I am building my house & I am my own GC. A subcontractor has refused to finish his job but is demanding full payment. He is threatening to file a mechanic's lien & a foreclosure lien. Is there anything I can do to prevent this or must I wait for him to file & then fight it? He has gone to the extent of threatening my family & jobsite that "bad things are going to happen to us". Thank you in advance.
If you believe the threats are physical, then you should call 911. Otherwise, no you can't do anything to prevent him from filing a lien. It is highly likely to be invalid and you don't necessarily need to do anything to remove the lien unless you will be selling or re-financing in the next 12 months. Liens on residential property expire unless an action is brought to enforce them within 12 months of their filing.
Thank you for your question. Perfecting a lien against residential property can be very difficult, even though the act of filing a "lien" can be extremely easy. Assuming that your subcontractor gets everything right, he will have one year to foreclose on the lien after the date of filing. If he seeks a foreclosure, you will need to hire an attorney to fight the case. Sadly, there is no fool-proof way to prevent the filing of a lien. If you want to take some action in the hopes of avoiding a lien, please contact me to schedule an appointment and we can discuss sending your subcontractor a very stern letter advising against the filing of a lien.
I assume that the construction is for your house, and that your house is your homestead. For the house to be your homestead, the house is in your name and you must live there. If so, for a contractor to be entitled to file a valid mechanic's lien on the homestead, he would have to comply with Chapter 53 of the Texas Property Code. Among the requirements are a written contract signed by the owners of the homestead (husband and wife), certain homestead warnings, and filing of the contract with the county clerk. Those formalities do not usually happen. Without them, any attempted mechanic's lien filing would be invalid.
In this situation, with you acting as your owner general contractor, all of the trade contractors (probably what you are calling a subcontractor) would be original contractors. They would have to perfect a homestead mechanic's lien contract in their own right.
Under Texas law, you have an obligation to pay the contract price. If the contractor contends that the price has somehow risen, the contractor would have to prove that you consented to the supposedly extra work, and agreed to pay the extra money. If the contractor does file a mechanic's lien, the contractor is required to provide you with notice of lien filing within five days of the filing by certified mail. So, if you receive notice of certified mail, make sure that you claim it so that you can determine what the contractor is claiming and for how much.
If the contractor did not properly perfect a homestead mechanic's lien contract, and you want to avoid one, you should write a letter by certified mail to demand that no lien be filed or if one is filed that it be released, pointing out that the property is your homestead, and why the contractor has not perfected a homestead mechanic's lien. If the contractor does not voluntarily release the lien, he could be liable for a fraudulent lien under Chapter 12 of the Texas Civil Practice & Remedies Code. Chapter 12 can award damages of $10,000 or actual damages whichever is greater, plus attorney's fees.
If a lien is filed, you can also demand that the lien be released under Section 53.160 of the Texas Property Code, which provides for a summary procedure (no trial necessary) for the removal of an invalid lien on someone's homestead.
If you have overpaid the contractor, or there are defects in the contractor's work, you may consider writing to him to request that he pay back the overpayment. Often, the best defense is a good offense.
To address the failure to complete, you should write the contractor a letter by certified mail to request that the contractor return to correct/complete his work. In that letter, you should advise generally what work needs to be corrected/completed. You should also indicate that if the contractor does not return to correct/complete his work, you will have to retain another contractor, and will hold the first contractor responsible for the costs. Finally, indicate in your letter that if the contractor does not advise that he will return to correct/complete his work within one week, you will presume that he has no intention of doing so, and you will hold him responsible for the costs of correcting/completing his work.
When the contractor does not return, you can retain another contractor to correct/complete the first contractor's work. Make sure that the second contractor itemizes his invoices and lists the costs to correct/complete the first contractor's work. You cannot charge the first contractor with the cost of work that was not within the first contractor's scope of work. For example, if the first contractor was supposed to install carpet, you cannot charge him for the second contractor's installation of ceramic tile.
I have a lot of mechanic's lien materials (the law, notice forms, deadline charts, etc.) at my web site, The Construction Report. The web address for The Construction Report is:
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