86R1809 BEE-F
By: Deshotel H.B. No. 589
A BILL TO BE ENTITLED
AN ACT
relating to mechanic's, contractor's, or materialman's liens;
authorizing a fee; changing the eligibility for community
supervision.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 3503.051(3), Insurance Code, is amended
to read as follows:
(3) "Notice of claim" means a written notification by
a claimant who makes a claim for payment from the surety
company. The term does not include a routine statutory notice
required by [Section 53.056(b), 53.057, 53.058, 53.252(b), or
53.253, Property Code, or] Section 2253.047, Government Code.
SECTION 2. Section 53.001, Property Code, is amended by
amending Subdivisions (2), (12), (13), and (14) and adding
Subdivisions (1-a), (2-a), (3-a), (5-a), (5-b), (5-c), (5-d),
(5-e), (5-f), (7-a), (7-b), (7-c), and (12-a) to read as follows:
(1-a) "Contractual retainage" means an agreed amount or
percentage of money in a construction contract or subcontract that
is withheld from a payment and not due to be paid until completion
of the contract or on an agreed date.
(2) "Improved" means, in reference to real property,
having an improvement, as defined by this section.
(2-a) "Improvement" means a house, building, or other
improvement to the real property of an owner. The term includes:
(A) improvements constructed adjacent to the
real property under an original contract with the owner, including
[abutting] sidewalks and streets and utilities in or on those
sidewalks and streets or appurtenant to the real property;
(B) clearing, grubbing, draining, or fencing of
land;
(C) wells, cisterns, tanks, reservoirs, or
artificial lakes or pools made for supplying or storing water;
(D) pumps, siphons, and windmills or other
machinery or apparatuses used for raising water for stock, domestic
use, or irrigation; [and]
(E) planting orchard trees, grubbing out
orchards and replacing trees, and pruning of orchard trees;
(F) levees or embankments erected for the
reclamation of overflow land along a river or creek; and
(G) railroads.
(3-a) "Lien website" means the Internet website
established under Subchapter A-1.
(5-a) "Notice of commencement" means a notice
described by Section 53.125.
(5-b) "Notice of completion or termination" means a
notice described by Section 53.059.
(5-c) "Notice of demand" means a notice described by
Section 53.0521.
(5-d) "Notice of furnishing" means a notice described
by Section 53.0561.
(5-e) "Notice of nonpayment" means a notice described
by Section 53.0562.
(5-f) "Notice of unpaid balance" means a notice
described by Section 53.0563.
(7-a) "Owner" means a person who owns any interest in
real property or an authorized agent, trustee, or receiver of the
person.
(7-b) "Payment request" includes any bill, billing
statement, invoice, or application for payment given by an original
contractor or a subcontractor for work.
(7-c) "Reputed owner" means a person who is:
(A) identified as an owner in a notice of
commencement required under this chapter or in an original contract
or a subcontract for an improvement; or
(B) generally considered or reputed to be the
owner of the real property being improved.
(12) "Specially fabricated material" means material
fabricated for use as a component of the construction or repair of
an improvement so as to be reasonably unsuitable for use elsewhere.
(12-a) "Subcontract" means a contract between:
(A) an original contractor and a subcontractor;
or
(B) a subcontractor and another subcontractor.
(13) "Subcontractor" means a person who has furnished
labor or materials to fulfill an obligation to an original
contractor or to a subcontractor of any tier to perform all or part
of the work required by an original contract.
(14) "Work" means any part of labor done, material
furnished, or materials specially fabricated for the construction
or repair of an improvement performed under an original contract.
SECTION 3. Section 53.003, Property Code, is amended by
amending Subsections (a) and (c) and adding Subsection (e) to read
as follows:
(a) This section applies to notices required by this chapter
[Subchapters B through G and K]. In this section, "notice" includes
any written communication required under this chapter.
(c) A notice may be sent by registered or certified mail. If
a notice is sent by registered or certified mail, the effective date
of the notice is the date of deposit or mailing of the notice in the
United States mail in the form required [constitutes compliance
with the notice requirement]. This subsection does not apply if the
law requires receipt of the notice by the person to whom it is
directed.
