2009 Texas Code
PROPERTY CODE
TITLE 5. EXEMPT PROPERTY AND LIENS
CHAPTER 53. MECHANIC'S, CONTRACTOR'S, OR MATERIALMAN'S LIEN
PROPERTY CODE
TITLE 5. EXEMPT PROPERTY AND LIENS
SUBTITLE B. LIENS
CHAPTER 53. MECHANIC'S, CONTRACTOR'S, OR MATERIALMAN'S LIEN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 53.001. DEFINITIONS. In this chapter:
(1) "Contract price" means the cost to the owner for any part of
construction or repair performed under an original contract.
(2) "Improvement" includes:
(A) abutting sidewalks and streets and utilities in or on those
sidewalks and streets;
(B) clearing, grubbing, draining, or fencing of land;
(C) wells, cisterns, tanks, reservoirs, or artificial lakes or
pools made for supplying or storing water;
(D) pumps, siphons, and windmills or other machinery or
apparatuses used for raising water for stock, domestic use, or
irrigation; and
(E) planting orchard trees, grubbing out orchards and replacing
trees, and pruning of orchard trees.
(3) "Labor" means labor used in the direct prosecution of the
work.
(4) "Material" means all or part of:
(A) the material, machinery, fixtures, or tools incorporated
into the work, consumed in the direct prosecution of the work, or
ordered and delivered for incorporation or consumption;
(B) rent at a reasonable rate and actual running repairs at a
reasonable cost for construction equipment used or reasonably
required and delivered for use in the direct prosecution of the
work at the site of the construction or repair; or
(C) power, water, fuel, and lubricants consumed or ordered and
delivered for consumption in the direct prosecution of the work.
(5) "Mechanic's lien" means the lien provided by this chapter.
(6) "Original contract" means an agreement to which an owner is
a party either directly or by implication of law.
(7) "Original contractor" means a person contracting with an
owner either directly or through the owner's agent.
(8) "Residence" means a single-family house, duplex, triplex, or
quadruplex or a unit in a multiunit structure used for
residential purposes that is:
(A) owned by one or more adult persons; and
(B) used or intended to be used as a dwelling by one of the
owners.
(9) "Residential construction contract" means a contract between
an owner and a contractor in which the contractor agrees to
construct or repair the owner's residence, including improvements
appurtenant to the residence.
(10) "Residential construction project" means a project for the
construction or repair of a new or existing residence, including
improvements appurtenant to the residence, as provided by a
residential construction contract.
(11) "Retainage" means an amount representing part of a contract
payment that is not required to be paid to the claimant within
the month following the month in which labor is performed,
material is furnished, or specially fabricated material is
delivered. The term does not include retainage under Subchapter
E.
(12) "Specially fabricated material" means material fabricated
for use as a component of the construction or repair so as to be
reasonably unsuitable for use elsewhere.
(13) "Subcontractor" means a person who has furnished labor or
materials to fulfill an obligation to an original contractor or
to a subcontractor to perform all or part of the work required by
an original contract.
(14) "Work" means any part of construction or repair performed
under an original contract.
(15) "Completion" of an original contract means the actual
completion of the work, including any extras or change orders
reasonably required or contemplated under the original contract,
other than warranty work or replacement or repair of the work
performed under the contract.
Acts 1983, 68th Leg., p. 3533, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 2, eff.
Sept. 1, 1997; Acts 1999, 76th Leg., ch. 889, Sec. 1, eff. Sept.
1, 1999.
Sec. 53.002. MORE THAN ONE ORIGINAL CONTRACTOR. On any work
there may be more than one original contractor for purposes of
this chapter.
Acts 1983, 68th Leg., p. 3535, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.003. NOTICES. (a) This section applies to notices
required by Subchapters B through G and K.
(b) Any notice or other written communication may be delivered
in person to the party entitled to the notice or to that party's
agent, regardless of the manner prescribed by law.
(c) If notice is sent by registered or certified mail, deposit
or mailing of the notice in the United States mail in the form
required constitutes compliance with the notice requirement. This
subsection does not apply if the law requires receipt of the
notice by the person to whom it is directed.
(d) If a written notice is received by the person entitled to
receive it, the method by which the notice was delivered is
immaterial.
Acts 1983, 68th Leg., p. 3535, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 3, eff.
Sept. 1, 1997.
SUBCHAPTER B. PERSONS ENTITLED TO LIEN; SUBJECT PROPERTY
Sec. 53.021. PERSONS ENTITLED TO LIEN. (a) A person has a lien
if:
(1) the person labors, specially fabricates material, or
furnishes labor or materials for construction or repair in this
state of:
(A) a house, building, or improvement;
(B) a levee or embankment to be erected for the reclamation of
overflow land along a river or creek; or
(C) a railroad; and
(2) the person labors, specially fabricates the material, or
furnishes the labor or materials under or by virtue of a contract
with the owner or the owner's agent, trustee, receiver,
contractor, or subcontractor.
(b) A person who specially fabricates material has a lien even
if the material is not delivered.
(c) An architect, engineer, or surveyor who prepares a plan or
plat under or by virtue of a written contract with the owner or
the owner's agent, trustee, or receiver in connection with the
actual or proposed design, construction, or repair of
improvements on real property or the location of the boundaries
of real property has a lien on the property.
(d) A person who provides labor, plant material, or other
supplies for the installation of landscaping for a house,
building, or improvement, including the construction of a
retention pond, retaining wall, berm, irrigation system,
fountain, or other similar installation, under or by virtue of a
written contract with the owner or the owner's agent, trustee, or
receiver has a lien on the property.
(e) A person who performs labor as part of, or who furnishes
labor or materials for, the demolition of a structure on real
property under or by virtue of a written contract with the owner
of the property or the owner's agent, trustee, receiver,
contractor, or subcontractor has a lien on the property.
Acts 1983, 68th Leg., p. 3535, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 395, Sec. 1, eff.
Sept. 1, 1989; Acts 1989, 71st Leg., ch. 1138, Sec. 1, eff. Sept.
1, 1989; Acts 1991, 72nd Leg., ch. 16, Sec. 16.01, eff. Aug. 26,
1991; Acts 1995, 74th Leg., ch. 851, Sec. 1, 6, eff. Sept. 1,
1995; Acts 1999, 76th Leg., ch. 896, Sec. 1, eff. Sept. 1, 1999;
Acts 2003, 78th Leg., ch. 410, Sec. 1, eff. Sept. 1, 2003.
Sec. 53.022. PROPERTY TO WHICH LIEN EXTENDS. (a) The lien
extends to the house, building, fixtures, or improvements, the
land reclaimed from overflow, or the railroad and all of its
properties, and to each lot of land necessarily connected or
reclaimed.
(b) The lien does not extend to abutting sidewalks, streets, and
utilities that are public property.
(c) A lien against land in a city, town, or village extends to
each lot on which the house, building, or improvement is situated
or on which the labor was performed.
(d) A lien against land not in a city, town, or village extends
to not more than 50 acres on which the house, building, or
improvement is situated or on which the labor was performed.
Acts 1983, 68th Leg., p. 3536, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.023. PAYMENT SECURED BY LIEN. The lien secures payment
for:
(1) the labor done or material furnished for the construction or
repair;
(2) the specially fabricated material, even if the material has
not been delivered or incorporated into the construction or
repair, less its fair salvage value; or
(3) the preparation of a plan or plat by an architect, engineer,
or surveyor in accordance with Section 53.021(c).
Acts 1983, 68th Leg., p. 3536, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1995, 74th Leg., ch. 851, Sec. 2, eff.
Sept. 1, 1995.
Sec. 53.024. LIMITATION ON SUBCONTRACTOR'S LIEN. The amount of
a lien claimed by a subcontractor may not exceed:
(1) an amount equal to the proportion of the total subcontract
price that the sum of the labor performed, materials furnished,
materials specially fabricated, reasonable overhead costs
incurred, and proportionate profit margin bears to the total
subcontract price; minus
(2) the sum of previous payments received by the claimant on the
subcontract.
Acts 1983, 68th Leg., p. 3536, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.025. LIMITATION ON ORDINARY RETAINAGE LIEN. A lien for
retainage is valid only for the amount specified to be retained
in the contract, including any amendments to the contract,
between the claimant and the original contractor or between the
claimant and a subcontractor.
Acts 1983, 68th Leg., p. 3537, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 2, eff.
Sept. 1, 1989.
Sec. 53.026. SHAM CONTRACT. (a) A person who labors, specially
fabricates materials, or furnishes labor or materials under a
direct contractual relationship with another person is considered
to be in direct contractual relationship with the owner and has a
lien as an original contractor, if:
(1) the owner contracted with the other person for the
construction or repair of a house, building, or improvements and
the owner can effectively control that person through ownership
of voting stock, interlocking directorships, or otherwise;
(2) the owner contracted with the other person for the
construction or repair of a house, building, or improvements and
that other person can effectively control the owner through
ownership of voting stock, interlocking directorships, or
otherwise; or
(3) the owner contracted with the other person for the
construction or repair of a house, building, or improvements and
the contract was made without good faith intention of the parties
that the other person was to perform the contract.
(b) In this section, "owner" does not include a person who has
or claims a security interest only.
Acts 1983, 68th Leg., p. 3537, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 3, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 4, eff. Sept.
1, 1997.
SUBCHAPTER C. PROCEDURE FOR PERFECTING LIEN
Sec. 53.051. NECESSARY PROCEDURES. To perfect the lien, a
person must comply with this subchapter.
Acts 1983, 68th Leg., p. 3538, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.052. FILING OF AFFIDAVIT. (a) Except as provided by
Subsection (b), the person claiming the lien must file an
affidavit with the county clerk of the county in which the
property is located or into which the railroad extends not later
than the 15th day of the fourth calendar month after the day on
which the indebtedness accrues.
(b) A person claiming a lien arising from a residential
construction project must file an affidavit with the county clerk
of the county in which the property is located not later than the
15th day of the third calendar month after the day on which the
indebtedness accrues.
