Summary of Texas Mechanic’s Liens Requirements for Suppliers and Subcontractors

Material suppliers are entitled to file liens when they have not been paid for materials delivered to, and erected or installed within, a construction project. Subcontractors providing labor in the construction of improvements for a project are likewise entitled to file liens. To assert a lien a supplier must have a contract with either the original contractor, who is usually a general contractor or builder, or with a subcontractor. A subcontractor must likewise have a contract with either the original contractor or with another subcontractor. 

To perfect, or to render enforceable, a mechanic’s lien, the material supplier and subcontractor are obligated to first give written notice. The timing to provide such notice depends on whether the supplier or subcontractor has a contract directly with the original contractor or with a subcontractor.

Where the supplier or subcontractor has a contract directly with the original contractor, the supplier or subcontractor must give the owner written notice of the unpaid claim by the 15th day of the 3rd calendar month following EACH month in which material or labor was delivered for which the supplier or subcontractor has not been paid. This notice is sometimes referred to as the third month notice or the third month trapping notice. The third month notice is not only required to perfect the lien of the supplier or subcontractor, but allows the owner to withhold funds in excess of the 10% retainage required by Texas statutes. The third month notice must

  • Be sent by certified mail, return receipt requested and must contain the following language in italics:
  • If the claim remains unpaid, you may be personally liable and your property subjected to a lien unless you withhold payments from the contractor for payment of the claim or the claim is otherwise paid or settled. This language is commonly referred to as the fund trapping language.

Here's an example of a third month notice.

Where the supplier has a contract with a subcontractor or a subcontractor has a contract with another subcontractor (and not the original contractor), the supplier or subcontractor depending on the case, must give written notice to the original contractor (not the owner) by the 15th day of the 2nd calendar month following EACH month in which material was delivered or labor was performed for which the supplier or subcontractor has not been paid. This notice is sometimes referred to as the second month notice.

The second month notice should trap funds in the hands of the general contractor for the benefit of the supplier or subcontractor. In addition to the second month notice however, a notice providing the fund trapping language must also be given to the owner by the 15th day of the third calendar month—what we referred to previously as the third month notice. As a practical matter, the second and third month notices can be combined into one notice if the fund trapping language is included in the second month notice.

Here's an example of a second month notice.

Assuming the proper notices have first been sent, in order to perfect a lien, the material supplier or subcontractor must file an affidavit in the correct form with the county clerk of the county where the real property is located. The affidavit must be filed no later than the 15th day of the 4th month after the indebtedness accrues. Accrual of indebtedness for a supplier occurs on the last day of the month in which materials were furnished. Accrual of indebtedness for a subcontractor occurs on the last day of the month in which labor was performed.

One important thing to remember—if the materials are supplied or labor is performed towards the end of the project, the deadline to trap funds or file a lien is 30 days after completion of the project.

Lets turn to an example:

A lumber and building material supplier is selling building materials to a framing subcontractor who has a turn-key material and labor subcontract with a general contractor for a project being built in Houston, Texas.  Building materials are delivered in January and February.  Payment terms are Net 30.  Payment is not timely made for either the delivery in January or the delivery in February.

Since the supplier is selling to a subcontractor and not the original contractor, both a second month notice and third month notice must be sent before the lien is actually filed.  The second month notice needs to be sent for EACH month in which material was delivered for which payment has not been made.  Therefore for the delivery made in January the second month notice must be sent by March 15 and for the delivery made in February the second month notice must be sent by April 15.  For the delivery made in January the third month notice must be sent by April 15.  For the delivery made in February the third month notice must be sent by May 15.  The affidavit of lien for the deliveries made must be recorded with the Harris County Clerk’s office by June 15 as the accrual of indebtedness occurs on the last day of the month materials were delivered—which in our example is February.

Here's an example of A Notice and Filing Deadline chart.

Previously we stated that the lien affidavit must be filed in the correct form.  There is very little room for error here.  If the lien affidavit is not properly completed it will be considered defective and unenforceable.  For the material supplier and subcontractor, the lien affidavit must

  • Be signed either by the person claiming the lien or a person on the claimants behalf and must contain
    • A sworn statement of claim, including the amount
    • The name and address of the owner
    • A general statement of the materials furnished or labor performed
    • The name of the person to whom the supplier furnished materials or for whom labor was performed
    • The name and address of the original contractor
    • A description, legally sufficient for identification, of the property sought to be charged with a lien
    • The supplier’s  or subcontractor’s mailing and physical address
    • A statement as to each month in which materials or labor were furnished for which the lien is claimed and
    • The date and method by which notices of claim were sent to the owner and contractor.

Here's an example of a lien affidavit form.

It is imperative that the lien affidavit include a “sworn statement” as shown in the example.

All lien affidavits must be mailed.  Suppliers and subcontractors filing affidavits claiming mechanic’s liens must send a copy of the affidavit by registered or certified mail to the owner no later than the 5th day after the lien affidavit is filed with the county clerk.

As indicated above, to properly perfect a lien affidavit, the supplier or subcontractor will need a description of the property that is legally sufficient to identify it.  A legal description can oftentimes be obtained online, through a search of the county real property records in the county where the project is located, through retention of a title company, or upon a written request of the supplier and subcontractor in a form consistent with the Texas Property Code.  Because requesting information necessary to perfect a lien does not suspend the time limits for filing a lien or notice, a supplier or subcontractor should always allow enough time to otherwise obtain this information from another source should that information be not provided to the supplier or subcontractor.

There are also specific requirements with regard to when

  • the supplier is providing specially manufactured items
  • a supplier or subcontractor is perfecting a lien on retained funds or is
  • perfecting a lien on homestead properties