(e) This subsection applies only if a notice of commencement
has been posted under Section 53.125 and does not apply to a notice
of demand or a notice of bond. A notice may be posted on the lien
website under the protocols established for the website. If an
e-mail address is provided to the owner or reputed owner in a notice
of furnishing by a person under Section 53.0561, a notice may be
provided to that person by e-mail with an electronic record of
delivery. The effective date of a notice is the date the notice is
posted on the lien website under the website's protocols or the date
the e-mail is sent. An e-mail sent to a recipient in accordance
with this subsection is prima facie evidence of delivery of a
message to an e-mail address to which it is sent.
SECTION 4. Subchapter A, Chapter 53, Property Code, is
amended by adding Section 53.004 to read as follows:
Sec. 53.004. COMPUTATION OF TIME. In computing the period
of days in which to provide a notice or to take an action required
under this chapter, if the last day of the period is a Saturday,
Sunday, or legal holiday, the period is extended to include the next
day that is not a Saturday, Sunday, or legal holiday.
SECTION 5. Chapter 53, Property Code, is amended by adding
Subchapter A-1 to read as follows:
SUBCHAPTER A-1. LIEN WEBSITE
Sec. 53.011. LIEN WEBSITE. (a) The secretary of state
shall:
(1) establish and maintain a lien website through the
state electronic Internet portal, as defined by Section 2054.003,
Government Code; and
(2) establish protocols for posting and receiving
notices under this chapter through the lien website.
(b) The secretary of state may adopt rules and forms
necessary to implement this subchapter.
Sec. 53.012. POSTING ON LIEN WEBSITE. (a) The lien website
must provide an online form for each notice or written
communication required by this chapter that complies with the
content requirements of this chapter for the notice or
communication.
(b) The lien website must allow a person to electronically:
(1) obtain a form;
(2) complete and post the notice or written
communication on the lien website efficiently; and
(3) for an owner, original contractor, or
subcontractor, opt to automatically receive notice of new postings
by e-mail.
Sec. 53.013. SEARCHING LIEN WEBSITE. The lien website must
allow a person to search the notices and written communications
posted on the lien website with a full or partial:
(1) owner name;
(2) project name;
(3) project address;
(4) project real property legal description;
(5) original contractor name; or
(6) name of the person on whose behalf a notice or
written communication is posted.
Sec. 53.014. FEES. (a) Notwithstanding Section 2054.2591,
Government Code, and except as provided by Subsection (b), the
secretary of state may not charge a fee for a person to:
(1) electronically obtain a form or post a notice or
written communication on the lien website; or
(2) use the search functions of the lien website.
(b) The secretary of state may charge a fee for a person to
post a notice of commencement on the lien website.
SECTION 6. Section 53.021(a), Property Code, is amended to
read as follows:
(a) A person has a lien if:
(1) the person labors, specially fabricates material,
or furnishes labor or materials for construction or repair in this
state of an[:
[(A) a house, building, or] improvement;
[(B) a levee or embankment to be erected for the
reclamation of overflow land along a river or creek; or
[(C) a railroad;] and
(2) the person labors, specially fabricates the
material, or furnishes the labor or materials under or arising out
[by virtue] of an express [a] contract or contract implied by law
between the person and:
(A) [with] the owner or the owner's agent,
trustee, or receiver;
(B) a [,] contractor; [,] or
(C) a subcontractor.
SECTION 7. Section 53.022, Property Code, is amended by
amending Subsection (a) and adding Subsections (b-1) and (e) to
read as follows:
(a) The lien extends to the interest of the owner or the
owner's successor in interest in the real property, house,
building, fixtures, or improvements, the land reclaimed from
overflow, or the railroad and all of its properties, and to each lot
of land necessarily connected or reclaimed.
(b-1) If an improvement is constructed on real property that
is adjacent to the real property of the owner who entered into the
original contract for the improvements and the adjacent property is
not owned by the owner, the lien extends only to the interest
described by Subsection (a) and not to the adjacent property.
