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Mechanic’s Liens: A Brief Overview

In home building, the contractor is the brain behind everything: it manages the supplies, manpower and the building process from start to finish. It is with this very important role that the law has given a contractor a protection in a form of a mechanic's lien. In Texas, with a mechanic's lien, a contractor is guaranteed payments for labor and materials it provided in the event a buyer or homeowner has defaulted payment or has breached the contract.

The rights of an original contractor

An original contractor is the person or entity who entered into a Contractor's Contract with a buyer or a homeowner. An original contractor is not the subcontract or the materials supplier, although these people or businesses may work side-by-side with the original contractor.

An original contractor is protected by a mechanic’s lien the moment it entered into a Contractor's Contract with the buyer and has perfected the filing of notices to the proper offices, such as the notice of commencement of work, notice of intention to file for lien if unpaid, and similar notices as required by the state. The subject property including the improvements thereon may be auctioned off and the proceeds may be used to pay the original contractor.

Under the Texas liens law, however, subcontractors and materials suppliers may have a hard time enforcing a lien, especially if their respective contracts are with the original contractor, not the buyer.

When is mechanics lien enforceable?

An original contractor may file for a petition for a mechanic's lien if and when after several notices and demands, the buyer still refuses and fails to pay the services and materials provided by the original contractor.

The Texas court will determine whether the petition is meritorious and it will issue a judgment to enforce the mechanic's lien against the property of the buyer.

What a buyer can do to protect his interests

True, a mechanic's lien is made with original contractors in mind; but it does not give a contractor a license to take advantage of this protection created by the law.

It is unethical of a subcontractor or a supplier to demand payment from a buyer if it was the original contractor (fully paid by the buyer) who has failed to pay them. Legally though, a subcontractor or a supplier is entitled to claim from the buyer.

For a buyer to protect his interests and prevent this scenario to ever happen in reality, the buyer should demand the following from the original contractor:

- Detailed list of subcontractors and suppliers
- Payment schedule for subcontractors and suppliers
- Receipts from subcontractors and suppliers to prove that they have been paid for the services or materials they have provided.

A buyer must ensure that for every payment he makes to the original contractor, the subcontractors and suppliers for the project are duly compensated, and that next schedule of payment would be delayed until such time the payment receipts from the subcontractors and suppliers are returned.

Source: http://easycontentpro.com

About the Author:
Joe Cline writes articles for austin law firm. Other articles written by the author related to the cronfel firm can be found on the net.

"Mechanic’s Liens: A Brief Overview"
written by Joe Cline

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