(c) The county clerk shall record the affidavit in records kept
for that purpose and shall index and cross-index the affidavit in
the names of the claimant, the original contractor, and the
owner. Failure of the county clerk to properly record or index a
filed affidavit does not invalidate the lien.
Acts 1983, 68th Leg., p. 3538, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 4, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 5, eff. Sept.
1, 1997.
Sec. 53.053. ACCRUAL OF INDEBTEDNESS. (a) For purposes of
Section 53.052, indebtedness accrues on a contract under which a
plan or plat is prepared, labor was performed, materials
furnished, or specially fabricated materials are to be furnished
in accordance with this section.
(b) Indebtedness to an original contractor accrues:
(1) on the last day of the month in which a written declaration
by the original contractor or the owner is received by the other
party to the original contract stating that the original contract
has been terminated; or
(2) on the last day of the month in which the original contract
has been completed, finally settled, or abandoned.
(c) Indebtedness to a subcontractor, or to any person not
covered by Subsection (b) or (d), 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.
(d) Indebtedness for specially fabricated material accrues:
(1) on the last day of the last month in which materials were
delivered;
(2) on the last day of the last month in which delivery of the
last of the material would normally have been required at the job
site; or
(3) on the last day of the month of any material breach or
termination of the original contract by the owner or contractor
or of the subcontract under which the specially fabricated
material was furnished.
(e) A claim for retainage accrues on the last day of the month
in which all work called for by the contract between the owner
and the original contractor has been completed, finally settled,
or abandoned.
Acts 1983, 68th Leg., p. 3539, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 5, eff.
Sept. 1, 1989; Acts 1995, 74th Leg., ch. 851, Sec. 3, eff. Sept.
1, 1995.
Sec. 53.054. CONTENTS OF AFFIDAVIT. (a) The affidavit must be
signed by the person claiming the lien or by another person on
the claimant's behalf and must contain substantially:
(1) a sworn statement of the amount of the claim;
(2) the name and last known address of the owner or reputed
owner;
(3) a general statement of the kind of work done and materials
furnished by the claimant and, for a claimant other than an
original contractor, a statement of each month in which the work
was done and materials furnished for which payment is requested;
(4) the name and last known address of the person by whom the
claimant was employed or to whom the claimant furnished the
materials or labor;
(5) the name and last known address of the original contractor;
(6) a description, legally sufficient for identification, of the
property sought to be charged with the lien;
(7) the claimant's name, mailing address, and, if different,
physical address; and
(8) for a claimant other than an original contractor, a
statement identifying the date each notice of the claim was sent
to the owner and the method by which the notice was sent.
(b) The claimant may attach to the affidavit a copy of any
applicable written agreement or contract and a copy of each
notice sent to the owner.
(c) The affidavit is not required to set forth individual items
of work done or material furnished or specially fabricated. The
affidavit may use any abbreviations or symbols customary in the
trade.
Acts 1983, 68th Leg., p. 3540, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 6, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 6, eff. Sept.
1, 1997.
Sec. 53.055. NOTICE OF FILED AFFIDAVIT. (a) A person who files
an affidavit must send a copy of the affidavit by registered or
certified mail to the owner or reputed owner at the owner's last
known business or residence address not later than the fifth day
after the date the affidavit is filed with the county clerk.
(b) If the person is not an original contractor, the person must
also send a copy of the affidavit to the original contractor at
the original contractor's last known business or residence
address within the same period.
Acts 1983, 68th Leg., p. 3540, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 7, eff.
Sept. 1, 1989; Acts 1993, 73rd Leg., ch. 48, Sec. 7, eff. Sept.
1, 1993; Acts 1997, 75th Leg., ch. 526, Sec. 7, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 889, Sec. 2, eff. Sept. 1, 1999.
Sec. 53.056. DERIVATIVE CLAIMANT: NOTICE TO OWNER OR ORIGINAL
CONTRACTOR. (a) Except as provided by Subchapter K, a claimant
other than an original contractor must give the notice prescribed
by this section for the lien to be valid.
(b) If the lien claim arises from a debt incurred by a
subcontractor, 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.
(c) If the lien claim arises from a debt incurred by the
original contractor, the claimant must give notice to the owner
or reputed owner, with a copy to the original contractor, in
accordance with Subsection (b).
(d) To authorize the owner to withhold funds under Subchapter D,
the notice to the owner must state that if the claim remains
unpaid, the owner may be personally liable and the owner's
property may be subjected to a lien unless:
(1) the owner withholds payments from the contractor for payment
of the claim; or
(2) the claim is otherwise paid or settled.
(e) The notice must be sent by registered or certified mail and
must be addressed to the owner or reputed owner or the original
contractor, as applicable, at his last known business or
residence address.
(f) A copy of the statement or billing in the usual and
customary form is sufficient as notice under this section.
Acts 1983, 68th Leg., p. 3540, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 8, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 8, eff. Sept.
1, 1997.
Sec. 53.057. DERIVATIVE CLAIMANT: NOTICE FOR CONTRACTUAL
RETAINAGE CLAIM. (a) A claimant may give notice under this
section instead of or in addition to notice under Section 53.056
or 53.252 if the claimant is to labor, furnish labor or
materials, or specially fabricate materials under an agreement
with an original contractor or a subcontractor providing for
retainage.
(b) The claimant must give the owner or reputed owner notice of
the retainage agreement not later than the 15th day of the second
month following the delivery of materials or the performance of
labor by the claimant that first occurs after the claimant has
agreed to the contractual retainage. If the agreement is with a
subcontractor, the claimant must also give notice within that
time to the original contractor.
(c) The notice must contain:
(1) the sum to be retained;
(2) the due date or dates, if known; and
(3) a general indication of the nature of the agreement.
(d) The notice must be sent by registered or certified mail to
the last known business or residence address of the owner or
reputed owner or the original contractor, as applicable.
(e) If a claimant gives notice under this section and Section
53.055 or, if the claim relates to a residential construction
project, under this section and Section 53.252, the claimant is
not required to give any other notice as to the retainage.
Acts 1983, 68th Leg., p. 3541, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 9, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 9, eff. Sept.
1, 1997; Acts 1999, 76th Leg., ch. 889, Sec. 3, eff. Sept. 1,
1999.
Sec. 53.058. DERIVATIVE CLAIMANT: NOTICE FOR SPECIALLY
FABRICATED ITEMS. (a) Except as provided by Subchapter K, a
claimant who specially fabricates material must give notice under
this section for the lien to be valid.
(b) The claimant must give the owner or reputed owner notice not
later than the 15th day of the second month after the month in
which the claimant receives and accepts the order for the
material. If the indebtedness is incurred by a person other than
the original contractor, the claimant must also give notice
within that time to the original contractor.
(c) The notice must contain:
(1) a statement that the order has been received and accepted;
and
(2) the price of the order.
(d) The notice must be sent by registered or certified mail to
the last known business or residence address of the owner or the
reputed owner or the original contractor, as applicable.
(e) In addition to notice under this section, the claimant must
give notice under Section 53.056 if delivery has been made or if
the normal delivery time for the job has passed.
(f) The lien of a claimant who accepts an order but fails to
give notice under this section is valid as to delivered items if
the claimant has given notice under Section 53.056.
(g) If a retainage agreement consists in whole or part of an
obligation to furnish specially fabricated materials and the
claimant has given notice under Section 53.057, the claimant is
not required to give notice under this section.
Acts 1983, 68th Leg., p. 3542, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 10, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 10, eff. Sept.
1, 1997.
SUBCHAPTER D. FUNDS WITHHELD BY OWNER FOLLOWING NOTICE
Sec. 53.081. AUTHORITY TO WITHHOLD FUNDS FOR BENEFIT OF
CLAIMANTS. (a) If an owner receives notice under Section
53.056, 53.057, 53.058, 53.252, or 53.253, the owner may withhold
from payments to the original contractor an amount necessary to
pay the claim for which he receives notice.
(b) If notice is sent in a form that substantially complies with
Section 53.056 or 53.252, the owner may withhold the funds
immediately on receipt of the notice.
(c) If notice is sent under Section 53.057, the owner may
withhold funds immediately on receipt of a copy of the claimant's
affidavit prepared in accordance with Sections 53.052 through
53.055.
(d) If notice is sent under Section 53.058, the owner may
withhold funds immediately on receipt of the notices sent under
Subsection (e) of that section. If notice is sent as provided by
Section 53.253(b), the owner may withhold funds immediately on
receipt of the notice sent as required by Section 53.252.
Acts 1983, 68th Leg., p. 3543, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 12, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 11, eff. Sept.
1, 1997.
Sec. 53.082. TIME FOR WHICH FUNDS ARE WITHHELD. Unless payment
is made under Section 53.083 or the claim is otherwise settled,
discharged, indemnified against under Subchapter H or I, or
determined to be invalid by a final judgment of a court, the
owner shall retain the funds withheld until:
(1) the time for filing the affidavit of mechanic's lien has
passed; or
(2) if a lien affidavit has been filed, until the lien claim has
been satisfied or released.
Acts 1983, 68th Leg., p. 3544, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 13, eff.
Sept. 1, 1989.
Sec. 53.083. PAYMENT TO CLAIMANT ON DEMAND. (a) The claimant
may make written demand for payment of the claim to an owner
authorized to withhold funds under this subchapter. The demand
must give notice to the owner that all or part of the claim has
accrued under Section 53.053 or is past due according to the
agreement between the parties.
(b) The claimant must send a copy of the demand to the original
contractor. The original contractor may give the owner written
notice that the contractor intends to dispute the claim. The
original contractor must give the notice not later than the 30th
day after the day he receives the copy of the demand. If the
original contractor does not give the owner timely notice, he is
considered to have assented to the demand and the owner shall pay
the claim.
(c) The claimant's demand may accompany the original notice of
nonpayment or of a past-due claim and may be stamped or written
in legible form on the face of the notice.
(d) Unless the lien has been secured, the demand may not be made
after expiration of the time within which the claimant may secure
the lien for the claim.
Acts 1983, 68th Leg., p. 3544, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.084. OWNER'S LIABILITY. (a) Except for the amount
required to be retained under Subchapter E, the owner is not
liable for any amount paid to the original contractor before the
owner is authorized to withhold funds under this subchapter.