(e) A lien arising from work performed on common elements of
a condominium governed by Chapter 81 or 82 extends to each unit
owning an interest in the common elements being improved, and is
apportioned based on the relative ownership interests of each unit
in the common elements being improved, if:
(1) the inception of the lien is after the date the
declaration establishing the condominium was recorded; and
(2) the work was performed under a contract with the
council of owners, the unit owners' association of the condominium,
or all of the owners of the units owning an interest in the common
elements being improved.
SECTION 8. Section 53.024, Property Code, is amended to
read as follows:
Sec. 53.024. LIMITATION ON SUBCONTRACTOR'S LIEN. The
amount of a lien claimed by a subcontractor may not exceed:
(1) an amount equal to the proportion of the total
subcontract price, including all additional amounts to which the
subcontractor is entitled as an adjustment to the subcontract, that
the sum of the labor performed, materials furnished, materials
specially fabricated, reasonable overhead costs incurred, and
proportionate profit margin bears to the total subcontract price;
minus
(2) the sum of previous payments received by the
claimant on the subcontract.
SECTION 9. Section 53.026(a), Property Code, is amended to
read as follows:
(a) Except as provided by Section 53.0561, a [A] person who
labors, specially fabricates materials, or furnishes labor or
materials under a direct contractual relationship with another
person is considered to be in direct contractual relationship with
the owner and has a lien as an original contractor, if:
(1) the owner [contracted with the other person for
the construction or repair of a house, building, or improvements
and the owner] can effectively control that other person or that
other person can effectively control the owner through ownership of
voting stock, interlocking directorships, or otherwise; or
(2) the owner contracted with the other person for the
construction or repair of a house, building, or improvements [and
that other person can effectively control the owner through
ownership of voting stock, interlocking directorships, or
otherwise; or
[(3) the owner contracted with the other person for
the construction or repair of a house, building, or improvements]
and the contract was made without good faith intention of the
parties that the other person was to perform the contract.
SECTION 10. Section 53.052, Property Code, is amended to
read as follows:
Sec. 53.052. FILING OF LIEN CLAIM AFFIDAVIT. (a) Except as
provided by Subsection (b) or Section 53.0521, an original
contractor or a subcontractor, including an employee described by
Section 53.0563(a)(1), [the person] claiming a [the] lien under
this chapter must file a lien claim [an] affidavit as provided by
Subsection (c) [with the county clerk of the county in which the
property is located or into which the railroad extends] not later
than the 15th day of the fourth calendar month after the date the
work under the original contract is completed or the original
contract is terminated [day on which the indebtedness accrues].
(b) Except as provided by Section 53.0521, an original
contractor or a subcontractor, including an employee described by
Section 53.0563(a)(1), [A person] claiming a lien on [arising from]
a residential construction project must file a lien claim [an]
affidavit as provided by Subsection (c) [with the county clerk of
the county in which the property is located] not later than the 15th
day of the third calendar month after the date the work under the
original contract is completed or the original contract is
terminated [day on which the indebtedness accrues].
(c) A lien claim affidavit must be filed with the county
clerk of the county in which the property is located or into which
the railroad extends. The county clerk shall record the affidavit
in records kept for that purpose and shall index and cross-index the
affidavit in the names of the claimant, the original contractor,
and the owner. Failure of the county clerk to properly record or
index a filed affidavit does not invalidate the lien.
(d) For purposes of this section, an original contract is
terminated on the date an owner posts a notice of termination on the
lien website. If a notice of commencement has not been filed and
posted under Section 53.125, the owner must send a notice of
termination to each person who has given the owner a notice of
furnishing.
SECTION 11. Subchapter C, Chapter 53, Property Code, is
amended by adding Section 53.0521 to read as follows:
Sec. 53.0521. NOTICE OF DEMAND. (a) If work under an
original contract has been completed or the original contract has
been terminated, an owner may send a notice of demand to the
original contractor or a subcontractor requesting the contractor or
subcontractor to file a lien claim affidavit. If the notice of
demand is based on the termination of the original contract, the
notice must state that the original contract was terminated and the
date of the termination. An owner may not send the notice of demand
before the original contract has been terminated. A notice of
demand sent to a subcontractor before work under the original
contract has been completed is effective only as to a claimant who
has completed the claimant's work on or before the date the notice
is sent and is void as to any other claimant.
