Texas Lien Law Guide
Texas mechanics lien law is governed by Texas Property Code Chapter 53 and provides robust protections for contractors, subcontractors, and suppliers who improve real property. However, the system relies heavily on a notice-and-deadline framework that rewards those who send timely notices and punishes those who miss them. Texas is also unique in its "fund trapping" concept, which can dramatically increase or limit your recovery depending on whether you sent notice on time.
Texas is one of the largest construction markets in the country. Whether you are building in Houston, Dallas-Fort Worth, Austin, or San Antonio, understanding the lien statute is essential. A single missed notice can eliminate your right to recover from the owner entirely.
Key Deadlines
Texas deadlines vary based on your role in the project and whether the project is residential or commercial (non-residential). The table below summarizes the critical dates.
| Action | Residential Projects | Commercial Projects |
|---|---|---|
| Monthly notice (fund trapping) | By 15th of 2nd month after unpaid work | By 15th of 3rd month after unpaid work |
| File lien affidavit | By 15th of 4th month after last month of unpaid work | By 15th of 4th month after last month of unpaid work |
| Send notice of filed lien to owner | Within 5 days of filing | Within 5 days of filing |
| Foreclosure suit | Within 1 year of last day claimant could file lien | Within 2 years of last day claimant could file lien |
On residential homestead projects, you must send your fund-trapping notice by the 15th of the 2nd month after the month of unpaid work. For commercial projects, it is the 15th of the 3rd month. Missing these windows reduces or eliminates your claim against the owner's funds.
Who Must Send Notice?
Not everyone in Texas must send preliminary notice, but failing to do so when required strips you of your right to recover from the owner's retained funds.
| Party | Notice Required? | Details |
|---|---|---|
| Original contractor (GC) | No preliminary notice required | Has a direct contract with the owner; lien rights arise automatically |
| First-tier subcontractor | Yes | Must send notice to the owner and GC |
| Second-tier sub (sub-sub) | Yes | Must send notice to the owner, GC, and the sub who hired them |
| Material supplier to GC | Yes | Must send notice to the owner |
| Material supplier to sub | Yes | Must send notice to the owner and GC |
| Laborer | No | Wage liens have separate protections |
What the Notice Must Contain
The notice must include:
- A sworn statement of the amount claimed
- The name and address of the claimant
- The name of the party who hired you
- A general description of the work performed or materials supplied
- A description of the property (enough to identify it)
Fund Trapping
Fund trapping is a concept unique to Texas and is one of the most important mechanisms in the state's lien system. Here is how it works:
- When a subcontractor or supplier sends timely monthly notice to the owner, it "traps" funds in the owner's hands. The owner is then obligated to withhold enough money from the general contractor to cover the claim.
- If the owner pays the GC after receiving your notice, the owner becomes personally liable for your claim up to the amount that should have been withheld.
- If you fail to send notice, the owner can pay the GC freely and you have no claim against the owner -- your only recourse is against the party who hired you.
Think of it as putting a hold on the owner's checkbook. Once the owner receives your notice, they cannot safely pay the GC without setting aside enough to cover your claim. This is your most powerful leverage as a subcontractor or supplier in Texas.
Fund Trapping Example
- You are a plumbing sub on a commercial project. You performed $50,000 of work in January and were not paid.
- You must send notice to the owner by March 15 (15th of the 3rd month after the unpaid work on a commercial project).
- If you send notice on March 10, the owner must withhold $50,000 from any future payments to the GC.
- If the owner ignores your notice and pays the GC anyway, the owner is liable to you for up to $50,000.
Lien Affidavit Requirements
To perfect your mechanics lien in Texas, you must file a lien affidavit with the county clerk in the county where the property is located.
Required Contents
The lien affidavit must include:
- A sworn statement that the claim is just and true
- The amount of the claim
- The name and last known address of the owner or reputed owner
- A general statement of the work done or materials furnished
- A description of the property sufficient to identify it (legal description or street address)
- The name and address of the claimant
- The claimant's relationship to the project (sub, supplier, etc.)
Filing Procedure
- Prepare the lien affidavit (must be notarized)
- File with the county clerk in the county where the property is located
- Send a copy to the owner within 5 days of filing
- On residential homestead projects, you must also send a copy to the owner via certified mail
For residential homestead properties, Texas imposes additional requirements including written contract requirements, disclosure notices, and stricter notice timelines. If the property is someone's primary residence, consult a construction attorney before filing.
