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What is a mechanic’s lien?

As a contractor in Texas, you know how complex large commercial and/or residential construction projects can become. Oftentimes the completion of these projects requires you to subcontract out to different service providers. While this may take some of the burden off your company’s plate, it also introduces the potential for problems with the payments for goods and services.

If and when a subcontractor does not receive timely payment for services rendered, they may file a mechanic’s lien. Such a lien exists against the property involved in the work (thus pulling the property owner into the dispute and potentially damaging your relationship with them). Therefore, knowing the guidelines for mechanics liens in Texas is essential to avoiding or answering to them.

Who can file a mechanic’s lien?

According to Section 53.021 of Texas’ Property Code, only the following parties can file a mechanic’s lien:

  • One who creates or provides material for and/or labors in the construction or improvement of a house, building, river embankment or railroad
  • An architect, engineer or surveyor who participates in the planning or design of such a project
  • One who provides labor or materials for the landscaping of a private or public place
  • One who provides labor or materials for the demolition of a private or public structure

The law does not allow the amount of a mechanic’s lien to exceed any amount already paid to a subcontractor or the total reasonable cost of labor performed, materials furnished and overhead expenses incurred.

How to avoid mechanics liens

The steps needed to avoid the potential for a mechanic’s lien should occur during initial contract negotiations. You must clearly delineate the obligations over who pays what with a property owner. Furthermore, offering an alternative dispute resolution process to subcontractors allows a way for you to resolve issues without involving the property owner