(b) For purposes of this section, an original contract is
terminated on the date an owner posts a notice of termination on the
lien website. If a notice of commencement has not been filed and
posted under Section 53.125, the owner must send a notice of
termination to each person who has provided a notice of furnishing.
(c) A notice of demand:
(1) must be sent by registered or certified mail to:
(A) an original contractor at the contractor's
last known address; or
(B) a subcontractor at the subcontractor's
address provided by the notice of furnishing; and
(2) may not be given by posting on the lien website or
by e-mail.
(d) If an owner sends a notice of demand, a claimant who has
completed the claimant's work must, not later than the 30th day
after the date the notice is sent, file a lien claim affidavit for a
claim the claimant has not included in a previously filed lien claim
affidavit.
(e) A claimant who has not completed the claimant's work on
the date the owner sends a notice of demand must file a lien claim
affidavit as provided by Section 53.052(a) or (b), as applicable.
(f) An original contractor or a subcontractor waives any
statutory lien rights that have not been perfected if the
contractor or subcontractor does not comply with this section.
(g) A notice of demand must be conspicuously printed in bold
type and in all capital letters not smaller than 10-point type and
must state the following:
"NOTICE OF DEMAND
"WARNING: THIS NOTICE BRIEFLY SUMMARIZES LEGAL REQUIREMENTS
STATED BY SECTION 53.0521, PROPERTY CODE. YOU SHOULD CONSULT AN
ATTORNEY TO FULLY UNDERSTAND YOUR RIGHTS AND OBLIGATIONS.
"THE OWNER IS DEMANDING THAT YOU FILE A LIEN CLAIM AFFIDAVIT
NOT LATER THAN THE 30TH DAY AFTER THE DATE THIS NOTICE WAS SENT TO
YOU. IF THE ORIGINAL CONTRACT HAS BEEN TERMINATED OR IF YOU
COMPLETED YOUR WORK ON OR BEFORE THE DATE THIS NOTICE WAS SENT TO
YOU, YOU ARE REQUIRED, NOT LATER THAN THE 30TH DAY AFTER THE DATE
THIS NOTICE WAS SENT TO YOU, TO FILE YOUR LIEN CLAIM AFFIDAVIT FOR
ANY CLAIMS YOU HAVE NOT INCLUDED IN A LIEN CLAIM AFFIDAVIT YOU HAVE
PREVIOUSLY FILED OR YOU MAY LOSE ANY STATUTORY LIEN RIGHTS THAT YOU
HAVE NOT PREVIOUSLY PERFECTED.
"IF THE ORIGINAL CONTRACT IS NOT TERMINATED OR YOU HAVE NOT
COMPLETED YOUR WORK, THE DEADLINE TO FILE YOUR LIEN CLAIM AFFIDAVIT
IS PROVIDED BY SECTION 53.052(a) OR (b), PROPERTY CODE."
SECTION 12. The heading to Section 53.054, Property Code,
is amended to read as follows:
Sec. 53.054. CONTENTS OF LIEN CLAIM AFFIDAVIT.
SECTION 13. Sections 53.054(a) and (c), Property Code, are
amended to read as follows:
(a) The lien claim affidavit must be signed by the person
claiming the lien or by another person on the claimant's behalf and
must contain substantially:
(1) a sworn statement of the amount of the claim;
(2) the name and last known address of the owner or
reputed owner;
(3) a general statement of the kind of work done and
materials furnished by the claimant [and, for a claimant other than
an original contractor, a statement of each month in which the work
was done and materials furnished for which payment is requested];
(4) the name and last known address of the person by
whom the claimant was employed or to whom the claimant furnished the
materials or labor;
(5) the name and last known address of the original
contractor;
(6) a description, legally sufficient for
identification, of the property sought to be charged with the lien;
(7) the claimant's name, mailing address, and, if
different, physical address; and
(8) for a claimant other than an original contractor,
a statement identifying the date each notice of furnishing or
notice of unpaid balance, as applicable, [the claim] was given
[sent] to the owner or reputed owner [and the method by which the
notice was sent].
