Texas lien laws
We are a supplier right now, but will also be a subcontractor in Texas soon. I am getting pushback from our sales group on filing preliens in Texas. They don’t like having the contract amount on the initial notice. I want to make sure we retain our lien rights. My questions are
Do we have to send the initial lien notice to all parties as a supplier and as a subcontractor?
Does the contract amount have to be on the initial notice?
Thank you very much.
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Legal Associate Levelset
In Texas, preliminary notice is really only "required" for parties that are specially fabricating materials to be used on a construction project. If materials are going to be specially made for the job, sending a Notice of Specially Fabricated Materials will preserve the right to make a claim for the work put into that material creation even if those materials never make it to the job site. This can be helpful because specially fabricated materials that aren't actually incorporated into the project or aren't actually delivered might not be a sound basis for lien or bond claim rights unless the notice is sent. But, if the materials are actually used, there's little question that specially fabricated materials that go unpaid could be the basis for a claim. Ultimately, if a Notice of Specially Fabricated Materials will be sent, then the price of the order for specially fabricated materials must be included.
There are other notices that might be helpful to send from the get-go (like a Retainage Notice, a Request for Notice of Termination, and a Request for Surety Information), but these notices aren't necessarily required right at the start of the project. Though, when working on public projects, obtaining surety info via a Requires for Surety Information might be wise at the start of the project. But, if a claimant doesn't want to send these notices, their lien or bond rights won't automatically be prejudiced. Note, though, that eventually sending a Texas Retainage Notice will be necessary. This notice must be provided by the 30th day after the claimant finishes their contract with their customer, or by the 30th day after the prime contract is terminated or abandoned.
Now, if payment issues do arise throughout the life of the job, sending monthly notices may be necessary. As you may already know, the requirements for these notices can create more than a few headaches. You can learn more about monthly notices here: What is a Monthly Fund Trapping Notice?.
For more information on Texas liens and notices, as well as notices and bond claims for public projects, here are some helpful resources:
(1) Texas Lien and Notice Overview, FAQs, and Statutes
(2) Texas Public Project Resources
(3) Texas Monthly Notices Guide [Free Download]
(4) Is Monthly Notice Required on a Texas Public Construction Project?