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Should I file like a GC or like a subcontractor?

I was contracted in May of 2019 by a general contractor to provide roll-off services and dumpster rental on a residential job in Texas. After paying their initial invoice, the GC ran into issues on the project and then essentially left town. They are ignoring attempts to contact them. However, when I looked into the property record, it showed that the GC also owned the property. So, since I am contracted with the owner (who is also the GC) should I send monthly notices and use the lien process like a subcontractor or can I go straight to filing a lien here (absent the homesteading exceptions)?

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Dec 10, 2019

First, if the owner and the "GC" are actually the same exact party, then a party hired directly by that owner will be considered an original contractor for the purposes of filing a mechanics lien claim. To be sure, the definition of "original contractor" set out at Texas Property Code § 53-001 is "a person contracting with an owner either directly or through the owner’s agent." What's more, the statute actually prepares for situations where there may be some questionable or shady activity going on regarding who's considered the owner and the original contractor - known as the Sham Contract provisions. Under § 53-026, a party is considered to have a lien as an original contractor if they were hired by a contractor who effectively controls the property or if the owner effectively controls the contractor. As you may know, original contractors do not need to send monthly notices in Texas. It sounds like you may be familiar with Texas' notice requirements, but I think this resource should be helpful in determining what notices may or may not be appropriate: Texas Notice Guide and FAQs.

Recovering payment without having to file a mechanics lien

Keep in mind that mechanics liens are generally considered the nuclear option, and other recovery tools can often be effective without having to proceed without an actual lien filing. Before a dispute gets out of hand, wrangling a customer into making payment might be done with simple invoice reminders. Frequently, a little nudge in the right direction is enough to get paid. Or, a less friendly reminder - like a demand letter - could be effective, too. Of course, something a little stronger may be in order when a customer is intentionally dodging invoices and has even left town. If the customer can be reached, sending something like a Notice of Intent to Lien can be effective. It acts as a warning shot, informing recipients that if payment isn't made and made soon, then a lien will be filed.

Additional Texas mechanics lien resources

I hope this was helpful! Below are some resources that should be valuable in pursuing a Texas mechanics lien claim, if you decide that's what's best for your situation. - How to File Your Texas Mechanics Lien – A Step by Step Guide to Get You Paid - Texas Mechanics Lien Guide and FAQs

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Dec 10, 2019

It sounds like you have exhausted your efforts to get paid, then I would suggest you seek the assistance of a certified commercial collector who's a member of the Commercial Collection Agencies of America that is licensed and bonded in Texas to collect the debt on a contingency bases. This way you are not throwing good money after a bad debt. If you have additional questions feel free to email srauch@rauchmilliken.com for your collection recovery options.

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