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Texas Lien Laws - Supply Chain

Can a steel mill claim lien rights on a project if they are part of a supply chain? We are a material supplier, who supplied material to another material supplier, who then supplied a subcontractor on a project. If we are late paying, will the steel mill have lien rights on the project?

1 reply

Nov 19, 2019

The Texas Property Code does not explicitly limit the level of tiers entitled to mechanics lien rights in Texas. While suppliers to suppliers are limited on their ability to file a lien in some states, Texas doesn't clearly place the same limitation. Though, when a supplier is yet another tier removed from the project, it's natural to be a little skeptical about lien rights. Perhaps the biggest hurdle that should come into consideration is proving that the materials being were incorporated in that specific construction project. In order for lien rights to arise, the supplier would need to be able to prove which materials were used for the specific project property being liened. And, due to the multiple tiers between the claimant and the property owner, it can get hard to track exactly which materials went where. Leveslet discusses this problem in detail here: Material Suppliers: Proving Incorporation When Filing A Mechanics Lien. Unfortunately, though, there's no good black or white answer to your question, at least that I'm aware of. It's possible that a given court could turn either way, depending on the situation, if the mechanics lien ultimately made its way to court. For more background on Texas mechanics lien rights, here's a great resource: Texas Mechanics Lien Guide and FAQs.

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