(b) If the owner has received the notices required by Subchapter
C or K, if the lien has been secured, and if the claim has been
reduced to final judgment, the owner is liable and the owner's
property is subject to a claim for any money paid to the original
contractor after the owner was authorized to withhold funds under
this subchapter. The owner is liable for that amount in addition
to any amount for which he is liable under Subchapter E.
Acts 1983, 68th Leg., p. 3545, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 12, eff.
Sept. 1, 1997.
Sec. 53.085. AFFIDAVIT REQUIRED. (a) Any person who furnishes
labor or materials for the construction of improvements on real
property shall, if requested and as a condition of payment for
such labor or materials, provide to the requesting party, or the
party's agent, an affidavit stating that the person has paid each
of the person's subcontractors, laborers, or materialmen in full
for all labor and materials provided to the person for the
construction. In the event, however, that the person has not paid
each of the person's subcontractors, laborers, or materialmen in
full, the person shall state in the affidavit the amount owed and
the name and, if known, the address and telephone number of each
subcontractor, laborer, or materialman to whom the payment is
owed.
(b) The seller of any real property shall, upon request by the
purchaser or the purchaser's agent prior to closing of the
purchase of the real property, provide to the purchaser or the
purchaser's agent, a written affidavit stating that the seller
has paid each of the seller's contractors, laborers, or
materialmen in full for all labor and materials provided to the
seller through the date specified in the affidavit for any
construction of improvements on the real property and that the
seller is not indebted to any person, firm, or corporation by
reason of any such construction through the date specified in the
affidavit. In the event that the seller has not paid each of the
seller's contractors, laborers, or materialmen in full for labor
and material provided through the date specified in the
affidavit, the seller shall state in the affidavit the amount
owed and the name and, if known, the address and telephone number
of each contractor, laborer, or materialman to whom the payment
is owed.
(c) The affidavit may include:
(1) a waiver or release of lien rights by the affiant that is
conditioned on the receipt of actual payment or collection of
funds when payment is made by check or draft;
(2) a warranty or representation that certain bills or classes
of bills will be paid by the affiant from funds paid in reliance
on the affidavit; and
(3) an indemnification by the affiant for any loss or expense
resulting from false or incorrect information in the affidavit.
(d) A person, including a seller, commits an offense if the
person intentionally, knowingly, or recklessly makes a false or
misleading statement in an affidavit under this section. An
offense under this section is a misdemeanor. A person adjudged
guilty of an offense under this section shall be punished by a
fine not to exceed $4,000 or confinement in jail for a term not
to exceed one year or both a fine and confinement. A person may
not receive community supervision for the offense.
(e) A person signing an affidavit under this section is
personally liable for any loss or damage resulting from any false
or incorrect information in the affidavit.
Added by Acts 1987, 70th Leg., ch. 578, Sec. 1, eff. Aug. 31,
1987. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 14, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 13, eff. Sept.
1, 1997.
SUBCHAPTER E. REQUIRED RETAINAGE FOR BENEFIT OF LIEN CLAIMANTS
Sec. 53.101. REQUIRED RETAINAGE. (a) During the progress of
work under an original contract for which a mechanic's lien may
be claimed and for 30 days after the work is completed, the owner
shall retain:
(1) 10 percent of the contract price of the work to the owner;
or
(2) 10 percent of the value of the work, measured by the
proportion that the work done bears to the work to be done, using
the contract price or, if there is no contract price, using the
reasonable value of the completed work.
(b) In this section, "owner" includes the owner's agent,
trustee, or receiver.
Acts 1983, 68th Leg., p. 3545, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 15, eff.
Sept. 1, 1989.
Sec. 53.102. PAYMENT SECURED BY RETAINAGE. The retained funds
secure the payment of artisans and mechanics who perform labor or
service and the payment of other persons who furnish material,
material and labor, or specially fabricated material for any
contractor, subcontractor, agent, or receiver in the performance
of the work.
Acts 1983, 68th Leg., p. 3545, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.103. LIEN ON RETAINED FUNDS. A claimant has a lien on
the retained funds if the claimant:
(1) sends the notices required by this chapter in the time and
manner required; and
(2) files an affidavit claiming a lien not later than the 30th
day after the earlier of the date:
(A) the work is completed;
(B) the original contract is terminated; or
(C) the original contractor abandons performance under the
original contract.
Acts 1983, 68th Leg., p. 3545, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Amended by:
Acts 2005, 79th Leg., Ch.
1003, Sec. 1, eff. September 1, 2005.
Sec. 53.104. PREFERENCES. (a) Individual artisans and
mechanics are entitled to a preference to the retained funds and
shall share proportionately to the extent of their claims for
wages and fringe benefits earned.
(b) After payment of artisans and mechanics who are entitled to
a preference under Subsection (a), other participating claimants
share proportionately in the balance of the retained funds.
Acts 1983, 68th Leg., p. 3546, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 16, eff.
Sept. 1, 1989.
Sec. 53.105. OWNER'S LIABILITY FOR FAILURE TO RETAIN. (a) If
the owner fails or refuses to comply with this subchapter, the
claimants complying with this chapter have a lien, at least to
the extent of the amount that should have been retained from the
original contract under which they are claiming, against the
house, building, structure, fixture, or improvement and all of
its properties and against the lot or lots of land necessarily
connected.
(b) The claimants share the lien proportionately in accordance
with the preference provided by Section 53.104.
Acts 1983, 68th Leg., p. 3546, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 13.02, eff.
Aug. 28, 1989; Acts 1989, 71st Leg., ch. 1138, Sec. 17, eff.
Sept. 1, 1989.
Sec. 53.106. AFFIDAVIT OF COMPLETION. (a) An owner may file
with the county clerk of the county in which the property is
located an affidavit of completion. The affidavit must contain:
(1) the name and address of the owner;
(2) the name and address of the original contractor;
(3) a description, legally sufficient for identification, of the
real property on which the improvements are located;
(4) a description of the improvements furnished under the
original contract;
(5) a statement that the improvements under the original
contract have been completed and the date of completion; and
(6) a conspicuous statement that a claimant may not have a lien
on retained funds unless the claimant files the affidavit
claiming a lien not later than the 30th day after the date of
completion.
(b) A copy of the affidavit must be sent by certified or
registered mail to the original contractor not later than the
date the affidavit is filed and to each claimant who sends a
notice of lien liability to the owner under Section 53.056,
53.057, 53.058, 53.252, or 53.253 not later than the date the
affidavit is filed or the 10th day after the date the owner
receives the notice of lien liability, whichever is later.
(c) A copy of the affidavit must also be sent to each person who
furnishes labor or materials for the property and who furnishes
the owner with a written request for the copy. The owner must
furnish the copy to the person not later than the date the
affidavit is filed or the 10th day after the date the request is
received, whichever is later.
(d) Except as provided by this subsection, an affidavit filed
under this section on or before the 10th day after the date of
completion of the improvements is prima facie evidence of the
date the work under the original contract is completed for
purposes of this subchapter. If the affidavit is filed after the
10th day after the date of completion, the date of completion for
purposes of this subchapter is the date the affidavit is filed.
This subsection does not apply to a person to whom the affidavit
was not sent as required by this section.
(e) Repealed by Acts 1999, 76th Leg., ch. 889, Sec. 12, eff.
Sept. 1, 1999.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 18, eff. Sept. 1,
1989. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 14, eff.
Sept. 1, 1997; Acts 1999, 76th Leg., ch. 889, Sec. 12, eff. Sept.
1, 1999.
Sec. 53.107. NOTICE RELATING TO TERMINATION OF WORK OR
ABANDONMENT OF PERFORMANCE BY ORIGINAL CONTRACTOR OR OWNER. (a)
Not later than the 10th day after the date an original contract
is terminated or the original contractor abandons performance
under the original contract, the owner shall give notice to each
subcontractor who, before the date of termination or abandonment,
has:
(1) given notice to the owner as provided by Section 53.056,
53.057, or 53.058; or
(2) sent to the owner by certified or registered mail a written
request for notice of termination or abandonment.
(b) The notice must contain:
(1) the name and address of the owner;
(2) the name and address of the original contractor;
(3) a description, legally sufficient for identification, of the
real property on which the improvements are located;
(4) a general description of the improvements agreed to be
furnished under the original contract;
(5) a statement that the original contract has been terminated
or that performance under the contract has been abandoned;
(6) the date of the termination or abandonment; and
(7) a conspicuous statement that a claimant may not have a lien
on the retained funds unless the claimant files an affidavit
claiming a lien not later than the 30th day after the date of the
termination or abandonment.
(c) A notice sent in compliance with this section on or before
the 10th day after the date of termination or abandonment is
prima facie evidence of the date the original contract was
terminated or work was abandoned for purposes of this subchapter.
(d) A subcontractor who fails to file a lien affidavit in the
time prescribed by Section 53.103(2) has a lien to the extent
authorized under this subchapter if:
(1) the subcontractor otherwise complies with this chapter; and
(2) the owner did not provide the subcontractor notice as
required by this section.
(e) This section does not apply to a residential construction
project.
Added by Acts 2005, 79th Leg., Ch.
1003, Sec. 2, eff. September 1, 2005.
SUBCHAPTER F. PRIORITIES AND PREFERENCES
Sec. 53.121. PREFERENCE OVER OTHER CREDITORS. All
subcontractors, laborers, and materialmen who have a mechanic's
lien have preference over other creditors of the original
contractor.
Acts 1983, 68th Leg., p. 3546, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.122. EQUALITY OF MECHANIC'S LIENS. (a) Except as
provided by Subchapter E and Section 53.124(e), perfected
mechanic's liens are on equal footing without reference to the
date of filing the affidavit claiming the lien.
(b) If the proceeds of a foreclosure sale of property are
insufficient to discharge all mechanic's liens against the
property, the proceeds shall be paid pro rata on the perfected
mechanic's liens on which suit is brought.
(c) This chapter does not affect the contract between the owner
and the original contractor as to the amount, manner, or time of
payment of the contract price.