(c) The affidavit is not required to set forth individual
items of work done or material furnished or specially fabricated.
The affidavit may use any broad descriptive terms, abbreviations,
or symbols customary in the trade to describe the work done or
material furnished.
SECTION 14. Section 53.055, Property Code, is amended to
read as follows:
Sec. 53.055. NOTICE OF FILED LIEN CLAIM AFFIDAVIT. (a) A
person who files a lien claim [an] affidavit must send a copy of the
affidavit by registered or certified mail to the owner or reputed
owner at the owner's last known business or residence address or
post a copy on the lien website not later than the 10th [fifth] day
after the date the affidavit is filed with the county clerk.
(b) If the person is not an original contractor, and the
person has not posted a copy of the affidavit on the lien website
under Subsection (a), the person must also send a copy of the
affidavit to the original contractor at the original contractor's
last known business or residence address in [within] the same
manner and time that the affidavit must be sent to the owner or
reputed owner under Subsection (a) [period].
SECTION 15. Subchapter C, Chapter 53, Property Code, is
amended by adding Sections 53.0561, 53.0562, 53.0563, and 53.059 to
read as follows:
Sec. 53.0561. NOTICE OF FURNISHING. (a) Except as provided
by Section 53.0563:
(1) a person who contracts with a person other than the
owner and who has a lien as an original contractor under Section
53.026(a) must give a notice of furnishing to the owner or reputed
owner for the lien to be valid; and
(2) a person other than an original contractor must
give a notice of furnishing to the owner or reputed owner and the
original contractor for the lien to be valid.
(b) The notice of furnishing must include:
(1) a general description of the labor or material
furnished or to be furnished by the person giving the notice of
furnishing and, for specially fabricated material, a separate
description of the specially fabricated material, that may include
a list of individual items of work or material or use terms,
abbreviations, or symbols customary in the trade;
(2) the name, address, and telephone number of the
person giving the notice of furnishing;
(3) the e-mail address of the person giving the notice
of furnishing, if the person wants to receive notices of postings on
the lien website;
(4) the name, address, and telephone number of the
person with whom the person giving the notice of furnishing
contracted to furnish the labor or material; and
(5) a conspicuous statement in bold type as follows:
"THIS IS NOT A LIEN OR A CLAIM FOR A LIEN. THIS IS ONLY A
NOTICE TO THE OWNER THAT A SUBCONTRACTOR IS FURNISHING OR INTENDS TO
FURNISH LABOR OR MATERIAL TO THE PROJECT. THIS NOTICE IS REQUIRED TO
PRESERVE THE SUBCONTRACTOR'S LIEN RIGHTS UNDER CHAPTER 53, PROPERTY
CODE."
(c) Except as provided by Subsection (d), the notice of
furnishing does not preserve a lien right for labor performed or
material furnished or specially fabricated earlier than 60 days
before the date the notice is provided as required by this section.
(d) If the owner has filed and posted a notice of
commencement under Section 53.125 before the subcontractor begins
performing labor or furnishing or specially fabricating material,
the notice of furnishing does not preserve a lien right for labor
performed or material furnished or specially fabricated by the
subcontractor earlier than 30 days before the date the notice of
furnishing is provided.
(e) Only one notice of furnishing to an owner or reputed
owner is required for all labor or material furnished or to be
furnished by each subcontractor. If a subcontractor contracts to
perform work for the improvement of the owner's property under more
than one original contract, the subcontractor must identify each
original contract in the notice of furnishing or must furnish
separate notices of furnishing for each original contract.
(f) The notice of furnishing is not invalid if, after the
date of the notice, the subcontractor furnishes labor or material
that is not within the scope of the notice's general description of
the labor and material furnished or to be furnished.
(g) A notice of furnishing that does not include the
subcontractor's e-mail address is not invalid.
