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What do my husband and myself have to do to protect ourselves and our property from a mechanic's lien?

Texas

Hello there! Hoping someone can shed some light on a situation for me. My husband and I closed on an investment property in July, and immediately after hired a contractor that we were recommended through a friend. He seemed trustworthy and we were in a time crunch to do some improvements on the property over 2-3 weeks and turn around and put the property up for rent. We agreed on a list of items/tasks to be completed by August 3rd for $20,000. We paid him $5,000 the day we signed the contract on July 16th and another $10,000 in accordance with our payment schedule at the end of July. Without going into all the in's and out's I will just say that the contractor was virtually never at the house, and never supervised the work. The work was done by unlicensed, underage, and potentially illegal workers that we never agreed to work with. We were left with countless items that were left incomplete or were done so poorly they will have to be re-done by another contractor. We are both very busy and probably didn't do as good of a job supervising the job as we could have, but every time we visited we would point out items that needed to be fixed or corrected - trying to give him the benefit of the doubt that it would be resolved by the project completion date. We asked over and over for him to fix the work, and he refused, slapping us with the final invoice of $5,000. It will cost us at least this much to have another contractor fix what is there. On top of this we have exceeded the contract date and will be set back by at least a week or two. In our minds, he did not deliver the product agreed upon, he did not perform at the standard of other contractors in town, he breached the contract by not hitting the contract date and then abandoning the remaining items on the list. We also feel that he was deceptive in how he marketed the tasks he was able to take on, and that the job was over his head from the beginning. What do we need to do to protect ourselves and our new investment property from this contractor? I am blown away that after walking out on the job, leaving our house dirty, and with the awful quality of work that he did that he is requesting any additional payment at all.

1 reply

Aug 9, 2019
There are some steps that can be taken to mitigate the risk of mechanics liens, but it can be very difficult to ensure that a mechanics lien is not filed if a contractor decides that filing a lien is the way to go. While it is not what any property owner wants to hear, a disgruntled contractor is very rarely prohibited from filing a lien by the county recorder's office - especially if the dispute over the validity of the lien will be because of the quality of the work. Further, in Texas, a direct contractor has a self-perfecting Constitutional mechanics lien against the property that arises pursuant to doing work, without any filing required. A property owner can request a lien waiver, but it is unlikely that a lien waiver will be provided in the event that there is an ongoing dispute over payment. Another potential avenue to protect against lien claims may be to file a lawsuit against the contractor for breach of contract. If actually filing is not desired, it may be sufficient to have a letter drafted to the contractor explaining why no further payment is due, that a lawsuit for breach of contract is being contemplated and will be filed if necessary, and that any attempt by the contractor to secure a mechanics lien will be improper, and an action for slander of title will be initiated. Finally, it is also possible to just sit back and do nothing. If a claimant files a lien, the lien must be enforced within a certain amount of time, or it expires. If there is no desire to sell or refinance the property for some time, a property owner could see if the contractor actually files the lien and attempts to enforce it. Since a mechanics lien enforcement action is a full-blown lawsuit, it may not be worth it to the contractor to go through the time and expense of a lawsuit. And, if an enforcement action is filed, all the defenses to the lien will still be available. In any event, if legal action is taken, it is a good idea to enlist the assistance of a local attorney to take a look at the entire situation and lend assistance.
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