In September 2021, the Texas legislature made main adjustments to the development lien statutes in Chapter 53 of the Texas Property Code. All the key gamers within the building business (homeowners, contractors, subcontractors, suppliers, architects, engineers, landscapers, and sureties) are affected.
This text highlights essentially the most vital adjustments to the Texas lien legal guidelines affecting all non-residential, personal Texas building initiatives the place the unique contracts (the contract between the proprietor and unique contractor) are entered into on or after January 1, 2022.
- Revised Lingo. There are a number of adjustments to the statutory definitions underneath Chapter 53 of the Texas Property Code that must be reviewed. Nevertheless, the largest change is the elimination of the phrase “statutory retainage”—the prior time period used to explain the cash an proprietor should withhold (10%) from its funds to the unique contractor all through the challenge. The legislature now makes use of the phrase “reserved fund” to check with the “statutory retainage” or the ten% fund an proprietor is obligated to withhold. The time period “retainage” is now used to check with quantities withheld pursuant to contractual agreements between the contractor and subcontractor or subcontractor and sub-subcontractor.
- Statutory Discover Types. The legislature now requires two types of statutory discover for lien claimants apart from an unique contractor. Part 53.056 units forth the statutory discover to good a declare for unpaid labor or supplies, whereas the discover set forth underneath Part 53.057 is used to good a declare for unpaid contractual retainage.
- Streamlined Discover Necessities for Unpaid Supplies or Labor. Second-tier subcontractors (and decrease) not have a shortened discover obligation. Second month notices have been eradicated.
- Previous Regulation: Previous to the 2021 legislative adjustments enacted underneath Home Invoice 2237, second-tier subcontractors (and decrease tiers) had been required to ship discover to the unique contractor no later than the 15th day of the second month after offering labor or supplies for which they haven’t been paid.
- New Regulation: The brand new lien legal guidelines not make a distinction between first-tier subcontractors and second-tier subcontractors (or decrease). All subcontractors of any tier now have the identical discover necessities underneath Part 53.056. They have to ship the statutory discover to the proprietor and unique contractor no later than the 15th day of the third month after offering labor or supplies for which they haven’t been paid.
- Calculating Statutory Deadlines—Weekends and Holidays No Longer a Downside. If the statutory deadline underneath Chapter 53 falls on a Saturday, Sunday, or authorized vacation, the deadline is prolonged to the next day that’s NOT a Saturday, Sunday, or authorized vacation. Part 53.003(e). Nevertheless, finest follow is rarely to attend. When you’ve got a fee problem, act quick and act early—you may at all times launch your lien declare as soon as it has been happy.
- Expanded Mailing Choices for Notices. The lien adjustments develop the suitable types of mailing lien notices to incorporate personal supply choices corresponding to FedEx and UPS or different personal supply providers with monitoring capabilities. Part 53.003(b). Nevertheless, licensed mail by the US Postal Service, return receipt requested, continues to be the popular methodology of mailing statutory notices as a result of it eliminates the sender’s burden to make sure receipt underneath most circumstances. Part 53.003(c).
- Added Lien Protections for Architects, Engineers, Surveyors, Landscapers, and Demolition Contractors. The lien regulation amendments have eradicated the requirement that these 5 classes of claimants have to be underneath contract with the proprietor. The statute now extends the flexibility to lien to architects, engineers, landscapers and demolition contractors who carried out work underneath a contract with an unique contractor or a subcontractor of any tier. Part 53.021. If not underneath a contract with the proprietor, these claimants might want to adjust to the subcontractor discover necessities.
- Streamlined Lien Recording Deadlines for Unpaid Contractual Retainage. To good a lien for unpaid contractual retainage solely, a claimant should (1) ship the required discover and (2) report its lien by the 15th day of the threerd month after the unique contract was accomplished, terminated, or deserted.
- Previous Regulation: Part 53.057 used to supply for 4 totally different deadlines for recording a lien for unpaid contractual retainage, the earliest of which in the end ruled.
- New Regulation: Now, as long as a claimant sends its § 53.057 discover, and information its lien by the 15th day of the threerd month after the unique contract was accomplished, terminated or deserted (see §§ 53.057(f) and 53.052(d)), the claimant may have a perfected lien for unpaid contractual retainage. Word: this new deadline is simply relevant to claims solely for unpaid contractual retainage. In case your declare additionally consists of unpaid supplies and/or labor, totally different deadlines apply.
- Shortened Limitations to File Go well with for Lien Foreclosures: One 12 months.
- Previous Regulation: Beforehand, claimants had at the least two years to file swimsuit to foreclose on a perfected lien.
- New Regulation: Usually, claimants are actually required to file a lawsuit for lien foreclosures one yr from the final date the claimant was permitted to file its lien affidavit underneath § 53.052. Nevertheless, the one yr limitations interval could also be prolonged as much as two years if the claimant enters right into a written settlement with the then-current property proprietor for the extension and the settlement is recorded in the actual property information within the county the place the property is positioned.
- Lien Waivers Want Not be Notarized. A legitimate statutory lien waiver is not required to be notarized to adjust to the statutory necessities. Nevertheless, homeowners and contractors might proceed to require notarization per contract and county clerks might require notarization for recording functions.
There are quite a few different adjustments to Chapter 53 of the Texas Property Code ensuing from Home Invoice 2237 which will additionally have an effect on you. Seek the advice of an legal professional for the way these adjustments might have an effect on the way you conduct enterprise going ahead. For a extra complete analysis of find out how to correctly good a lien declare on non-residential, personal initiatives in Texas, taking into account all statutory amendments, click here.
For a hyperlink to our desktop abstract of lien deadlines for personal initiatives, click here.
For a duplicate of Chapter 53 of the Texas Property Code that includes the adjustments carried out by Home Invoice 2237 efficient as of January 1, 2022, click here.