Texas Lien Waiver Legal Update – 2012

The Texas Legislature enacted HB 1456 a new law amending Chapter 53 of the Texas Property Code relating to the waiver and release of a mechanic's, contractor's, or materialman's lien or payment bond claim.  This law was signed by the Governor and became effective on January 1, 2012, and only applies to contracts executed on or after January 1, 2012.

The full text of HB 1456 can be found here, but should be read in context with the full Texas Property Code it amends.  

While you always should consult your attorney to fully understand how a change in the law will affect you and your company, some highlights of the changes in HB 1456 are as follows:

  • Any waiver or release of a lien or payment bond claim is UNENFORCEABLE unless executed and delivered in accordance with the language in HB 1456.
  • A waiver and release is only effective if it (1) substantially complies with one of the new statutory forms1, (2) is signed by the claimant or the claimant’s agent and is notarized, and (3) where the release is conditional (e.g., on a payment being made), evidence of payment to the claimant must exist. 
  • There is an exception where the forms set out in HB 1456 are not required for releases or waivers of lien in a contract for residential construction (original or remodel) if the contract was made before the labor or materials are provided, however this exception does not exist for a person who supplies only materials.2
  • A further exception is if the subcontractor or supplier has been paid in full with sufficient funds—thus an owner or contractor prepared release or waiver form is allowed in this instance.
  • In the event there is a settlement of a lien or bond claim form, the subcontractor or supplier can be required to sign the owner or contractor’s customized forms.  In these instances however, the subcontractor and supplier should be careful to not sign a full and complete release in addition to the release or waiver of lien if it does not intend a release of ALL claims.
  • Under HB 1456, a subcontractor or supplier is not required to execute an unconditional waiver and release for a progress payment or final payment unless the payment is received for that amount.
  • Because HB 1456 substantially changes current practices related to waivers and releases, it includes a provision that states waivers and releases will “be construed” to comply with HB 1456 if the waiver or release “is furnished in attempted compliance [with HB 1456]” or “evidences by its terms intent to comply [with HB 1456].  That means that any waiver or release that attempts to expand or restrict the rights or liabilities under HB 1456 shall be disregarded and the provisions of HB 1456 “shall be read into that waiver or release.”  This section of HB 1456 expires on August 31, 2012.
  • HB 1456 also adds a statement that any agreement that purports to waive the right to enforce any lien or claim under the Statute, except as provided in the Statute, is void against public policy.

 

1HB 1456 creates four forms:  Conditional Waiver and Release on Progress Payments, Unconditional Waiver and Release on Progress Payments, Conditional Waiver and Release on Final Judgment, and Unconditional Waiver and Release on Final Judgment.  Please contact info@pdhlaw.com should you wish to see copies of the forms established by HB 1456.

2With respect to a residential contract, if a subcontractor files a lien there is no violation of the fraudulent lien statute (Section 12.002 of the Texas Property Code), unless an owner or contractor sends to the subcontractor or supplier filing the lien, a written explanation of the basis for nonpayment, evidence of the waiver of lien rights, and a notice to release the lien.  In that event, a release of the lien must be filed on or before the 14th day after the date the owner or contractor sends the required notice.