One of the contractors wasn't fully paid. He is putting a lien on my house because builder doesn't want to pay. What can I do???
We paid the builder for contractor's work. When we bought the house the title company gave us a title policy, does this will help?? What will be the next step?
Construction / Development Lawyer
If your house is your homestead -- meaning that the house is in your name and you live there, you are protected by the homestead provisions of the Texas Constitution and Chapter 53 of the Texas Property Code. With homestead property, the contractor that contracts with you (known under the Property Code as the "original contractor") has to comply with the homestead mechanic's lien provisions of Chapter 53. 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 such compliance, any attempted mechanic's lien filing would be invalid. That means that the original contractor or any of the original contractor's subcontractors or suppliers could not file a vaild mechanic's lien on your homestead.
A subcontractor has additional requirements. Assuming that the original contractor has satisfied the requirements for a valid mechanic's lien contract, a subcontractor then has to provide notice of non-payment to you and request that you withhold payment from the original contractor. The notice has to be sent by certified mail, and has to include warnings that if you do not withhold payment from the original contractor, you could be liable and your property subject to lien. This mailing has to be placed in the mail by the 15th day of the second month after the month in which the labor or materials were furnished for the project. If the notice is late, the claim for that month's work is not perfected.
If the original contractor did not perfect a valid mechanic's lien contract, and the subcontractor does file a mechanic's lien, you should write a letter by certified mail to demand that the lien be released, pointing out that the property is your homestead, and why the original contractor has not perfected a homestead mechanic's lien. If the subcontractor 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.
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 the subcontractor's lien is valid, and you have paid the original contractor for the subcontractor's work, you can demand in writing that the original contractor resolve the lien claim. If you have not paid the original contractor, you should hold the money until the lien claim is resolved.
Do not allow the subcontractor to remove his work under a theory that his work is removable. Write to the subcontractor and advise that you have already paid for the work, and now own it. If the subcontractor tries to remove his work, call the police. The police ought to stop the removal, as the matter is then a civil dispute and the subcontractor will need a court order confirming his rights to removal. The subcontractor cannot remove his work if doing so would breach the peace (in other words, no self help if you don't voluntarily agree).
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:
Also, please review your title insurance policy. Schedule C contains information about mechanic's liens. If none are listed, notify your title insurer and request that the insurer take steps to remove the lien.
Since you are in the Dallas area, let me know if you need any assistance. I offer an hour of free consultation for new clients.
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You need to speak with a real estate attorney as soon as possible. It's hard to provide a good assessment until an attorney can ask a few questions and obtain documents from you and the original contractor (the builder).
For instance, did you buy the land and contract directly with the builder? Did you buy a home through a mass home-builder (DR Horton, Pulte, Lennar, etc.)? Did you receive any disclosures? When did title convey to you? Did you receive a final bills paid affidavit? When did the subcontractor complete its portion of the job? Was there bank financing? Did you receive a "completion of improvements" endorsement on your title policy?
These questions and many more are important to knowing your rights and options.
The above statements are provided as general information and not intended as legal advice. Each matter has its own set of unique circumstances that cannot be adequately addressed without consultation. You are strongly advised to hire an attorney licensed to practice law in your state to represent you.
Real Estate Attorney
There are several things that may assist you, including but not limited to retaining payments otherwise due your contractor under the contract (if allowed), complying with statutory retainage, bonding around the lien, issuing a joint check, demanding release of the lien, and other potentially available remedies depending on your particular circumstances. However, mechanic's lien issues are extremely complicated and always require a full and complete review of all facts, contracts, documents, communications, and other circumstances associated with the construction of your home. I suggest that you seek an immediate consultation with a qualified real estate attorney who handles mechanic's lien issues.
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