Sec. 53.0562. NOTICE OF NONPAYMENT. (a) Except as provided
by Subsection (b), a subcontractor may give an owner or reputed
owner a notice of nonpayment for any amount of a payment request
that remains unpaid for at least 60 days after the date the
subcontractor gives the payment request.
(b) A notice of nonpayment is not effective for the unpaid
amount of a payment request that is contractual retainage, provided
that the contractual retainage does not exceed 10 percent of the
amount of the payment request.
(c) Except as provided by Subsection (d), an owner is liable
and the owner's property is subject to a lien by the subcontractor
under Section 53.0841(b)(3) after the owner is given the notice of
nonpayment.
(d) An owner is not liable and the owner's property is not
subject to a lien as provided by Subsection (c) if the subcontractor
gives the notice of nonpayment earlier than the 60th day after the
date the subcontractor gave a payment request, a part of which
remains unpaid, to the person to whom the subcontractor furnished
the subcontractor's work.
(e) A subcontractor who gives a notice of nonpayment must
give a copy of the notice to:
(1) the original contractor; and
(2) if the subcontractor did not contract for the
subcontractor's work with the original contractor, the person to
whom the subcontractor furnished the subcontractor's work.
(f) Failure by a subcontractor to give a notice of
nonpayment does not limit an owner's liability under Sections
53.0841(b)(1) and (2).
(g) A copy of a statement or bill in the usual and customary
form is sufficient as notice under this section.
Sec. 53.0563. NOTICE OF UNPAID BALANCE. (a) Sections
53.0561 and 53.125 do not apply, and a claimant must give the notice
described by Subsection (b) in writing, if:
(1) the claimant is an employee of an original
contractor or a subcontractor and personally labored in the
construction or repair of the improvement, and the claimant's claim
is for wages for the personal labor furnished; or
(2) the improvement is a house of not more than four
self-contained units intended for residential purposes on a single
lot or tract of land, or related land development activity on the
lot or tract necessary for the development of the house.
(b) Except as provided by this subsection, the claimant must
give the owner or reputed owner, with a copy to the original
contractor, a notice of the unpaid balance not later than the 15th
day of the third month following each month in which all or part of
the labor was performed, material was furnished, or material was
specially fabricated by the claimant. For residential construction
projects governed by Subchapter K, the claimant must give the
notice of unpaid balance not later than the 15th day of the second
month following each month in which all or part of the labor was
performed, material was furnished, or material was specially
fabricated by the claimant.
(c) A notice under this section is not required for the
unpaid amount of a payment request that is contractual retainage.
(d) A copy of a statement or bill in the usual and customary
form is sufficient as notice under this section.
Sec. 53.059. NOTICE OF COMPLETION OR TERMINATION. (a) If
an owner has filed and posted on the lien website a notice of
commencement under Section 53.125 and the work under an original
contract has been completed or the original contract has been
terminated, the owner may file with the county clerk of the county
in which the owner's property is located a notice of completion or
termination, as applicable, and post the notice on the lien
website. The notice must contain:
(1) the name and address of the owner;
(2) the name and address of each original contractor
covered by the notice;
(3) a description, legally sufficient for
identification, of the real property on which the improvements are
located;
(4) a description of the work furnished under an
original contract covered by the notice;
(5) a statement that the work under an original
contract covered by the notice has been completed or that the
original contract was terminated; and
(6) the date of the completion or termination.
(b) Not later than the 10th day after the notice of
completion or termination is filed with the county clerk and posted
on the lien website as provided by Subsection (a), the owner must
send a copy of the notice:
(1) to each original contractor identified in the
notice; and
(2) by e-mail to each person who has provided a notice
of furnishing to the owner and has provided an e-mail address to the
owner.
(c) For purposes of Section 53.052, the later of the date
the notice of completion or termination is filed or the date the
notice is posted on the lien website is considered the date the work
under an original contract identified in the notice is completed or
the original contract is terminated, as applicable. This
subsection does not apply to a person to whom the notice of
completion or termination was not sent as required by this section.