Acts 1983, 68th Leg., p. 3546, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1995, 74th Leg., ch. 851, Sec. 4, eff.
Sept. 1, 1995.
Sec. 53.123. PRIORITY OF MECHANIC'S LIEN OVER OTHER LIENS. (a)
Except as provided by this section, a mechanic's lien attaches to
the house, building, improvements, or railroad property in
preference to any prior lien, encumbrance, or mortgage on the
land on which it is located, and the person enforcing the lien
may have the house, building, improvement, or any piece of the
railroad property sold separately.
(b) The mechanic's lien does not affect any lien, encumbrance,
or mortgage on the land or improvement at the time of the
inception of the mechanic's lien, and the holder of the lien,
encumbrance, or mortgage need not be made a party to a suit to
foreclose the mechanic's lien.
Acts 1983, 68th Leg., p. 3547, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.124. INCEPTION OF MECHANIC'S LIEN. (a) Except as
provided by Subsection (e), for purposes of Section 53.123, the
time of inception of a mechanic's lien is the commencement of
construction of improvements or delivery of materials to the land
on which the improvements are to be located and on which the
materials are to be used.
(b) The construction or materials under Subsection (a) must be
visible from inspection of the land on which the improvements are
being made.
(c) An owner and original contractor may jointly file an
affidavit of commencement with the county clerk of the county in
which the land is located not later than the 30th day after the
date of actual commencement of construction of the improvements
or delivery of materials to the land. The affidavit must contain:
(1) the name and address of the owner;
(2) the name and address of each original contractor, known at
the time to the owner, that is furnishing labor, service, or
materials for the construction of the improvements;
(3) a description, legally sufficient for identification, of the
property being improved;
(4) the date the work actually commenced; and
(5) a general description of the improvement.
(d) An affidavit filed in compliance with this section is prima
facie evidence of the date of the commencement of the improvement
described in the affidavit. The time of inception of a mechanic's
lien arising from work described in an affidavit of commencement
is the date of commencement of the work stated in the affidavit.
(e) The time of inception of a lien that is created under
Section 53.021(c), (d), or (e) is the date of recording of an
affidavit of lien under Section 53.052. The priority of a lien
claimed by a person entitled to a lien under Section 53.021(c),
(d), or (e) with respect to other mechanic's liens is determined
by the date of recording. A lien created under Section 53.021(c),
(d), or (e) is not valid or enforceable against a grantee or
purchaser who acquires an interest in the real property before
the time of inception of the lien.
Acts 1983, 68th Leg., p. 3547, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 19, eff.
Sept. 1, 1989; Acts 1995, 74th Leg., ch. 851, Sec. 5, eff. Sept.
1, 1995; Acts 1999, 76th Leg., ch. 896, Sec. 2, eff. Sept. 1,
1999; Acts 2003, 78th Leg., ch. 410, Sec. 2, eff. Sept. 1, 2003.
SUBCHAPTER G. RELEASE AND FORECLOSURE; ACTION ON CLAIM
Sec. 53.151. ENFORCEMENT OF REMEDIES AGAINST MONEY DUE ORIGINAL
CONTRACTOR OR SUBCONTRACTOR. (a) A creditor of an original
contractor may not collect, enforce a security interest against,
garnish, or levy execution on the money due the original
contractor or the contractor's surety from the owner, and a
creditor of a subcontractor may not collect, enforce a security
interest against, garnish, or levy execution on the money due the
subcontractor, to the prejudice of the subcontractors, mechanics,
laborers, materialmen, or their sureties.
(b) A surety issuing a payment bond or performance bond in
connection with the improvements has a priority claim over other
creditors of its principal to contract funds to the extent of any
loss it suffers or incurs. That priority does not excuse the
surety from paying any obligations that it may have under its
payment bonds.
Acts 1983, 68th Leg., p. 3548, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 20, eff.
Sept. 1, 1989.
Sec. 53.152. RELEASE OF CLAIM OR LIEN. (a) When a debt for
labor or materials is satisfied or paid by collected funds, the
person who furnished the labor or materials shall, not later than
the 10th day after the date of receipt of a written request,
furnish to the requesting person a release of the indebtedness
and any lien claimed, to the extent of the indebtedness paid. An
owner, the original contractor, or any person making the payment
may request the release.
(b) A release of lien must be in a form that would permit it to
be filed of record.
Acts 1983, 68th Leg., p. 3548, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 21, eff.
Sept. 1, 1989.
Sec. 53.153. DEFENSE OF ACTIONS. (a) If an affidavit claiming
a mechanic's lien is filed by a person other than the original
contractor, the original contractor shall defend at his own
expense a suit brought on the claim.
(b) If the suit results in judgment on the lien against the
owner or the owner's property, the owner is entitled to deduct
the amount of the judgment and costs from any amount due the
original contractor. If the owner has settled with the original
contractor in full, the owner is entitled to recover from the
original contractor any amount paid for which the original
contractor was originally liable.
Acts 1983, 68th Leg., p. 3548, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.154. FORECLOSURE. A mechanic's lien may be foreclosed
only on judgment of a court of competent jurisdiction foreclosing
the lien and ordering the sale of the property subject to the
lien.
Acts 1983, 68th Leg., p. 3549, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.155. TRANSFER OF PROPERTY SOLD. If the house, building,
improvement, or any piece of railroad property is sold
separately, the officer making the sale shall place the purchaser
in possession. The purchaser is entitled to a reasonable time
after the date of purchase within which to remove the purchased
property.
Acts 1983, 68th Leg., p. 3549, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.156. COSTS AND ATTORNEY'S FEES. In any proceeding to
foreclose a lien or to enforce a claim against a bond issued
under Subchapter H, I, or J or in any proceeding to declare that
any lien or claim is invalid or unenforceable in whole or in
part, the court may award costs and reasonable attorney's fees as
are equitable and just.
Added by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec. 4(a), eff.
Oct. 2, 1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 22,
eff. Sept. 1, 1989.
Sec. 53.157. DISCHARGE OF LIEN. A mechanic's lien or affidavit
claiming a mechanic's lien filed under Section 53.052 may be
discharged of record by:
(1) recording a lien release signed by the claimant under
Section 53.152;
(2) failing to institute suit to foreclose the lien in the
county in which the property is located within the period
prescribed by Section 53.158, 53.175, or 53.208;
(3) recording the original or certified copy of a final judgment
or decree of a court of competent jurisdiction providing for the
discharge;
(4) filing the bond and notice in compliance with Subchapter H;
(5) filing the bond in compliance with Subchapter I; or
(6) recording a certified copy of the order removing the lien
under Section 53.160 and a certificate from the clerk of the
court that states that no bond or deposit as described by Section
53.161 was filed by the claimant within 30 days after the date
the order was entered.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 23, eff. Sept. 1,
1989. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 15, eff.
Sept. 1, 1997.
Sec. 53.158. PERIOD FOR BRINGING SUIT TO FORECLOSE LIEN. (a)
Except as provided by Subsection (b), suit must be brought to
foreclose the lien within two years after the last day a claimant
may file the lien affidavit under Section 53.052 or within one
year after completion, termination, or abandonment of the work
under the original contract under which the lien is claimed,
whichever is later.
(b) For a claim arising from a residential construction project,
suit must be brought to foreclose the lien within one year after
the last day a claimant may file a lien affidavit under Section
53.052 or within one year after completion, termination, or
abandonment of the work under the original contract under which
the lien is claimed, whichever is later.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 23, eff. Sept. 1,
1989. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 16, eff.
Sept. 1, 1997; Acts 1999, 76th Leg., ch. 889, Sec. 4, eff. Sept.
1, 1999.
Sec. 53.159. OBLIGATION TO FURNISH INFORMATION. (a) An owner,
on written request, shall furnish the following information
within a reasonable time, but not later than the 10th day after
the date the request is received, to any person furnishing labor
or materials for the project:
(1) a description of the real property being improved legally
sufficient to identify it;
(2) whether there is a surety bond and if so, the name and last
known address of the surety and a copy of the bond; and
(3) whether there are any prior recorded liens or security
interests on the real property being improved and if so, the name
and address of the person having the lien or security interest.
(b) An original contractor, on written request by a person who
furnished work under the original contract, shall furnish to the
person the following information within a reasonable time, but
not later than the 10th day after the date the request is
received:
(1) the name and last known address of the person to whom the
original contractor furnished labor or materials for the
construction project; and
(2) whether the original contractor has furnished or has been
furnished a payment bond for any of the work on the construction
project and if so, the name and last known address of the surety
and a copy of the bond.
(c) A subcontractor, on written request by an owner of the
property being improved, the original contractor, a surety on a
bond covering the original contract, or any person furnishing
work under the subcontract, shall furnish to the person the
following information within a reasonable time, but not later
than the 10th day after the date the request is received:
(1) the name and last known address of each person from whom the
subcontractor purchased labor or materials for the construction
project, other than those materials that were furnished to the
project from the subcontractor's inventory;
(2) the name and last known address of each person to whom the
subcontractor furnished labor or materials for the construction
project; and
(3) whether the subcontractor has furnished or has been
furnished a payment bond for any of the work on the construction
project and if so, the name and last known address of the surety
and a copy of the bond.
(d) Not later than the 30th day after the date a written request
is received from the owner, the contractor under whom a claim of
lien or under whom a bond is made, or a surety on a bond on which
a claim is made, a claimant for a lien or under a bond shall
furnish to the requesting person a copy of any applicable written
agreement, purchase order, or contract and any billing,
statement, or payment request of the claimant reflecting the
amount claimed and the work performed by the claimant for which
the claim is made. If requested, the claimant shall provide the
estimated amount due for each calendar month in which the
claimant has performed labor or furnished materials.
(e) If a person from whom information is requested does not have
a direct contractual relationship on the project with the person
requesting the information, the person from whom information is
requested, other than a claimant requested to furnish information
under Subsection (d), may require payment of the actual costs,
not to exceed $25, in furnishing the requested information.
