Home>Levelset Community>Legal Help>Texas Constitutional Lien Rights/Process When Customer Has Retained Legal Council

Texas Constitutional Lien Rights/Process When Customer Has Retained Legal Council

In this particular situation, We have an emailed and accepted agreement (no signed contract). I have performed over 90% of the agreed work and gave them an invoice for travel costs up to this point. I told them I would charge a daily trip fee for every day worked in our very first correspondence and have clearly accepted by hiring me. Instead they told me to "get out" without paying or offering payment. They have since retained an attorney who has sent me a letter affirming they received my invoices for the agreed upon work, but also saying they owe me nothing and to not contact his clients directly, but instead send all future correspondence to him. In Texas I know I cannot file and perfect a statutory lien, but there is a constitutional lien option here I believe I can use. The letter goes on to say the property is a "homestead" which is why I cannot file a statutory lien having no prior notification of work being performed to the county. This is news to me since I do not have complete information on their assets and do not know if they own other properties or which one they consider their homestead. Seems to me I should be able to file for a Constitutional Lien since I can prove an agreement was offered and accepted and I have produced over 300 hours of work with only materials being paid to date. The agreement clearly stipulates the agreed upon price and payments are to be made at milestones. The letter I received is so inflammatory and over the top I figure they are simply trying to dissuade me from exercising my legal rights to collect payment since their case would be very hard to win if litigated. Do you agree? I know I will need to send notice of any Lien to their representative (in this case their attorney) since I cannot send it directly to them now, but what else should I be doing? I can't imagine they plan to litigate this for how little they owe me (you should see the pictures I have, they were getting an exceptional deal on exquisitely detailed work). What can I expect to see if I do file a lien and is there anything I should avoid doing?

2 replies

Mar 2, 2018

The intersection of Homestead liens and Constitutional liens in Texas is an interesting one. On one hand, the process for filing a lien against a homestead is even more rigid than filing a regular-old mechanics lien (which is challenging in its own right). On the other hand, a Texas constitutional lien avoids the formalities typically tied to the mechanics lien process. When the two ideas meet head to head, confusion creeps in. To sort out the mess, your best bet will likely be to reach out to a local construction lawyer familiar with Texas constitutional liens. However, considering constitutional law and statutory law are at odds, it would seem that constitutional law would prevail and a constitutional lien might still be available regardless of the potential homestead designation. I’ll add that challenging a potential lien based on questionable arguments is not an uncommon tactic from property owners - more on that idea here. If an owner, through their attorney or otherwise, agrees that work was provided an invoices went unpaid but also argues that there is no recourse for payment, those statements could be very helpful in enforcing payment – whether via constitutional lien or some other remedy (such as litigation). Finally, perhaps the biggest obstacle to look out for is to steer clear of making a fraudulent filing. There is a difference between fraud and good faith mistakes (we discuss that topic in this article as well as this article), but Texas’ penalties for fraudulent liens can be steep. Being extra cautious is generally a good idea.

2 people found this helpful

Helpful

Feb 12, 2019

This is a very complex and interesting question - and one that, interestingly, has been the subject of debate and Texas case law.

While Texas law and jurisprudence is far from clear and straightforward with respect to mechanics liens, and mechanics liens on homesteads in particular, there has been a lot of thought over the years given to attempting to get to the bottom of what exactly is required for an original contractor to qualify for statutory liens and constitutional liens on residential and homestead property.

In a case in which the specific contractual requirements related to homestead property were not met, the determination of whether a lien may be validly claimed likely turns on whether the property is actually a homestead. In Texas, all residential homesteads meet the Property Code definition of a "residential construction project," BUT not all residential construction projects constitute homestead property. To the extent a residential project is not on "homestead property" the constitutional prerequisites necessary for a valid constitutional lien do not apply, and the lien is self-perfecting and enforceable against hte owners with no additional specific notice or filing required.

To the extent that work is performed on a homestead property, there are still specific actions that must be taken and requirements that must be met in order to claim a constitutional lien. The extent of these requirements depends on whether the work was for the original new construction of the homestead, or for renovation/repair work.

For new construction, the only requirement is that the contract be in writing. Since the recording, spouse's signatures, and specific clauses are not required, the bar for what constitutes an acceptable written contract is lower, and only mandates general contract requirements. If the project is the renovation/repair of existing homestead property, however, the Texas Constitution sets forth several specific requirements for the contract that must be met in order to be able to enforce a lien claim. These requirements are that:

1) the work and material be contracted for in writing;
2) the contract be signed and acknowledged by the owner and spouse, if married, before the work commenced;
3) the contract not be executed by the owner before the 5th day after the owner made written application for any extension of credit for the work and material;
4) the contract expressly provide that the owner may rescind the contract without penalty or charge within three days after the execution of the contract by all parties; and
5) the contract be executed by the owner and the owner's spouse only at the office of a third-party lender making an extension of credit for the work and material, an attorney at law, or a title company.

So, while there is no specific requirement to file a lien affidavit in order to claim a constitutional lien against homestead property, the Texas Constitution itself sets forth specific requirements that must be met in order to get around the general protection of homestead property from forced sale.

2 people found this helpful

Helpful