PROPERTY CODE
CHAPTER 53. MECHANIC'S, CONTRACTOR'S, OR MATERIALMAN'S LIEN
SUBCHAPTER A. GENERAL PROVISIONS
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1997, 75th Leg., ch. 526, § 2, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 889, § 1, eff. Sept. 1, 1999.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1997, 75th Leg., ch. 526, § 3, eff. Sept. 1,
1997.
SUBCHAPTER B. PERSONS ENTITLED TO LIEN; SUBJECT PROPERTY
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 395, § 1, eff. Sept. 1,
1989; Acts 1989, 71st Leg., ch. 1138, § 1, eff. Sept. 1, 1989;
Acts 1991, 72nd Leg., ch. 16, § 16.01, eff. Aug. 26, 1991; Acts
1995, 74th Leg., ch. 851, § 1, 6, eff. Sept. 1, 1995; Acts 1999,
76th Leg., ch. 896, § 1, eff. Sept. 1, 1999; Acts 2003, 78th
Leg., ch. 410, § 1, eff. Sept. 1, 2003.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1995, 74th Leg., ch. 851, § 2, eff. Sept. 1,
1995.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 2, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 3, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 4, eff. Sept. 1, 1997.
SUBCHAPTER C. PROCEDURE FOR PERFECTING LIEN
§ 53.051. NECESSARY PROCEDURES. To perfect the lien, a
person must comply with this subchapter.
Acts 1983, 68th Leg., p. 3538, ch. 576, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 4, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 5, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 5, eff. Sept. 1,
1989; Acts 1995, 74th Leg., ch. 851, § 3, eff. Sept. 1, 1995.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 6, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 6, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 7, eff. Sept. 1,
1989; Acts 1993, 73rd Leg., ch. 48, § 7, eff. Sept. 1, 1993;
Acts 1997, 75th Leg., ch. 526, § 7, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 889, § 2, eff. Sept. 1, 1999.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 8, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 8, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 9, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 9, eff. Sept. 1, 1997;
Acts 1999, 76th Leg., ch. 889, § 3, eff. Sept. 1, 1999.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 10, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 10, eff. Sept. 1, 1997.
SUBCHAPTER D. FUNDS WITHHELD BY OWNER FOLLOWING NOTICE
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 12, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 11, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 13, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1997, 75th Leg., ch. 526, § 12, eff. Sept. 1,
1997.
§ 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, § 1, eff. Aug. 31, 1987.
Amended by Acts 1989, 71st Leg., ch. 1138, § 14, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 13, eff. Sept. 1, 1997.
SUBCHAPTER E. REQUIRED RETAINAGE FOR BENEFIT OF LIEN CLAIMANTS
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 15, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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 work is completed.
Acts 1983, 68th Leg., p. 3545, ch. 576, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 16, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 2, § 13.02, eff. Aug. 28,
1989; Acts 1989, 71st Leg., ch. 1138, § 17, eff. Sept. 1, 1989.
§ 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, § 12, eff.
Sept. 1, 1999.
Added by Acts 1989, 71st Leg., ch. 1138, § 18, eff. Sept. 1,
1989. Amended by Acts 1997, 75th Leg., ch. 526, § 14, eff. Sept.
1, 1997; Acts 1999, 76th Leg., ch. 889, § 12, eff. Sept. 1, 1999.
SUBCHAPTER F. PRIORITIES AND PREFERENCES
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1995, 74th Leg., ch. 851, § 4, eff. Sept. 1,
1995.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 19, eff. Sept. 1,
1989; Acts 1995, 74th Leg., ch. 851, § 5, eff. Sept. 1, 1995;
Acts 1999, 76th Leg., ch. 896, § 2, eff. Sept. 1, 1999; Acts
2003, 78th Leg., ch. 410, § 2, eff. Sept. 1, 2003.
SUBCHAPTER G. RELEASE AND FORECLOSURE; ACTION ON CLAIM
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 20, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 21, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 4(a), eff.
Oct. 2, 1984. Amended by Acts 1989, 71st Leg., ch. 1138, § 22,
eff. Sept. 1, 1989.
§ 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, § 23, eff. Sept. 1,
1989. Amended by Acts 1997, 75th Leg., ch. 526, § 15, eff. Sept.
1, 1997.
§ 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, § 23, eff. Sept. 1,
1989. Amended by Acts 1997, 75th Leg., ch. 526, § 16, eff. Sept.
1, 1997; Acts 1999, 76th Leg., ch. 889, § 4, eff. Sept. 1, 1999.
§ 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, § 23, eff. Sept. 1,
1989.
§ 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, § 17, eff. Sept. 1, 1997.
§ 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, § 17, eff. Sept. 1, 1997.
§ 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, § 17, eff. Sept. 1, 1997.
SUBCHAPTER H. BOND TO INDEMNIFY AGAINST LIEN
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 24, 39(1), eff.
Sept. 1, 1989; Acts 1997, 75th Leg., ch. 526, § 18, eff. Sept. 1,
1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 25, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 1132, § 2, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 26, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 19, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 27, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 20, eff. Sept. 1, 1997.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 28, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 526, § 21, eff. Sept. 1, 1997.
SUBCHAPTER I. BOND TO PAY LIENS OR CLAIMS
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1997, 75th Leg., ch. 526, § 22, eff. Sept. 1,
1997.
§ 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 Article 1.35D, 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 29, eff. Sept. 1,
1989; Acts 1997, 75th Leg., ch. 1132, § 2, eff. Sept. 1, 1997;
Acts 2001, 77th Leg., ch. 380, § 5, eff. Sept. 1, 2001.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1987, 70th Leg., ch. 683, § 1, eff. Aug. 31,
1987; Acts 1989, 71st Leg., ch. 1138, § 30, eff. Sept. 1, 1989.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 31, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1999, 76th Leg., ch. 889, § 5, eff. Sept. 1,
1999.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 32, eff. Sept. 1,
1989; Acts 1999, 76th Leg., ch. 889, § 6, eff. Sept. 1, 1999;
Acts 2001, 77th Leg., ch. 380, § 6, eff. Sept. 1, 2001.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1999, 76th Leg., ch. 889, § 7, eff. Sept. 1,
1999.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 33, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 34, eff. Sept. 1,
1989.
SUBCHAPTER J. LIEN ON MONEY DUE PUBLIC WORKS CONTRACTOR
§ 53.231. LIEN. A person who furnishes material or
labor to a contractor under a prime contract 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.
Acts 1983, 68th Leg., p. 3554, ch. 576, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 35, eff. Sept. 1,
1989.
§ 53.234. TIME FOR NOTICE. The lien claimant must give
notice before any payment is made to the contractor and 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 36, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, § 37, eff. Sept. 1,
1989.
§ 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, § 1, eff. Jan. 1, 1984.
§ 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, § 1, eff. Jan. 1, 1984.
SUBCHAPTER K. RESIDENTIAL CONSTRUCTION PROJECTS
§ 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, § 23, eff. Sept. 1, 1997.
§ 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, § 23, eff. Sept. 1, 1997.
§ 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, § 23, eff. Sept. 1, 1997.
§ 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, § 23, eff. Sept. 1, 1997.
§ 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, § 23, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 889, § 8, eff. Sept. 1,
1999.
§ 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, § 23, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 889, § 9, eff. Sept. 1,
1999.
§ 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, § 23, eff. Sept. 1, 1997.
§ 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, § 23, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 889, § 10, eff. Sept. 1,
1999.
§ 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, § 23, eff. Sept. 1, 1997.
§ 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, § 23, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 889, § 11, eff. Sept. 1,
1999.