(f) A person, other than a claimant requested to furnish
information under Subsection (d), who fails to furnish
information as required by this section is liable to the
requesting person for that person's reasonable and necessary
costs incurred in procuring the requested information.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 23, eff. Sept. 1,
1989.
Sec. 53.160. SUMMARY MOTION TO REMOVE INVALID OR UNENFORCEABLE
LIEN. (a) In a suit brought to foreclose a lien or to declare a
claim or lien invalid or unenforceable, a party objecting to the
validity or enforceability of the claim or lien may file a motion
to remove the claim or lien. The motion must be verified and
state the legal and factual basis for objecting to the validity
or enforceability of the claim or lien. The motion may be
accompanied by supporting affidavits.
(b) The grounds for objecting to the validity or enforceability
of the claim or lien for purposes of the motion are limited to
the following:
(1) notice of claim was not furnished to the owner or original
contractor as required by Section 53.056, 53.057, 53.058, 53.252,
or 53.253;
(2) an affidavit claiming a lien failed to comply with Section
53.054 or was not filed as required by Section 53.052;
(3) notice of the filed affidavit was not furnished to the owner
or original contractor as required by Section 53.055;
(4) the owner complied with the requirements of Section 53.101
and paid the retainage and all other funds owed to the original
contractor before:
(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
the perfection of a claim against the statutory 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 by Section
53.254;
(B) the affidavit claiming a lien failed to contain the notice
as required by Section 53.254; or
(C) the notice of the claim failed to include the statement
required by Section 53.254; and
(7) the claimant executed a valid and enforceable waiver or
release of the claim or lien claimed in the affidavit.
(c) The claimant is not required to file a response. The
claimant and any other party that has appeared in the proceeding
must be notified by at least 21 days before the date of the
hearing on the motion. A motion may not be heard before the 21st
day after the date the claimant answers or appears in the
proceeding.
(d) At the hearing on the motion, the burden is on:
(1) the claimant to prove that the notice of claim and affidavit
of lien were furnished to the owner and original contractor as
required by this chapter; and
(2) the movant to establish that the lien should be removed for
any other ground authorized by this section.
(e) The court shall promptly determine a motion to remove a
claim or lien under this section. If the court determines that
the movant is not entitled to remove the lien, the court shall
enter an order denying the motion. If the court determines that
the movant is entitled to remove the lien, the court shall enter
an order removing the lien claimed in the lien affidavit. A party
to the proceeding may not file an interlocutory appeal from the
court's order.
(f) Any admissible evidence offered at the hearing may be
admitted in the trial of the case. The court's order under
Subsection (e) is not admissible as evidence in determining the
validity and enforceability of the claim or lien.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 17, eff. Sept. 1,
1997.
Sec. 53.161. BOND REQUIREMENTS AFTER ORDER TO REMOVE. (a) In
the order removing a lien, the court shall set the amount of
security that the claimant may provide in order to stay the
removal of the claim or lien. The sum must be an amount that the
court determines is a reasonable estimate of the costs and
attorney's fees the movant is likely to incur in the proceeding
to determine the validity or enforceability of the lien. The sum
may not exceed the amount of the lien claim.
(b) The court shall stay the order removing the lien if the
claimant files a bond or a deposit in lieu of a bond in the
amount set in the order with the clerk of the court not later
than the 30th day after the date the order is entered by the
court unless, for good cause, the court orders a later date for
filing the bond or the deposit in lieu of a bond. If the court
fails to set the amount of the security required, the amount
required is the amount of the lien claim.
(c) The bond must be:
(1) executed by a corporate surety authorized to do business in
this state and licensed by this state to execute bonds as surety;
and
(2) conditioned on the claimant's payment of any final judgment
rendered against the claimant in the proceeding for attorney's
fees and costs to the movant under Section 53.156.
(d) In lieu of filing a bond, the claimant may deposit in the
amount set by the court for the surety bond:
(1) cash;
(2) a negotiable obligation of the federal government or a
federal agency; or
(3) a negotiable obligation of a financial institution chartered
by the federal or state government that is insured by the federal
government or a federal agency.
(e) A deposit made under Subsection (d) must be conditioned in
the same manner as a surety bond. Any interest accrued on the
deposit amount is a part of the deposit.
(f) If the claimant fails to file the bond or the deposit in
lieu of the bond in compliance with this section, the owner may
file:
(1) a certified copy of the order; and
(2) a certificate from the clerk of the court stating that:
(A) no bond or deposit in lieu of the bond was filed within 30
days after the date the order was entered by the court; and
(B) no order staying the order to remove the lien was entered by
the court.
(g) The claim or lien is removed and extinguished as to a
creditor or subsequent purchaser for valuable consideration who
obtains an interest in the property after the certified copy of
the order and certificate of the clerk of the court are filed
with the county clerk. The removal of the lien does not
constitute a release of the liability of the owner, if any, to
the claimant.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 17, eff. Sept. 1,
1997.
Sec. 53.162. REVIVAL OF REMOVED LIEN. (a) If an order removing
the lien is not stayed as provided by Section 53.161 and the
claimant later obtains a final judgment in the suit establishing
the validity and ordering the foreclosure of the lien, the
claimant may file a certified copy of the final judgment with the
county clerk.
(b) The filed judgment revives the lien, and the claimant may
foreclose the lien.
(c) A lien revived under this section is void as to a creditor
or subsequent purchaser for valuable consideration who obtained
an interest in the property:
(1) after the order removing the lien and the certificate from
the clerk of the court was filed with the county clerk; and
(2) before the final judgment reviving the lien was filed with
the county clerk.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 17, eff. Sept. 1,
1997.
SUBCHAPTER H. BOND TO INDEMNIFY AGAINST LIEN
Sec. 53.171. BOND. (a) If a lien, other than a lien granted by
the owner in a written contract, is fixed or is attempted to be
fixed by a recorded instrument under this chapter, any person may
file a bond to indemnify against the lien.
(b) The bond shall be filed with the county clerk of the county
in which the property subject to the lien is located.
(c) A mechanic's lien claim against an owner's property is
discharged after:
(1) a bond that complies with Section 53.172 is filed;
(2) the notice of the bond is issued as provided by Section
53.173; and
(3) the bond and notice are recorded as provided by Section
53.174.
Acts 1983, 68th Leg., p. 3549, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 24, 39(1),
eff. Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 18, eff.
Sept. 1, 1997.
Sec. 53.172. BOND REQUIREMENTS. The bond must:
(1) describe the property on which the liens are claimed;
(2) refer to each lien claimed in a manner sufficient to
identify it;
(3) be in an amount that is double the amount of the liens
referred to in the bond unless the total amount claimed in the
liens exceeds $40,000, in which case the bond must be in an
amount that is the greater of 1-1/2 times the amount of the liens
or the sum of $40,000 and the amount of the liens;
(4) be payable to the parties claiming the liens;
(5) be executed by:
(A) the party filing the bond as principal; and
(B) a corporate surety authorized and admitted to do business
under the law in this state and licensed by this state to execute
the bond as surety, subject to Section 1, Chapter 87, Acts of the
56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's
Texas Insurance Code); and
(6) be conditioned substantially that the principal and sureties
will pay to the named obligees or to their assignees the amount
that the named obligees would have been entitled to recover if
their claims had been proved to be valid and enforceable liens on
the property.
Acts 1983, 68th Leg., p. 3549, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 25, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 1132, Sec. 2, eff. Sept.
1, 1997.
Sec. 53.173. NOTICE OF BOND. (a) After the bond is filed, the
county clerk shall issue notice of the bond to all named
obligees.
(b) A copy of the bond must be attached to the notice.
(c) The notice must be served on each obligee by mailing a copy
of the notice and the bond to the obligee by certified United
States mail, return receipt requested, addressed to the claimant
at the address stated in the lien affidavit for the obligee.
(d) If the claimant's lien affidavit does not state the
claimant's address, the notice is not required to be mailed to
the claimant.
Acts 1983, 68th Leg., p. 3550, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 26, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 19, eff. Sept.
1, 1997.
Sec. 53.174. RECORDING OF BOND AND NOTICE. (a) The county
clerk shall record the bond, the notice, and a certificate of
mailing in the real property records.
(b) In acquiring an interest in or insuring title to real
property, a purchaser, insurer of title, or lender may rely on
and is absolutely protected by the record of the bond and the
notice to the same extent as if the lien claimant had filed a
release of lien in the real property records.
Acts 1983, 68th Leg., p. 3550, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 27, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 20, eff. Sept.
1, 1997.
Sec. 53.175. ACTION ON BOND. (a) A party making or holding a
lien claim may not sue on the bond later than one year after the
date on which the notice is served or after the date on which the
underlying lien claim becomes unenforceable under Section 53.158.
(b) The bond is not exhausted by one action against it. Each
named obligee or assignee of an obligee may maintain a separate
suit on the bond in any court of jurisdiction in the county in
which the real property is located.
Acts 1983, 68th Leg., p. 3550, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 28, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, Sec. 21, eff. Sept.
1, 1997.
SUBCHAPTER I. BOND TO PAY LIENS OR CLAIMS
Sec. 53.201. BOND. (a) An original contractor who has a
written contract with the owner may furnish at any time a bond
for the benefit of claimants.
(b) If a valid bond is filed, a claimant may not file suit
against the owner or the owner's property and the owner is
relieved of obligations under Subchapter D or E.
Acts 1983, 68th Leg., p. 3551, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1997, 75th Leg., ch. 526, Sec. 22, eff.
Sept. 1, 1997.
Sec. 53.202. BOND REQUIREMENTS. The bond must:
(1) be in a penal sum at least equal to the total of the
original contract amount;
(2) be in favor of the owner;
(3) have the written approval of the owner endorsed on it;
(4) be executed by:
(A) the original contractor as principal; and
(B) a corporate surety authorized and admitted to do business in
this state and licensed by this state to execute bonds as surety,
subject to Section 1, Chapter 87, Acts of the 56th Legislature,
Regular Session, 1959 (Article 7.19-1, Vernon's Texas Insurance
Code);
(5) be conditioned on prompt payment for all labor,
subcontracts, materials, specially fabricated materials, and
normal and usual extras not exceeding 15 percent of the contract
price; and
(6) clearly and prominently display on the bond or on an
attachment to the bond:
(A) the name, mailing address, physical address, and telephone
number, including the area code, of the surety company to which
any notice of claim should be sent; or
(B) the toll-free telephone number maintained by the Texas
Department of Insurance under Subchapter B, Chapter 521,
Insurance Code, and a statement that the address of the surety
company to which any notice of claim should be sent may be
obtained from the Texas Department of Insurance by calling the
toll-free telephone number.
