Sub-contractor filed bankruptcy. We have full lien waiver from GC Can Sub sub-contractor file mechanics lien on property

1 month ago

Hello there, we (lease holder) contracted with our GC for a full build out of our restaurant. After the build out finished we received unconditional lien waiver from our GC (that also clarifies material men). But a sub contractor of the plumbing company (plumbing company filed for bankruptcy) that our GC used sent a notice to the property owner regarding unpaid dues and have mentioned that they will file Lien on property. Property owner said it will be on us to pay the amount (because how the lease agreement was done). We have already paid our GC and he is not willing to help us on this. What are our legal avenue?

Chief Legal Officer Levelset

Texas mechanics lien law is exceptionally complex. The notice requirements are some of the most confusing and intricate in the country, and they must be strictly complied with in order to retain lien rights.

In the event that the rules and requirements for notices and the lien itself were met, however, and a valid lien was filed, it is difficult to get out of paying the proper lien claimant and being forced to attempt reimbursement for paying twice from the nonpaying party.

Reliance on the unconditional lien waiver received from the GC is likely misplaced, even though the GC’s waiver purported to waive the lien rights of material suppliers, as well. Texas is one of the 12 states with statutory waiver forms, and one of the three states that requires lien waivers to be notarized. Clearly, then, Texas takes lien waivers seriously.

Texas law specifically states that a lien waiver is not valid unless three things are true:

(1) the waiver and release is in the statutory form;
(2) the waiver and release is signed by the claimant or the claimant’s authorized agent and notarized; [emphasis added] and
(3) in the case of a conditional release, evidence of payment to the claimant exists.

Since the lien is being claimed by a party who did not sign the waiver – the waiver is not enforceable against that party, and the sub-sub is likely entitled to claim a lien (provided all other requirements have been met).

If a party is forced to satisfy a valid lien, recovery is available through the party who was actually responsible for the payment in the first place. However, if that party has filed for bankruptcy protection, it can be difficult or impossible to recover the total amount due (if any).

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