Texas notice and lien requirements are some of the most complex and confusing in the country. Multiple notice requirements, reoccurring notice requirements, odd textual requirements, potentially needing to have both spouses sign a contract for improvement even if they are not both owners, and more make the notice and lien landscape a quagmire.
While there are almost constant discussions in the Texas Legislature about changing the laws, those changes have never materialized and seem destined to always flame out.
Some of the most confusing aspects about the notice requirements in Texas are the “monthly” notices or “fund-trapping” notices that are required for parties who did not contract with the property owner. These notices, depending on project and role, must be sent 2 and/or 3 months after every month for which a potential lien claimant furnished labor or materials but remains unpaid. This can mean that on long projects with slow payment, a company can be sending out multiple notices every month for a long period.
Do these complex requirements that require contractors to send multiple notices multiple times over the course of a single project also extend to the claim(s)? Do Texas liens and bond claims also need to be sent multiple times if the amounts due are from multiple months? This question is examined briefly below.
Timing of Texas Mechanics Liens Claims
The Texas monthly notice requirements stem from the following Texas statutory language:
“. . . the claimant must give to the original contractor written notice of the unpaid balance. The claimant must give the notice not later than the 15th day of the second month following each month in which all or part of the claimant’s labor was performed or material delivered. The claimant must give the same notice to the owner or reputed owner and the original contractor not later than the 15th day of the third month following each month in which all or part of the claimant’s labor was performed or material or specially fabricated material was delivered.” (emphasis added)
Since the language regarding the filing of the lien claim itself is similar (“. . . the person claiming the lien must file an affidavit with the county clerk . . . not later than the 15th day of the fourth calendar month after the day on which the indebtedness accrues”), it’s easy to take this wording as requiring the lien claim itself to be a “4th month notice” that follows the same pattern as the monthly notices above. However, this is not the case.
Lien Claims & Notices – Not the Same Thing
Sending monthly notices on the 2nd and 3rd months after the month in which labor or materials were furnished and unpaid is the hard step. First, note that in the monthly notice requirements, “each” month is specifically called out – this specific language is missing from the statutory clauses related to the lien affidavit itself. Second, while the lien claim affidavit must be filed by the 15th day of the 4th month after the debt accrues, that wording has a very specific meaning according to Texas statutes.
Texas law specifically states that:
“Indebtedness to a subcontractor . . . who has furnished labor or material to an original contractor or to another subcontractor accrues on the last day of the last month in which the labor was performed or the material furnished.”
This means that in Texas, a mechanics lien must be filed by the 15th day of the 4th month after the month in which the lien claimant last furnished labor or material to the project.
As long as the monthly notices (2nd and 3rd) are going out as required, the lien claim itself only must be filed once within 4 months from last furnishing.
2017 Texas Monthly Notice Calendar
Timing of Texas Bond Claims
The analysis is a bit different for bond claims made under the Texas Little Miller Act. While the Little Miller Act also requires monthly 2 and 3 month notices, the 3rd month notice is the “written notice of claim” that must be provided to the prime contractor and the surety in order for the claimant to recover in a suit against the bond.
Accordingly, the “3rd month notice” is the bond claim itself and must be mailed no later than the 15th day of the 3rd month after each month in which the claimant furnished labor and/or materials for which there is an unpaid balance.
Further, the notice of claim must be accompanied by a sworn statement of account that states in substance:
- (1) the amount claimed is just and correct; and
- (2) all just and lawful offsets, payments, and credits known to the affiant have been allowed.
The Texas Takeaway
This means that for private projects in Texas there is only one lien required, but on Texas public projects, multiple claims may be required.
Want to learn more about getting paid in Texas? Talk to us – we might be able to help.
Also, please download our free guide – How to File a Texas Mechanics Lien. Lots of folks just like you in the construction business in Texas have found our Texas guide to be helpful.