be valid and investigate further. It's worth noting, though, that when materials are not actually delivered or incorporated into a project, there's a fair chance that the right to file a (valid) lien will not arise. Unless the materials provided were specially fabricated materials, that is - quite bluntly, § 53-021(b) provides that "A person who specially fabricates material has a lien even if the material is not delivered." If materials were resold, though, those materials are not likely to be considered "specially fabricated". The Texas Property Code describes specially fabricated material as "material fabricated for use as a component of the construction or repair so as to be reasonably unsuitable for use elsewhere."