The Amsler Firm

A quick clarification: "Notice Letters" are not the same thing as liens in Texas. Notice letters are (generally) sent out prior to liens being filed. However, notice letters preserve the claimant's ability to file a lien at a later time, if necessary. All notice letters must be sent via certified mail, return receipt requested. The actual lien is an affidavit that is filed with the county clerk in the property records of the county in which the job is located. Please seek legal assistance before filing lien affidavits, as there can be some consequences for improperly filing liens in Texas. (such as having to pay the legal fees for having the lien removed).

PRIVATE CONSTRUCTION PROJECT (non-residential)
In general, contractors and material suppliers in Texas are required to file their lien in the county in which the project is located no later than the 15th day of the 4th month following any month in which labor and materials are supplied. For example, for labor and material supplied anytime in January, the lien filing deadline will generally be May 15th. General Contractors are not required to send lien notices to the owner of the project prior to filing their liens.

First Tier Subcontractors/suppliers (i.e., subcontractors who have a direct contract with the General/Prime Contractor) are required to send "fund-trapping" notices to the owner and the Prime Contractor of the project on or before the 15th day of the third month following any month in which labor and materials are supplied. So in the example above, if a subcontractor supplied labor to a general contractor in January, that subcontractor needs to send his lien notice letters to the G.C. and the Owner not later than April 15th. The sub/supplier will then need to file his lien as above in the event that he is not paid (i.e., not later than May 15th).

2nd Tier (and below) Subcontractors/suppliers - (i.e., those who supply labor and materials to a project, but do not have a contract directly with the Prime Contractor - These claimants are required to send an additional notice (via CMRRR) to the General Contractor not later than the 15th day of the 2nd month. In our running example, somebody who supplies a forklift to a subcontractor in January needs to send notice to the General Contractor not later than the 15th day of March. This makes sense if you think about it; it basically gives the General Contractor an opportunity to cure a payment problem that he may not be aware of prior to the owner of the job receiving a lien notice letter. Of course, if the 2nd tier (or lower) supplier/contractor is not paid, he will then have to follow-up by filing his 3rd month "fund trapping" notice and his lien by the 15th day of the 4th month.

PRIVATE CONSTRUCTION PROJECT (residential)
For construction/renovation of residential projects in Texas (i.e., projects of up to four single family housing units), the general rule of thumb is that liens must be filed no later than the 15th day of the third month following any month in which labor and/or materials are supplied. Further, the notice letters required of subcontractors/suppliers must be sent no later than the 15th day of the 2nd month following any month in which labor and/or materials are supplied.

It is of special importance to note that subchapter K of sections 53.254-.256 of the Texas Property Code require some very specific hurdles to be overcome prior to a general or his subs/suppliers to even HAVE lien rights on residential construction in Texas. Those requirements are beyond the scope of this article, but they are even more onerous if the project is homesteaded. Suffice it to say that I HIGHLY recommend contacting a construction attorney prior to beginning work on a residential project in Texas to make sure that the contractual pre-requisites for preserving lien rights are met.

But again, in general, "fund trapping" notices must be sent by the 15th day of the 2nd month, and liens must be filed no later than the 15th day of the 3rd month "after the indebtedness accrues." For general contractors, the indebtedness accrues when the project is completed or abandoned, but for subcontractors, the indebtedness accrues on the last day of the month in which labor and/or materials are supplied. So if you are a concrete supplier who pours a foundation in January, you need to send your "fund trapping" letter no later than March 15th, and you need to file your lien no later than April 15th.

PUBLIC PROJECTS - STATE OF TEXAS
For public projects where the prime contract is greater than $25,000.00, Texas requires public jobs to be bonded so that no liens are filed against public lands. It is the General Contractor who obtains a payment and performance bond, and the purpose of this bond is to ensure that the GC's suppliers and subcontractors are paid. The ability of a claimant on a public job to collect from a surety for non-payment ensures that public lands remain free of liens, and it ensures that people will actually perform work on projects that they cannot file liens against in the event of non-payment. Because of the special nature of the relationship between General contractors and their bonding companies, G.C.'s are limited to suing the owner for payment. GC's cannot make a claim against their own bonding company, and public lands are non-lienable when a bond is in place. However, section 2253 of the Texas Government Code (formerly the "McGregor Act") provides that subcontractors and suppliers may make claims against the GC's surety bond in the event of non-payment.

For 1st tier subcontractors, they must send their "Sworn Statement of Account" to the GC and to the surety not later than the 15th day of the THIRD month following any month in which labor/materials are provided. The notice to the surety must contain a sworn statement of account, stating in substance that the amount claimed is just and correct and that all just and lawful offsets, payments, and credits known to the claimant have been allowed. This "sworn statement" must be in the form of an affidavit, and it must be sent certified mail, return receipt requested.

2nd Tier (and below) - Those not having a contract directly with the GC on public jobs must send an additional "2nd Month" notice to the GC by the 15th day of the 2nd month following the supplying of labor and/or materials to a public (state) project. Keep in mind that this 2nd month notice does not perfect a bond claim; it merely preserves the right of the claimant to send a sworn statement of account to the surety on or before the 15th day of the 3rd month, as set forth above.

Of special importance in the area of bond claims on state jobs is the very short limitations period within which to file suit. It is one year from the date that the sworn statement of account is mailed (CMRRR) to the surety. (See section 2254.078 of the Texas Government Code).

PUBLIC PROJECTS - FEDERAL (Miller Act -40 U.S.C. section 270a-270f)
This section is fairly straightforward, because we're not dealing with Texas law. GC's on federal jobs have no lien or bond claims available. First Tier subcontractors have bond claims available, but they need not file any special notice in order to preserve their bond claims. Rather, they need only file suit in Federal District Court in the District where the project is located no SOONER than 90 days after they complete their work, but no later than 1 year after they complete their work. (NOTE: THIS PROVIDES FOR ONLY A NINE MONTH WINDOW OF OPPORTUNITY WITHIN WHICH TO FILE SUIT - it is one of the shortest statutes of limitations around). Finally, sub-subcontractors not having a contract directly with the prime must send notice of their claim within 90 days of completing their work. If they are not paid, these sub-subcontractors must file suit in Federal District Court just as subcontractors must (BEWARE THE 9 MONTH STATUTE OF LIMITATIONS).

Please be aware that the foregoing overview has left out more law than it has included. There are additional requirements with respect to retainage and specially fabricated materials notices/liens. This is just an attempt to let contractors and suppliers know WHEN they need to contact their attorney in order to preserve their lien rights/bond claims.

Of course, we here at Amsler & Amsler, P.C. will be happy to help you.