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Texas Notices

We are trying to establish our TX Notice to Owner process. We are an engineer and usually sub to an architect, thus required to send a 3rd month (and sometimes 2nd month) notice. It seems the notice is for work performed in a specific month. Our contracts are often for a fixed fee with phased or progressive billing (ex: fee is $100,000 billed as 20% at Schematic Design completion, 40% at Design Documents completion, 30% at Construction Documents completion, and 10% at Construction Administration) so what is billed and owed may or may not line up exactly with "labor" that month. How should we fill out this form? If the total we put for "work performed" in a specific month is what we're allowed to bill that month per our contract, but doesn't line up with hours worked, does that create problems with our notice?

1 reply

Feb 19, 2020

Texas notice requirements are confusing and convoluted. As you state, parties who do not contract directly with the property owner (derivative claimants, according to Texas law) must provide monthly notices in order to retain lien rights. For residential projects the monthly notices must be sent by the 15th day pf the second month after each month in which labor or materials were furnished to the project for which the claimant remains unpaid. On non-residential projects, first-tier subcontractors (parties who contracted directly with the direct contractor) must send notice by the 15th day of the 3rd month following each month work was performed and unpaid. If the noticing party contracted with a subcontractor, notice must also be sent by the 15th day of the second month following each month work was performed and unpaid. The key factor for determining when Texas monthly notices are technically due is the month in which labor or material was furnished, not necessarily the billing dates or the months in which the payment is supposed to be due. This is set forth by Texas § 53-056, which states in part that the notice(s) are required "following each month in which all or part of the claimant’s labor was performed or material delivered." Accordingly, every month in which work was performed is subject to having a notice provided, even if the billing cycle doesn't line up such that an invoice is provided each month in which work is ongoing.

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