When do we need to file a preliminary notice and subsequent notices/filings during the timeline of a project in Texas?

7 days ago

With regard to filing initial intent to lien notice, and subsequent filings, in Texas: we were recently told by a LevelSet representative that unless we file a monthly notice/an intent to lien in the first month of projects life cycle, and each subsequent month after that, then we will lose our ability to lien at any point during that project, this being true even in the case when our customer has already paid these invoices on time, before deadline to file intent to lien.

This is the exact opposite of what we had previously been told by a different LevelSet representative when we were first purchasing the Levelset software. My previous understanding was that if customer never gets behind in paying we never need to file initial monthly notice or intent to lien. But if 6 months into a project they get late in paying, then we can file intent to lien on that months amount owed, which has no bearing on previous months. And likewise, if paid in months 7 to 9 no filing, but in month 10 you can file notice again.

Generally speaking, I thought that this was looked at on a month by month basis, and all paperwork had to be filed for each month where appropriate, by that months deadline(s).

Can you please clarify.

Thanks.

Senior Legal Associate Levelset
129 reviews

Texas monthly notice requirements can certainly be confusing, and I hate that you haven’t been able to get clarity on the monthly notice requirements yet. I’ll break them down below, but also know that Levelset provides this Texas monthly notice FAQ page that has helpful charts, discussion, etc.: When do I Need to Send a Texas Preliminary Notice?

With that in mind, let’s clear up some vernacular first. Then, we’ll look at the document and deadline requirements.

Texas mechanics lien and notice terminology

Texas is home to monthly notice requirements, which can be cumbersome to manage. A monthly notice is somewhere in between a preliminary notice and a Notice of Intent to Lien in how adversarial the notice is. It’s more than a preliminary notice because a monthly notice does serve as notice that there’s payment due and owing. But, a monthly notice doesn’t quite rise to the threat of a lien claim. So, I wouldn’t necessarily say that a monthly notice should be considered a Notice of Intent to Lien.

And, to be sure: Texas is not one of the few states that requires a Notice of Intent to Lien be sent in order to preserve lien rights. Though, as mentioned in the following article, sending a Notice of Intent to Lien voluntarily can help to recover payment without actually having to file a lien: What Is a Notice of Intent to Lien and Should You Send One?

When are monthly notices required in Texas?

As you mentioned in your question, monthly notices are only required for months when work was performed but not paid for. So, if a customer has fully paid for the work done in a prior month, then there’s no need to send a monthly notice for that month. Though, if a Notice of Contractual Retainage isn’t sent, then it might still be necessary to send monthly notice for unpaid retainage amounts for those months.

Texas monthly notice requirements depend on job type and role

When, exactly, you’ll need to send notice will depend on your role on the job as well as the job type.

For residential projects, all parties hired by someone other than the owner must send 2nd month notice to the owner and GC.

For non-residential jobs, 1st tier subcontractors, suppliers, equipment rental companies, etc. (hired directly by the GC) must send a 3rd month notice to the owner and the GC. All other subs, suppliers, and equipment rental companies will need to send a 2nd month notice to the GC, and then they’ll need to send a 3rd month notice to both the owner and the GC.

But, Texas monthly notices won’t be required unless payment is owed but unpaid for the relevant month. And, if invoices for a certain prior month have been fully paid, then no monthly notices would be required for that month.

Disclaimer: The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the help of a local attorney.
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