(d) Except as provided by Subsection (e), the notice of
completion must contain the following statement in bold type in all
capital letters:
"A CLAIMANT WILL LOSE THE RIGHT TO PERFECT A LIEN IF THE
CLAIMANT DOES NOT FILE A LIEN CLAIM AFFIDAVIT ON OR BEFORE THE 15TH
DAY OF THE FOURTH MONTH AFTER THE DATE OF COMPLETION OF THE WORK."
(e) The notice of completion for a residential construction
project must contain the following statement in bold type in all
capital letters:
"A CLAIMANT WILL LOSE THE RIGHT TO PERFECT A LIEN IF THE
CLAIMANT DOES NOT FILE A LIEN CLAIM AFFIDAVIT ON OR BEFORE THE 15TH
DAY OF THE THIRD MONTH AFTER THE DATE OF COMPLETION OF THE WORK."
SECTION 16. Section 53.081, Property Code, is amended to
read as follows:
Sec. 53.081. AUTHORITY TO WITHHOLD FUNDS FOR BENEFIT OF
CLAIMANTS. [(a)] If a lien claim affidavit is filed by a
subcontractor or if an owner receives notice under Section 53.055
or 53.0563 [53.056, 53.057, 53.058, 53.252, or 53.253], the owner
may withhold from payments due or to become due to the original
contractor an amount necessary to pay the claim for which the owner
[he] receives notice or that is stated in the lien claim affidavit.
[(b) If notice is sent in a form that substantially complies
with Section 53.056 or 53.252, the owner may withhold the funds
immediately on receipt of the notice.
[(c) If notice is sent under Section 53.057, the owner may
withhold funds immediately on receipt of a copy of the claimant's
affidavit prepared in accordance with Sections 53.052 through
53.055.
[(d) If notice is sent under Section 53.058, the owner may
withhold funds immediately on receipt of the notices sent under
Subsection (e) of that section. If notice is sent as provided by
Section 53.253(b), the owner may withhold funds immediately on
receipt of the notice sent as required by Section 53.252.]
SECTION 17. Section 53.082, Property Code, is amended to
read as follows:
Sec. 53.082. TIME FOR WHICH FUNDS ARE WITHHELD. An owner
may retain funds under Section 53.081 until:
(1) the time for filing a lien claim affidavit has
passed;
(2) [Unless] payment is made under Section 53.0831;
(3) [53.083 or] the claim is otherwise settled or [,]
discharged [, indemnified against] under Section 53.157; or
(4) the claim is [Subchapter H or I, or] determined to
be invalid by a final judgment of a court [, the owner shall retain
the funds withheld until:
[(1) the time for filing the affidavit of mechanic's
lien has passed; or
[(2) if a lien affidavit has been filed, until the lien
claim has been satisfied or released].
SECTION 18. Subchapter D, Chapter 53, Property Code, is
amended by adding Sections 53.0831 and 53.0841 to read as follows:
Sec. 53.0831. DEMAND FOR NOTICE OF DISPUTE; PAYMENT OF
CLAIM. (a) An owner against whom a lien claim affidavit is filed by
a claimant other than an original contractor may send to the
original contractor and to any person identified by the claimant as
required by Section 53.054(a)(4) a written demand to receive notice
of whether the original contractor or the person intends to dispute
the claim.
(b) An owner must send a copy of the lien claim affidavit
with a written demand sent under Subsection (a).
(c) The owner may pay a claim when the claim becomes due if
the owner:
(1) sends the written demand and copy of the lien claim
affidavit as provided by this section; and
(2) does not, before the 30th day after the date the
demand is received, receive written notice from the original
contractor or the person of the intent to dispute the claim.
Sec. 53.0841. LIABILITY FOR LIENS. (a) Except as provided
by Subsections (b) and (c), if a claim has been reduced to final
judgment, the owner is liable and the owner's property is subject to
a claim for the contract price minus any amounts paid to the
original contractor.