Prompt Payment Act
Texas prompt payment obligations are found in Texas Business & Commerce Code Chapter 28 (private projects) and Texas Government Code Chapter 2251 (public projects).
Private Projects
| Requirement | Rule |
|---|---|
| Owner to GC | Pay within 35 days of receiving invoice |
| GC to sub | Pay within 7 days of receiving payment from owner |
| Penalty for late payment | 1.5% per month interest on overdue amounts |
| Attorney's fees | Prevailing party may recover reasonable attorney's fees |
Public Projects (Government Code Ch. 2251)
| Requirement | Rule |
|---|---|
| Government entity to GC | Pay within 30 days of receipt of proper invoice |
| GC to sub | Pay within 10 days of receiving payment |
| Penalty for late payment | Automatic interest at rate published by the Comptroller (typically prime + 1%) |
| No pay-when-paid defense | Public prompt payment overrides contractual pay-when-paid language |
Many contractors do not realize they are entitled to 1.5% per month interest on late payments. On a $200,000 outstanding balance, that is $3,000 per month. Send a formal demand letter citing Business & Commerce Code Chapter 28 -- it often accelerates payment.
Residential vs. Commercial Differences
Texas draws an important distinction between residential homestead projects and commercial (non-residential) projects.
| Feature | Residential Homestead | Commercial |
|---|---|---|
| Contract requirement | Written contract required (or lien rights severely limited) | No written contract required |
| Fund-trapping notice | 15th of 2nd month | 15th of 3rd month |
| Lien filing deadline | 15th of 4th month after last unpaid work | 15th of 4th month after last unpaid work |
| Foreclosure deadline | 1 year | 2 years |
| Owner disclosure | Owner must receive statutory disclosure notices | No special disclosure |
| Lien cap | Lien limited to original contract price (less payments made) | No automatic cap on liens from subs |
Texas aggressively protects homestead properties. Courts construe the lien statute strictly against claimants on residential homestead projects. If you regularly do residential work, your contracts and notice procedures must be bulletproof.
Common Mistakes
1. Missing the Fund-Trapping Notice Deadline
The problem: You performed work in January but did not send notice to the owner until May. The owner has already paid the GC.
The fix: Send fund-trapping notices every month as a standard business practice. Calendar the 15th-of-the-month deadlines and treat them as non-negotiable.
2. Not Having a Written Contract on Residential Projects
The problem: You performed $80,000 of work on a homeowner's property based on a verbal agreement. Your lien rights are now severely limited.
The fix: Always use a written, signed contract on residential homestead projects. Texas Property Code requires it.
3. Filing the Lien Affidavit in the Wrong County
The problem: You filed the lien in the county where your office is located, not where the property sits.
The fix: Always file in the county where the property is located. For projects near county lines, verify the property address with the county appraisal district.
4. Failing to Send Copy of Filed Lien to the Owner
The problem: You filed the lien affidavit but forgot to send a copy to the owner within 5 days.
The fix: Mail a copy of the filed lien affidavit to the owner via certified mail on the same day you file it with the county clerk.
5. Confusing Residential and Commercial Deadlines
The problem: You treated a residential homestead project like a commercial project and used the longer commercial deadlines.
The fix: Determine the property type before your first day on the job. If there is any doubt whether a property is a homestead, use the shorter residential deadlines.
6. Assuming "Pay-When-Paid" Eliminates Your Rights
The problem: The GC tells you they do not have to pay until the owner pays them, and you accept this.
The fix: Texas courts have ruled that pay-when-paid clauses are timing mechanisms, not conditions precedent, unless the contract uses very specific "pay-if-paid" language. Even then, your lien rights against the property are independent of the GC's contract with the owner.
Related Resources
- Lien Deadline Calculator -- Calculate your Texas lien deadlines automatically
- State Lien Law Reference -- Compare lien laws across all 50 states
- Construction Lien Law Guide -- General mechanics lien overview and California-specific guidance
- Stop Payment Notices -- Alternative remedy for public works projects
- Collections Strategy -- What to do when payment is overdue
This guide is for educational purposes only. Texas lien law is complex and fact-specific. Consult a Texas construction attorney for advice on your particular situation.