BusinessHomeownersLienTexas Law
One of the most frustrating things can be learning that a lien has been filed on your home by a contractor, particularly one which is invalid or unenforceable. Your first thought is one of bewilderment as to why it was filed, maybe you paid the invoices (or didn’t) for the work performed. This article is a two-sided blog in that the goal is to let homeowners know there are procedures under the law for removal of an invalid or unenforceable lien, but also to advise contractors that documentation and communication with your homeowner is key to avoiding any such challenge to legitimate amounts owing that you are trying to collect through the Mechanic’s Lien process.
Even if your project has been completed, it is critical to keep all paperwork, especially including contracts, change orders, proof of payment, request for payments, or other electronic information such as emails and texts which can provide evidence of an oral agreement, work performed, and/or payments. For both homeowner and contractor, the absolute best advice we can give you is to follow your contract and other contractual documents, from start to finish. By simply following these guidelines and those provided in your contract, you can have a smooth transition to the completion of a project.
In the fact scenario we are discussing today, there is a dispute where the contractor believes the homeowner still owes him money. Any negotiations have failed or stalled. The homeowner then receives notice that a Mechanic’s Lien has been filed and is now attached to their property. What do they do? They will likely need representation to bring an action to remove the lien if it is invalid or unenforceable. A construction attorney will evaluate the contract, works performed and monies paid to the contractor, then calculate the legal timeframe for timely filing any lien. Keep in mind the Mechanic’s Lien laws just went through an overhaul effective January 1, 2022. If it is the case where the lien is invalid or unenforceable, a summary motion to remove lien may be a good legal option by giving you what we in the legal field would call a “quick” fix to the lien problem. There is a list of requirements to qualify for this quick solution. While there are no guarantees with this procedure, in applicable cases, it can be worth bringing the Motion.
Summary lien removal is governed by Texas Property Code Section 53.160 (“Summary Motion to Remove Invalid Lien or Unenforceable Lien”). This sets forth a process by which a lien can be removed in as fast as 21 days after the contractor (lien claimant) appears in the action. In a typical lawsuit, the Court typically sets a matter like this for the first trial in about 1 year from the date of filing suit, the benefits of complaining removal process quickly are revealed, particularly if it takes 2 to 3 times to set the trial. It may provide a quick solution, greatly reducing attorney fees. Keep in mind that this process requires drafting and filing of a lawsuit, service of the suit on the contractor, then roughly another month for the contractor to file responsive pleadings. Only then will the procedural rules allow for having this Summary Motion, decided by the Court. The Motion will typically be heard within 21 days after filing it. It is a process to get there, and it can be frustrating during the wait time.
Once you make it to the hearing, the contractor has the burden of proving that the notice of claim and affidavit of lien were furnished to the owner and original contractor (if applicable) with all the required formalities Tex. Prop. Code § 53.160(d). Keep in mind, you, as the homeowner who filed the Motion, must also show that the lien should be removed for “any other ground authorized by this section” (i.e. The Texas Property Code). The Code provides 7 valid reasons for objecting to the validity or enforceability of the lien. These are the only reasons which can be relied upon by the homeowner in bringing this Motion. These reasons are listed in Texas Property Code § 53.160(b) as follows:
(A) the claimant perfected the lien claim; and
(B) the owner received a notice of the claim as required by this chapter;
(5) all funds subject to the notice of a claim to the owner and a notice regarding the retainage have been deposited in the registry of the court and the owner has no additional liability to the claimant;
(6) when the lien affidavit was filed on homestead property:
(A) no contract was executed or filed as required;
(B) the affidavit claiming a lien failed to contain the required notice; or
(C) the notice of the claim failed to include the required statement; and
(7) the claimant executed a valid and enforceable waiver or release of the claim or lien claimed in the affidavit.
We all know that things do not always fit neatly into the categories provided by the Code. There exist several other options that can coincide with filing any action concerning a lien on your property. These would include bonding and posting of the monies in dispute into the registry of court. While this may appear to be automatic defeat for a homeowner, as the money that they are disputing is placed for safe keeping with the court while the matter is pending, the property may be released from the lien during the litigation and these options are typically cheaper in the long run when faced with mounting attorney’s fees.
What is the best option for a homeowner and contractor to avoid this situation? Document, document, document – then communicate with each other. Valid disputes arise, but you can stave off many pre-completion/post-construction disputes by simply following the terms contained in your well-written contract. The three biggest points of a dispute are 1) an improperly drafted scope of work with exclusions; 2) payments and payment terms; and 3) shortcuts taken in the Change Order process. Change Orders appear to be the biggest point of contention, even if signed by both parties. There are many “notices” required for residential. Definite and certain descriptions, approvals of work and requests for payment can stave off many disputes for residential. There are many “notices” required for construction properties that must be in a construction contract, otherwise the builder may face significant penalties. Just follow the rules, be reasonable and you may not have to meet your lawyer one day. It would be much more helpful to meet with your attorney prior to entering into an agreement instead of after a dispute has arisen.
