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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