This overview discusses who can assert a mechanic's lien claim in Texas for debts owed arising out of construction projects.
Because two legal authorities grant mechanic's liens in Texas, a claimant may have either a mechanic's lien pursuant to the Texas Constitution (a "Constitutional Mechanic's Lien") or a lien pursuant to the Texas Property Code (a "Statutory Mechanic's Lien"). All "mechanic's, artisans and material men" (e.g., contractors and suppliers) can claim a Constitutional Mechanic's Lien for the value of their labor performed or materials furnished for the construction or repair of a building on real property in Texas provided the person claiming the lien (the claimant) did so pursuant to a contract between the claimant and the property owner. Broadly, the Statutory Mechanic's Lien allows contractors and material suppliers who provided labor or material for the construction or repair of a house, building, or improvement on real property located in Texas regardless of whether the contractor or supplier has a direct contract with the property owner. All lien claimants who do not have a direct contract with the property owner can never claim a Constitutional Mechanic's Lien and must rely on a Statutory Mechanic's Lien.
Two potential lien claims
A claimant with a qualifying contract with the property owner, and who complies with the provisions Texas Property Code governing mechanic's lien rights, will have both a Constitutional Mechanic's Lien and a Statutory Mechanic's Lien available as remedies for securing payment of the debt owed for labor or materials, but only one can be enforced. However, having the Constitutional Mechanic's Lien available while asserting a Statutory Mechanic's Lien is beneficial because, should the lien claimant fail to fully comply with the Texas Property Code's requirements, the claimant may be able to fall back on the Constitutional Mechanic's Lien to protect its rights. Because complying with the requirements for properly claiming a Statutory Mechanic's Lien - "perfecting" the lien - will help ensure mechanic's lien rights aren't lost even when a Constitutional Mechanic's Lien is available, this overview covers only Statutory Mechanic's Liens, which will be referred to hereinafter only as "mechanic's liens" or "liens" for the sake of simplicity.
Essential characteristic of mechanic's lien claimant
To understand who is entitled to assert mechanic's lien rights, it is important to understand just how the Texas Property Code classifies those who can claim a mechanic's lien. Generally, to be entitled to claim a mechanic's lien, the person (or company) seeking to assert the claim must have furnished labor or materials or specially fabricated materials for the construction or repair of a house, building or improvement on real property in Texas under or by virtue of a contract with the property owner or the owner's agent, a contractor or a subcontractor. The phrase "under or by virtue of a contract with the property owner" essentially means that the lien claimant's contract must be for part of the work of the contract with the owner. Thus, all subcontractors of a general contractor, subcontractors to the general contractor's subcontractor, subcontractors to any of subcontractors, and material suppliers contracting with any of the aforementioned persons are entitled to claim a lien in connection with their work or materials furnished for the project. In addition to contracts for construction or repair, without going into further detail, there are a few other situations in which a mechanic's lien may be available, such as providing plant material or other supplies for the installation of landscaping and demolition of a structure on real property. However, the bulk of mechanic's liens claimed are for labor or materials furnished for the construction or repair of improvements.
Classification of mechanic's lien claimants
Of those to whom the law grants mechanic's lien rights, the Texas Property Code further divides them into two classes: (1) those claimants who directly contract with the owner and (2) those claimants who do not have a contract with the owner. Although the term "general contractor" is often used for the person or company who directly contracts with the owner, the Texas Property Code refers to this party as an "Original Contractor." This distinction between the terms "general contractor" and "Original Contractor" is important because a claimant who is not a general contractor may be an Original Contractor. For example, although a supplier is not a "general contractor" as the term is ordinarily used, a material supplier can be an Original Contractor for the purpose of a mechanic's lien where a supplier sells materials directly to the owner under a sales contact and the owner provides the materials to its general contractor for the construction project. Note that, in this example, both the supplier and general contractor would be Original Contractors on the project because, as long as each has furnished labor or materials for the construction or repair of the building or improvements on the property under a contract with the owner, the Texas Property Code does not limit the number of Original Contractors on a project. All subcontractors and material suppliers who furnish labor or materials for the work required by the Original Contractor's contact with the owner, whether contracting with an Original Contractor or a subcontractor or under a sales agreement with a subcontractor, are considered "derivative claimants" and are classified by their contract. If the party contracted with the Original Contractor, then it is a first tier derivative claimant and if the party contracted with a subcontractor it is a second tier derivative claim. The classification of the lien claimant is critically important. The mechanic's lien rights and the requirements for perfecting a lien differ for each type of claimant.
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