Texas has some of the most confusing and convoluted mechanics lien and construction notice requirements of any state. With multiple notices potentially required, and a separate notice due for each individual month in which work was performed (and unpaid), the requirements can be difficult to navigate, and even trickier to comply with. Companies doing work in Texas that still rely on an in-house process to manage these deadlines can run into difficulties, waste time, and learn the hard way that mistakes in performing this complicated function can have significant consequences.
Texas is nearly unique in that a separate notice is required for every month a project participant furnishes labor and/or materials (provided the participant is unpaid for at least a portion of the labor and/or materials provided in that month). This means that, on an extended project, a company can be required to send a large volume of notices. What makes things even more complicated, when viewed in light of the confusingly drafted Texas statutes, is that some parties are required to send more than one notice for each month unpaid labor and/or materials were furnished – and potentially, those notices may be required to be sent in different months.
The specific requirements regarding when (and if) a Texas notice is required to be sent depends on a party’s tier in the project. These requirements are outlined in the following chart.
This chart, however, only provides the basic outline of the notice requirements, not how the notices may be optimized. As noted above, for non-residential projects, parties that did not contract with the property owner or the GC must send monthly notice in both the 2nd and 3rd month following each month in which labor and/or materials were furnished and unpaid. The monthly notice must be delivered to the GC in the second month, and to both the owner and the GC in the third month. Texas law muddies the issue by stating that “the same notice” provided to the GC in the second month is to be provided to the owner and the GC in the third month.
Texas Monthly Notice Optimizations Through Technology
With such an intricate and data-intense process required for complying with the Texas notice requirements, there is an opportunity for companies to leverage technology/software platforms to optimize the process. This can occur in multiple ways. First, the required notices and deadlines can be calculated simply and correctly, and can be tracked and displayed on a clean and routinely updated interface, rather than haphazardly via messy in-house processes. Second, the notice process itself can be optimized.
Texas law states that these monthly notices must be sent to the required parties by or before the 15th day of the required month (either 2 or 3 months after the furnishing), so it is not required to necessarily wait until that specific month. Texas case law specifically allows parties who must send a monthly notice in both the 2nd and 3rd month after furnishing unpaid labor and/or materials to combine the notices into one notice (sent to all required parties) – provided that the notice is sent by the earliest deadline; i.e. 15th day of the 2nd month after labor/materials furnished but unpaid. This means that for non-residential projects, parties that did not contract with the property owner or the GC may send both required monthly notices (due in in both the 2nd and 3rd month following each month in which labor and/or materials were furnished and unpaid) by the 2nd month deadline. By doing so, the noticing company can cut down on mail pieces required, and streamline deadlines. This simple step can make it such that each month in which labor and/or materials were furnished only requires one monthly notice, and vastly streamlines the notice process.
Further, using a technology/software platform can empower companies to pull notices that were to be sent to parties if payment is received prior to the notice deadline. When the notice process is accomplished in-house, there is a big crunch around the 15th of each month (although waiting until the 15th is not required, many companies choose to put off sending the notices until the last minute), but once a notice is sent, it’s sent – there’s no going back. When using a software platform to optimize the process, a notice can be requested, and queued-up to send when needed, but can be pulled from the mailing batch if payment is received prior to the deadline.