Acts 1983, 68th Leg., p. 3551, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 29, eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 1132, Sec. 2, eff. Sept.
1, 1997; Acts 2001, 77th Leg., ch. 380, Sec. 5, eff. Sept. 1,
2001.
Amended by:
Acts 2005, 79th Leg., Ch.
728, Sec. 11.158, eff. September 1, 2005.
Sec. 53.203. RECORDING OF BOND AND CONTRACT. (a) The bond and
the contract between the original contractor and the owner shall
be filed with the county clerk of the county in which is located
all or part of the owner's property on which the construction or
repair is being performed or is to be performed. A memorandum of
the contract or a copy of the contract may be substituted for the
original.
(b) The plans, specifications, and general conditions of the
contract are not required to be filed.
(c) The county clerk shall record the bond and place the
contract on file in the clerk's office and shall index and
cross-index both in the names of the original contractor and the
owner in records kept for that purpose.
(d) On request and payment of a reasonable fee, the county clerk
shall furnish a copy of the bond and contract to any person.
(e) In any court of this state or in the United States, a copy
of the bond and contract certified by the county clerk
constitutes prima facie evidence of the contents, execution,
delivery, and filing of the originals.
Acts 1983, 68th Leg., p. 3551, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1987, 70th Leg., ch. 683, Sec. 1, eff. Aug.
31, 1987; Acts 1989, 71st Leg., ch. 1138, Sec. 30, eff. Sept. 1,
1989.
Sec. 53.204. RELIANCE ON RECORD. A purchaser, lender, or other
person acquiring an interest in the owner's property or an
insurer of title is entitled to rely on the record of the bond
and contract as constituting payment of all claims and liens for
labor, subcontracts, materials, or specially fabricated materials
incurred by the original contractor as if the purchaser, lender,
or other person acquiring an interest in the owner's property or
an insurer of title were the owner who approved, accepted, and
endorsed the bond and as if each person furnishing labor or
materials for the work performed under the original contract,
other than the original contractor, had filed a complete release
and relinquishment of lien of record.
Acts 1983, 68th Leg., p. 3552, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 31, eff.
Sept. 1, 1989.
Sec. 53.205. ENFORCEABLE CLAIMS. (a) The bond protects all
persons with a claim that is:
(1) perfected in the manner prescribed for fixing a lien under
Subchapter C or, if the claim relates to a residential
construction project, under Subchapter K; or
(2) perfected in the manner prescribed by Section 53.206.
(b) A claim or the rights to a claim under the bond may be
assigned.
Acts 1983, 68th Leg., p. 3552, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1999, 76th Leg., ch. 889, Sec. 5, eff.
Sept. 1, 1999.
Sec. 53.206. PERFECTION OF CLAIM. (a) To perfect a claim
against a bond in a manner other than that prescribed by
Subchapter C or K for fixing a lien, a person must:
(1) give to the original contractor all applicable notices under
the appropriate subchapter; and
(2) give to the surety on the bond, instead of the owner, all
notices under the appropriate subchapter required to be given to
the owner.
(b) To perfect a claim under this section, a person is not
required to:
(1) give notice to the surety under Section 53.057, unless the
claimant has a direct contractual relationship with the original
contractor and the agreed retainage is in excess of 10 percent of
the contract;
(2) give notice to the surety under Section 53.058(b) or, if the
claim relates to a residential construction project, under
Section 53.253(c); or
(3) file any affidavit with the county clerk.
(c) For the claim to be valid, a person must give notice in the
time and manner required by this section, but the content of the
notices need only provide fair notice of the amount and the
nature of the claim asserted.
(d) A person satisfies the requirements of this section relating
to providing notice to the surety if the person mails the notice
by certified or registered mail to the surety:
(1) at the address stated on the bond or on an attachment to the
bond;
(2) at the address on file with the Texas Department of
Insurance; or
(3) at any other address allowed by law.
Acts 1983, 68th Leg., p. 3552, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 32, eff.
Sept. 1, 1989; Acts 1999, 76th Leg., ch. 889, Sec. 6, eff. Sept.
1, 1999; Acts 2001, 77th Leg., ch. 380, Sec. 6, eff. Sept. 1,
2001.
Sec. 53.207. OWNER'S NOTICE OF CLAIM TO SURETY. (a) If the
owner receives any of the notices or a lien is fixed under
Subchapter C or K , the owner shall mail to the surety on the
bond a copy of all notices received.
(b) Failure of the owner to send copies of notices to the surety
does not relieve the surety of any liability under the bond if
the claimant has complied with the requirements of this
subchapter, nor does that failure impose any liability on the
owner.
Acts 1983, 68th Leg., p. 3553, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1999, 76th Leg., ch. 889, Sec. 7, eff.
Sept. 1, 1999.
Sec. 53.208. ACTION ON BOND. (a) A claimant may sue the
principal and surety on the bond either jointly or severally, if
his claim remains unpaid for 60 days after the claimant perfects
the claim.
(b) The claimant may sue for the amount of the claim and court
costs.
(c) The suit must be brought in the county in which the property
being improved is located.
(d) If the bond is recorded at the time the lien is filed, the
claimant must sue on the bond within one year following
perfection of his claim. If the bond is not recorded at the time
the lien is filed, the claimant must sue on the bond within two
years following perfection of his claim.
Acts 1983, 68th Leg., p. 3553, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 33, eff.
Sept. 1, 1989.
Sec. 53.210. CLAIMS IN EXCESS OF BOND AMOUNT. If valid claims
against the bond exceed the penal sum of the bond, each claimant
is entitled to a pro rata share of the penal sum.
Acts 1983, 68th Leg., p. 3553, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.211. ATTEMPTED COMPLIANCE. (a) A bond shall be
construed to comply with this subchapter, and the rights and
remedies on the bond are enforceable in the same manner as on
other bonds under this subchapter, if the bond:
(1) is furnished and filed in attempted compliance with this
subchapter; or
(2) evidences by its terms intent to comply with this
subchapter.
(b) Any provision in any payment bond furnished or filed in
attempted compliance with this subchapter that expands or
restricts the rights or liabilities provided under this chapter
shall be disregarded and the provisions of this subchapter shall
be read into that bond.
Acts 1983, 68th Leg., p. 3554, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 34, eff.
Sept. 1, 1989.
SUBCHAPTER J. LIEN ON MONEY DUE PUBLIC WORKS CONTRACTOR
Sec. 53.231. LIEN. (a) A person who furnishes material or
labor to a contractor under a prime contract with a governmental
entity other than a municipality or a joint board created under
Subchapter D, Chapter 22, Transportation Code, that does not
exceed $25,000 and that is for public improvements in this state
and who gives notice required by this subchapter has a lien on
the money, bonds, or warrants due the contractor for the
improvements.
(b) A person who furnishes material or labor to a contractor
under a prime contract with a municipality or a joint board
created under Subchapter D, Chapter 22, Transportation Code, that
does not exceed $50,000 and that is for public improvements in
this state and who gives notice required by this subchapter has a
lien on the money, bonds, or warrants due the contractor for the
improvements.
Acts 1983, 68th Leg., p. 3554, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1304, Sec. 2, eff. September 1, 2009.
Sec. 53.232. TO WHOM NOTICE GIVEN; MANNER. The lien claimant
must send written notice of his claim by registered or certified
mail to:
(1) the officials of the state, county, town, or municipality
whose duty it is to pay the contractor; and
(2) the contractor at the contractor's last known business or
residence address.
Acts 1983, 68th Leg., p. 3554, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.233. CONTENTS OF NOTICE. (a) Whether based on written
or oral agreement, the notice must contain:
(1) the amount claimed;
(2) the name of the party to whom the materials were delivered
or for whom the labor was performed;
(3) the dates and place of delivery or performance;
(4) a description reasonably sufficient to identify the
materials delivered or labor performed and the amount due;
(5) a description reasonably sufficient to identify the project
for which the material was delivered or the labor performed; and
(6) the claimant's business address.
(b) The notice must be accompanied by a statement under oath
that the amount claimed is just and correct and that all
payments, lawful offsets, and credits known to the affiant have
been allowed.
Acts 1983, 68th Leg., p. 3554, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 35, eff.
Sept. 1, 1989.
Sec. 53.234. TIME FOR NOTICE. The lien claimant must give
notice not later than the 15th day of the second month following
the month in which the labor was performed or the material
furnished.
Acts 1983, 68th Leg., p. 3555, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 36, eff.
Sept. 1, 1989.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1304, Sec. 3, eff. September 1, 2009.
Sec. 53.235. OFFICIAL TO RETAIN FUNDS. A public official who
receives the notice may not pay all of the money, bonds, or
warrants due the contractor, but shall retain enough to pay the
claim for which notice is given.
Acts 1983, 68th Leg., p. 3555, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.236. BOND FOR RELEASE OF LIEN. (a) If a claim is filed
attempting to fix a lien under this subchapter, the contractor
against whom the claim is made may file a bond with the officials
of the state, county, town, or municipality whose duty it is to
pay the money, bonds, or warrants to the contractor.
(b) If the bond is approved by the proper official, its filing
releases and discharges all liens fixed or attempted to be fixed
by the filing of a claim, and the appropriate officials shall pay
the money, bonds, or warrants to the contractor or the
contractor's assignee.
