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Sub/Suppliers not following notice requirements in TX

The sub is contracted through us for a TX project. They have not issued the required 2nd and 3rd month notices. Do they have a lien claim without this? They have a supplier that is owed and has not issued their notices as well. One invoice from Nov. is on their claim, which they should have send notices on and filed their lien by March 15. They have not lien rights for this claim correct? Do they have any other recourse that could affect us or our contract with the owner? The other invoice is from January, which we are just being made aware of now by them contacting us. Still no 2nd month notice. Does the letter suffice as their notice and if so ensures they have a lien claim?

1 reply

Apr 12, 2018

In Texas, if a claimant is required to send 2nd and 3rd month notices, they will be unable to file a valid mechanics lien for that work if they fail to do so. Of course, flawed mechanics lien claims are filed all the time - county recorders often don't have the bandwidth (or the authority) to reject claims on their own. Thus, even if a mechanics lien isn't valid, it might still be recorded - and that will create some headaches for a general contractor and an owner. It's not an easy sell to tell an owner "Sure this claim was filed against your property, but it won't hold up in court," - so making effort to resolve the payment claim is typically a good idea. Regarding whether an informal notice would suffice - the Texas Property Code does not prescribe a required form for a 2nd month notice. Rather, the notice must be "written," must notify of the unpaid balance, and must be sent by registered or certified mail. Further, a copy of the claimant's unpaid statement or billing (in it's usual form) will suffice as notice. Thus, an informal communication would appear to be acceptable. Of course, as mentioned above, there are requirements that the notice be made in writing and that the notice be sent by registered or certified mail. If notice is not sent by that method, it may very likely be invalid as providing the required notice under the Texas Property Code. It's worth noting, though, that § 53-003(d) of the Texas Property Code states that "If a written notice is received by the person entitled to receive it, the method by which the notice was delivered is immaterial," so there may be some room for argument by a claimant. Regarding other recourse - a claimant could certainly still move forward with a potentially invalid lien claim as mentioned above and create problems. Further, that claimant might also attempt to file suit as well. Further, even where a claimant has failed to send a 2nd month notice, sending a valid 3rd month notice could certainly result in fund trapping between an owner and a prime contractor.

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