timing

3 months ago

We are a commercial framing and drywall contractor –
when should I be sending notices to our GCs/project owners for non-payment of invoice?

Typically we bill on the 20th and expect payment by the 30th of the following month.

Also, does retainage follow the same guideline?

Senior Legal Associate Levelset

First, it’s worth noting that it’s not uncommon to send invoice reminders when invoices go unpaid. These provide a customer the opportunity to make payment before any monthly notices even come into the picture. So, sending a relatively-gentle reminder that payment is due but unpaid might help to avoid having to use the more formal Texas monthly notice process.

Texas monthly notices

But, for situations where monthly notices become necessary – Texas has some of the roughest notice requirements out there. Exactly when monthly notices (which indicate prior invoices are unpaid) are required will depend on who hired you. And, if monthly notices aren’t properly sent, a mechanics lien will not be available to help with payment recovery later on.

For those hired directly by the project’s prime contractor, a 3rd-month notice must be sent to the project owner and the GC on commercial projects. For those hired by someone other than the project’s GC (like another subcontractor), a 2nd-month notice must be sent to the GC, and a 3rd-month notice must also be sent – and that notice goes to both the owner and the GC.

And, to be sure:  a 2nd-month notice is sent no later than the 15th day of the 2nd month following each month when work was performed but unpaid. 3rd-month notices are sent by the 15th day of the 3rd month after work is performed but not paid for.

The timing requirements can be confusing at first blush, but this page breaks them down further and even provides a helpful calendar (under “When do I Need to Send a Texas Preliminary Notice?“): Texas Preliminary Notice Guide and FAQs.

Retainage

Retainage can generally be handled either by utilizing a Notice of Contractual Retainage or by including retainage amounts in monthly notices. And, many Texas subcontractors will elect to send both in order to provide extra notice about the project’s debts.

A Texas Notice of Contactual Retainage must be mailed no later than the following dates:

1. 30 days after the claimant’s agreement (which creates the retainage requirement) is completed, terminated, or abandoned; or

2. the 30th day after the prime contract is terminated or abandoned.

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