Acts 1983, 68th Leg., p. 3555, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.237. BOND REQUIREMENTS. The bond must be:
(1) in an amount double the amount of the claims filed;
(2) payable to the claimants;
(3) executed by:
(A) the party filing the bond as principal; and
(B) a corporate surety authorized, admitted to do business, and
licensed by the law of this state to execute the bond as surety;
and
(4) conditioned that:
(A) the principal and surety will pay to the obligees named or
to their assignees the amount of the claims or the portions of
the claims proved to be liens under this subchapter; and
(B) the principal and surety will pay all court costs adjudged
against the principal in actions brought by a claimant on the
bond.
Acts 1983, 68th Leg., p. 3555, ch. 576, Sec. 1, eff. Jan. 1,
1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 37, eff.
Sept. 1, 1989.
Sec. 53.238. NOTICE OF BOND. The official with whom the bond is
filed shall send an exact copy of the bond by registered mail or
certified mail, return receipt requested, to all claimants.
Acts 1983, 68th Leg., p. 3556, ch. 576, Sec. 1, eff. Jan. 1,
1984.
Sec. 53.239. ACTION ON BOND. (a) A claimant must sue on the
bond within six months after the bond is filed.
(b) The bond is not exhausted by one action on it. Each obligee
or his assignee may maintain a separate suit on the bond in any
court of jurisdiction.
Acts 1983, 68th Leg., p. 3556, ch. 576, Sec. 1, eff. Jan. 1,
1984.
SUBCHAPTER K. RESIDENTIAL CONSTRUCTION PROJECTS
Sec. 53.251. PROCEDURES FOR RESIDENTIAL CONSTRUCTION PROJECTS.
(a) This subchapter applies only to residential construction
projects.
(b) A person must comply with this subchapter in addition to the
other applicable provisions of this chapter to perfect a lien
that arises from a claim resulting from a residential
construction project.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997.
Sec. 53.252. DERIVATIVE CLAIMANT: NOTICE TO OWNER OR ORIGINAL
CONTRACTOR. (a) A claimant other than an original contractor
must give the notice prescribed by this section for the lien to
be valid. If the property that is the subject of the lien is a
homestead, the notice must also comply with Section 53.254.
(b) The claimant must give to the owner or reputed owner and 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 or specially
fabricated material was delivered.
(c) To authorize the owner to withhold funds under Subchapter D,
the notice to the owner must state that if the claim remains
unpaid, the owner may be personally liable and the owner's
property may be subjected to a lien unless:
(1) the owner withholds payments from the contractor for payment
of the claim; or
(2) the claim is otherwise paid or settled.
(d) The notice must be sent by registered or certified mail and
must be addressed to the owner or reputed owner and the original
contractor, as applicable, at the person's last known business or
residence address.
(e) A copy of the statement or billing in the usual and
customary form is sufficient as notice under this section.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997.
Sec. 53.253. DERIVATIVE CLAIMANT: NOTICE FOR SPECIALLY
FABRICATED ITEMS. (a) If specially fabricated materials have
not been delivered to the property or incorporated in the
residential construction project, the claimant who specially
fabricates material for incorporation in the residential
construction project must give notice under this section for the
lien to be valid.
(b) Once the specially fabricated materials have been delivered,
the claimant must give notice under Section 53.252.
(c) The claimant must give the owner or reputed owner notice not
later than the 15th day of the second month after the month in
which the claimant receives and accepts the order for the
material. If the indebtedness is incurred by a person other than
the original contractor, the claimant must also give notice
within that time to the original contractor.
(d) The notice must contain:
(1) a statement that the order has been received and accepted;
and
(2) the price of the order.
(e) The notice must be sent by registered or certified mail to
the last known business or residence address of the owner or the
reputed owner or the original contractor, as applicable.
(f) The lien of a claimant who accepts an order but fails to
give notice under this section is valid as to delivered items if
the claimant has given notice under Section 53.252.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997.
Sec. 53.254. HOMESTEAD. (a) To fix a lien on a homestead, the
person who is to furnish material or perform labor and the owner
must execute a written contract setting forth the terms of the
agreement.
(b) The contract must be executed before the material is
furnished or the labor is performed.
(c) If the owner is married, the contract must be signed by both
spouses.
(d) If the contract is made by an original contractor, the
contract inures to the benefit of all persons who labor or
furnish material for the original contractor.
(e) The contract must be filed with the county clerk of the
county in which the homestead is located. The county clerk shall
record the contract in records kept for that purpose.
(f) An affidavit for lien filed under this subchapter that
relates to a homestead must contain the following notice
conspicuously printed, stamped, or typed in a size equal to at
least 10-point boldface or the computer equivalent, at the top of
the page:
"NOTICE: THIS IS NOT A LIEN. THIS IS ONLY AN AFFIDAVIT CLAIMING A
LIEN."
(g) For the lien on a homestead to be valid, the notice required
to be given to the owner under Section 53.252 must include or
have attached the following statement:
"If a subcontractor or supplier who furnishes materials or
performs labor for construction of improvements on your property
is not paid, your property may be subject to a lien for the
unpaid amount if:
(1) after receiving notice of the unpaid claim from the
claimant, you fail to withhold payment to your contractor that is
sufficient to cover the unpaid claim until the dispute is
resolved; or
(2) during construction and for 30 days after completion of
construction, you fail to retain 10 percent of the contract price
or 10 percent of the value of the work performed by your
contractor.
"If you have complied with the law regarding the 10 percent
retainage and you have withheld payment to the contractor
sufficient to cover any written notice of claim and have paid
that amount, if any, to the claimant, any lien claim filed on
your property by a subcontractor or supplier, other than a person
who contracted directly with you, will not be a valid lien on
your property. In addition, except for the required 10 percent
retainage, you are not liable to a subcontractor or supplier for
any amount paid to your contractor before you received written
notice of the claim."
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997.
Sec. 53.255. DISCLOSURE STATEMENT REQUIRED FOR RESIDENTIAL
CONSTRUCTION CONTRACT. (a) Before a residential construction
contract is executed by the owner, the original contractor shall
deliver to the owner a disclosure statement described by this
section.
(b) The disclosure statement must read substantially similar to
the following:
"KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW. You are
about to enter into a transaction to build a new home or remodel
existing residential property. Texas law requires your contractor
to provide you with this brief overview of some of your rights,
responsibilities, and risks in this transaction.
"CONVEYANCE TO CONTRACTOR NOT REQUIRED. Your contractor may not
require you to convey your real property to your contractor as a
condition to the agreement for the construction of improvements
on your property.
"KNOW YOUR CONTRACTOR. Before you enter into your agreement for
the construction of improvements to your real property, make sure
that you have investigated your contractor. Obtain and verify
references from other people who have used the contractor for the
type and size of construction project on your property.
"GET IT IN WRITING. Make sure that you have a written agreement
with your contractor that includes: (1) a description of the work
the contractor is to perform; (2) the required or estimated time
for completion of the work; (3) the cost of the work or how the
cost will be determined; and (4) the procedure and method of
payment, including provisions for statutory retainage and
conditions for final payment. If your contractor made a promise,
warranty, or representation to you concerning the work the
contractor is to perform, make sure that promise, warranty, or
representation is specified in the written agreement. An oral
promise that is not included in the written agreement may not be
enforceable under Texas law.
"READ BEFORE YOU SIGN. Do not sign any document before you have
read and understood it. NEVER SIGN A DOCUMENT THAT INCLUDES AN
UNTRUE STATEMENT. Take your time in reviewing documents. If you
borrow money from a lender to pay for the improvements, you are
entitled to have the loan closing documents furnished to you for
review at least one business day before the closing. Do not waive
this requirement unless a bona fide emergency or another good
cause exists, and make sure you understand the documents before
you sign them. If you fail to comply with the terms of the
documents, you could lose your property. You are entitled to have
your own attorney review any documents. If you have any question
about the meaning of a document, consult an attorney.
"GET A LIST OF SUBCONTRACTORS AND SUPPLIERS. Before construction
commences, your contractor is required to provide you with a list
of the subcontractors and suppliers the contractor intends to use
on your project. Your contractor is required to supply updated
information on any subcontractors and suppliers added after the
list is provided. Your contractor is not required to supply this
information if you sign a written waiver of your rights to
receive this information.
"MONITOR THE WORK. Lenders and governmental authorities may
inspect the work in progress from time to time for their own
purposes. These inspections are not intended as quality control
inspections. Quality control is a matter for you and your
contractor. To ensure that your home is being constructed in
accordance with your wishes and specifications, you should
inspect the work yourself or have your own independent inspector
review the work in progress.
"MONITOR PAYMENTS. If you use a lender, your lender is required
to provide you with a periodic statement showing the money
disbursed by the lender from the proceeds of your loan. Each time
your contractor requests payment from you or your lender for work
performed, your contractor is also required to furnish you with a
disbursement statement that lists the name and address of each
subcontractor or supplier that the contractor intends to pay from
the requested funds. Review these statements and make sure that
the money is being properly disbursed.
"CLAIMS BY SUBCONTRACTORS AND SUPPLIERS. Under Texas law, if a
subcontractor or supplier who furnishes labor or materials for
the construction of improvements on your property is not paid,
you may become liable and your property may be subject to a lien
for the unpaid amount, even if you have not contracted directly
with the subcontractor or supplier. To avoid liability, you
should take the following actions:
(1) If you receive a written notice from a subcontractor or
supplier, you should withhold payment from your contractor for
the amount of the claim stated in the notice until the dispute
between your contractor and the subcontractor or supplier is
resolved. If your lender is disbursing money directly to your
contractor, you should immediately provide a copy of the notice
to your lender and instruct the lender to withhold payment in the
amount of the claim stated in the notice. If you continue to pay
the contractor after receiving the written notice without
withholding the amount of the claim, you may be liable and your
property may be subject to a lien for the amount you failed to
withhold.
(2) During construction and for 30 days after final completion,
termination, or abandonment of the contract by the contractor,
you should withhold or cause your lender to withhold 10 percent
of the amount of payments made for the work performed by your
contractor. This is sometimes referred to as "statutory
retainage.' If you choose not to withhold the 10 percent for at
least 30 days after final completion, termination, or abandonment
of the contract by the contractor and if a valid claim is timely
made by a claimant and your contractor fails to pay the claim,
you may be personally liable and your property may be subject to
a lien up to the amount that you failed to withhold.
"If a claim is not paid within a certain time period, the
claimant is required to file a mechanic's lien affidavit in the
real property records in the county where the property is
located. A mechanic's lien affidavit is not a lien on your
property, but the filing of the affidavit could result in a court
imposing a lien on your property if the claimant is successful in
litigation to enforce the lien claim.
"SOME CLAIMS MAY NOT BE VALID. When you receive a written notice
of a claim or when a mechanic's lien affidavit is filed on your
property, you should know your legal rights and responsibilities
regarding the claim. Not all claims are valid. A notice of a
claim by a subcontractor or supplier is required to be sent, and
the mechanic's lien affidavit is required to be filed, within
strict time periods. The notice and the affidavit must contain
certain information. All claimants may not fully comply with the
legal requirements to collect on a claim. If you have paid the
contractor in full before receiving a notice of a claim and have
fully complied with the law regarding statutory retainage, you
may not be liable for that claim. Accordingly, you should consult
your attorney when you receive a written notice of a claim to
determine the true extent of your liability or potential
liability for that claim.
"OBTAIN A LIEN RELEASE AND A BILLS-PAID AFFIDAVIT. When you
receive a notice of claim, do not release withheld funds without
obtaining a signed and notarized release of lien and claim from
the claimant. You can also reduce the risk of having a claim
filed by a subcontractor or supplier by requiring as a condition
of each payment made by you or your lender that your contractor
furnish you with an affidavit stating that all bills have been
paid. Under Texas law, on final completion of the work and before
final payment, the contractor is required to furnish you with an
affidavit stating that all bills have been paid. If the
contractor discloses any unpaid bill in the affidavit, you should
withhold payment in the amount of the unpaid bill until you
receive a waiver of lien or release from that subcontractor or
supplier.
"OBTAIN TITLE INSURANCE PROTECTION. You may be able to obtain a
title insurance policy to insure that the title to your property
and the existing improvements on your property are free from
liens claimed by subcontractors and suppliers. If your policy is
issued before the improvements are completed and covers the value
of the improvements to be completed, you should obtain, on the
completion of the improvements and as a condition of your final
payment, a 'completion of improvements' policy endorsement. This
endorsement will protect your property from liens claimed by
subcontractors and suppliers that may arise from the date the
original title policy is issued to the date of the endorsement."
(c) The failure of a contractor to comply with this section does
not invalidate a lien under this chapter, a contract lien, or a
deed of trust.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 889, Sec. 8, eff.
Sept. 1, 1999.
Sec. 53.256. LIST OF SUBCONTRACTORS AND SUPPLIERS. (a) Except
as provided by Subsection (d), for the construction of
improvements under a residential construction contract, the
original contractor shall:
(1) furnish to the owner before the commencement of construction
a written list that identifies by name, address, and telephone
number each subcontractor and supplier the contractor intends to
use in the work to be performed; and
(2) provide the owner with an updated list of subcontractors and
suppliers not later than the 15th day after the date a
subcontractor or supplier is added or deleted.
(b) The list must contain the following notice conspicuously
printed, stamped, or typed in a size equal to at least 10-point
boldface or the computer equivalent:
"NOTICE: THIS LIST OF SUBCONTRACTORS AND SUPPLIERS MAY NOT BE A
FINAL LISTING. UNLESS YOU SIGN A WAIVER OF YOUR RIGHT TO RECEIVE
UPDATED INFORMATION, THE CONTRACTOR IS REQUIRED BY LAW TO SUPPLY
UPDATED INFORMATION, AS THE INFORMATION BECOMES AVAILABLE, FOR
EACH SUBCONTRACTOR OR SUPPLIER USED IN THE WORK PERFORMED ON YOUR
RESIDENCE."
(c) The failure of a contractor to comply with this section does
not invalidate a lien under this chapter, a contract lien, or a
deed of trust.
(d) An owner may waive the right to receive the list of
subcontractors and suppliers or any updated information required
by this section only as provided by this subsection. The waiver
must be in writing and may be included in the residential
construction contract. If the waiver is not included as a
provision of the residential construction contract, the separate
waiver statement must be signed by the owner. The waiver must be
conspicuously printed in at least 10-point bold-faced type and
read substantially similar to the following:
"WAIVER OF THE LIST OF SUBCONTRACTORS AND SUPPLIERS. AN OWNER IS
NOT REQUIRED TO WAIVE THE RIGHT GRANTED BY SECTION 53.256,
PROPERTY CODE, TO RECEIVE FROM THE CONTRACTOR AN ORIGINAL OR
UPDATED LIST OF SUBCONTRACTORS AND SUPPLIERS.
"BY SIGNING THIS DOCUMENT, I AGREE TO WAIVE MY RIGHT TO RECEIVE
FROM THE CONTRACTOR AN ORIGINAL OR UPDATED LIST OF SUBCONTRACTORS
AND SUPPLIERS.
"I UNDERSTAND AND ACKNOWLEDGE THAT, AFTER SIGNING THIS DOCUMENT,
THIS WAIVER MAY NOT BE CANCELED AT A LATER DATE.
"I HAVE VOLUNTARILY CONSENTED TO THIS WAIVER."
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 889, Sec. 9, eff.
Sept. 1, 1999.
Sec. 53.257. PROVISIONS RELATED TO CLOSING OF LOAN FOR
CONSTRUCTION OF IMPROVEMENTS. (a) If the owner is obtaining
third-party financing for the construction of improvements under
a residential construction contract, the lender shall deliver to
the owner all documentation relating to the closing of the loan
not later than one business day before the date of the closing.
If a bona fide emergency or another good cause exists and the
lender obtains the written consent of the owner, the lender may
provide the documentation to the owner or the lender may modify
previously provided documentation on the date of closing.
(b) The lender shall provide to the owner the disclosure
statement described by Section 53.255(b). The disclosure
statement must be provided to the owner before the date of
closing. If a bona fide emergency or another good cause exists
and the lender obtains the written consent of the owner, the
lender may provide the disclosure statement at the closing. The
lender shall retain a signed and dated copy of the disclosure
statement with the closing documents.
(c) The failure of a lender to comply with this section does not
invalidate a lien under this chapter, a contract lien, or a deed
of trust.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997.
Sec. 53.258. DISBURSEMENTS OF FUNDS. (a) At the time the
original contractor requests payment from the owner or the
owner's lender for the construction of improvements under a
residential construction contract, the original contractor shall
provide to the owner a disbursement statement. The statement may
include any information agreed to by the owner and the original
contractor and must include at least the name and address of each
person who subcontracted directly with the original contractor
and who the original contractor intends to pay from the requested
funds. The original contractor shall provide the disbursement
statement:
(1) in the manner agreed to in writing by the owner and original
contractor; or
(2) if no agreement exists, by depositing the statement in the
United States mail, first class, postage paid, and properly
addressed to the owner or by hand delivering the statement to the
owner before the original contractor receives the requested
funds.
(b) If the owner finances the construction of improvements
through a third party that advances loan proceeds directly to the
original contractor, the lender shall:
(1) obtain from the original contractor the signed disbursement
statement required by Subsection (a) that covers the funds for
which the original contractor is requesting payment; and
(2) provide to the owner a statement of funds disbursed by the
lender since the last statement was provided to the owner.
(c) The lender shall provide to the owner the lender's
disbursement statement and the disbursement statement the lender
obtained from the contractor before the lender disburses the
funds to the original contractor. The disbursement statements may
be provided in any manner agreed to by the lender and the owner.
(d) The lender is not responsible for the accuracy of the
information contained in the disbursement statement obtained from
the original contractor.
(e) The failure of a lender or an original contractor to comply
with this section does not invalidate a lien under this chapter,
a contract lien, or a deed of trust.
(f) A person commits an offense if the person intentionally,
knowingly, or recklessly provides false or misleading information
in a disbursement statement required under this section. An
offense under this section is a misdemeanor. A person adjudged
guilty of an offense under this section shall be punished by a
fine not to exceed $4,000 or confinement in jail for a term not
to exceed one year or both a fine and confinement. A person may
not receive community supervision for the offense.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 889, Sec. 10, eff.
Sept. 1, 1999.
Sec. 53.259. FINAL BILLS-PAID AFFIDAVIT REQUIRED. (a) As a
condition of final payment under a residential construction
contract, the original contractor shall, at the time the final
payment is tendered, execute and deliver to the owner, or the
owner's agent, an affidavit stating that the original contractor
has paid each person in full for all labor and materials used in
the construction of improvements on the real property. If the
original contractor has not paid each person in full, the
original contractor shall state in the affidavit the amount owed
and the name and, if known, the address and telephone number of
each person to whom a payment is owed.
(b) The seller of any real property on which a structure of not
more than four units is constructed and that is intended as the
principal place of residence for the purchaser shall, at the
closing of the purchase of the real property, execute and deliver
to the purchaser, or the purchaser's agent, an affidavit stating
that the seller has paid each person in full for all labor and
materials used in the construction of improvements on the real
property and that the seller is not indebted to any person by
reason of any construction. In the event that the seller has not
paid each person in full, the seller shall state in the affidavit
the amount owed and the name and, if known, the address and
telephone number of each person to whom a payment is owed.
(c) A person commits an offense if the person intentionally,
knowingly, or recklessly makes a false or misleading statement in
an affidavit under this section. An offense under this section is
a misdemeanor. A person adjudged guilty of an offense under this
section shall be punished by a fine not to exceed $4,000 or
confinement in jail for a term not to exceed one year or both a
fine and confinement. A person may not receive community
supervision for the offense.
(d) A person signing an affidavit under this section is
personally liable for any loss or damage resulting from any false
or incorrect information in the affidavit.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997.
Sec. 53.260. CONVEYANCE TO CONTRACTOR NOT REQUIRED. An original
contractor may not require an owner of real property to convey
the real property to the original contractor or an entity
controlled by the original contractor as a condition to the
performance of the residential construction contract for
improvements to the real property.
Added by Acts 1997, 75th Leg., ch. 526, Sec. 23, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 889, Sec. 11, eff.
Sept. 1, 1999.
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