(b) In addition to the liability under Subsection (a), the
owner's liability and the owner's property subject to the amount of
the lien by a subcontractor is the sum of:
(1) the greater of:
(A) 10 percent of the value of the contract price
of the work to the owner; or
(B) 10 percent of the value of the work, measured
by the proportion that the work done bears to the work to be done,
using the contract price or, if there is no contract price, using
the reasonable value of the completed work;
(2) any money paid to the original contractor after
the owner was authorized to withhold funds under this subchapter;
and
(3) for a subcontractor who gives notice under Section
53.0562, any money paid to the original contractor after the notice
is given.
(c) In addition to the liability under Subsections (a) and
(b), an owner is personally liable for an award of costs and
attorney's fees under Section 53.156.
(d) An owner's personal liability is not affected by a
subsequent foreclosure or other transfer of the owner's interest in
all or part of the property.
(e) Subject to Section 53.122(b), the aggregate amount of
liens of the original contractor and the subcontractors, including
liens of employees as described by Section 53.0563(a)(1), may not
exceed the contract price of the original contract, as may be
modified, for the work. Duplicated claims asserted by claimants
within the same chain of contract may not be added more than once in
determining the aggregate amount of liens.
(f) A purchaser of property subject to a lien claim under
this chapter is not personally liable for the lien claim in a
foreclosure action brought by a claimant, except the purchaser may
be held liable for costs and attorney's fees awarded under Section
53.156.
SECTION 19. The heading to Section 53.085, Property Code,
is amended to read as follows:
Sec. 53.085. BILLS-PAID AFFIDAVIT REQUIRED.
SECTION 20. Sections 53.085(a), (b), (c), and (d), Property
Code, are amended to read as follows:
(a) Any person who performs work [furnishes labor or
materials for the construction of improvements on real property]
shall, if requested and as a condition of payment for such work
[labor or materials], provide to the requesting party, or the
party's agent, a bills-paid [an] affidavit acknowledging the amount
claimed for payment and stating that the person has paid each of the
person's subcontractors, laborers, or materialmen in full for all
labor and materials provided to the person for the construction or
repair. In the event, however, that the person has not paid each of
the person's subcontractors, laborers, or materialmen in full, the
person shall state in the affidavit the amount owed and the name
and, if known, the address and telephone number of each
subcontractor, laborer, or materialman to whom the payment is owed.
(b) The seller of any real property shall, upon request by
the purchaser or the purchaser's agent prior to closing of the
purchase of the real property, provide to the purchaser or the
purchaser's agent, a written affidavit stating that the seller has
paid each of the seller's contractors, laborers, or materialmen in
full for all labor done and materials provided to the seller through
the date specified in the affidavit for any construction or repair
of improvements on the real property and that the seller is not
indebted to any person, firm, or corporation by reason of any such
construction or repair through the date specified in the affidavit.
In the event that the seller has not paid each of the seller's
contractors, laborers, or materialmen in full for labor done and
material provided through the date specified in the affidavit, the
seller shall state in the affidavit the amount owed and the name
and, if known, the address and telephone number of each contractor,
laborer, or materialman to whom the payment is owed.
(c) The affidavit may include:
(1) a waiver or release of lien rights or payment bond
claims by the affiant that is conditioned on the receipt of actual
payment or collection of funds when payment is made by check or
draft, as provided by Subchapter L;
(2) a warranty or representation that certain bills or
classes of bills will be paid by the affiant from funds paid in
reliance on the affidavit and an identification of the specific
bills that the affiant will not pay from the fund; and
(3) an indemnification by the affiant for any loss or
expense resulting from false or incorrect information in the
affidavit.
(d) A person, including a seller, commits an offense if the
person intentionally, knowingly, or recklessly makes a false or
misleading statement in an affidavit under this section. An
offense under this section is a misdemeanor. A person adjudged
guilty of an offense under this section shall be punished by a fine
not to exceed $4,000 or confinement in jail for a term not to exceed
one year or both a fine and confinement. [A person may not receive
community supervision for the offense.]
SECTION 21. Section 53.122(a), Property Code, is amended to
read as follows:
(a) Perfected [Except as provided by Subchapter E and
Section 53.124(e), perfected] mechanic's liens that have the same
inception date are on equal footing without reference to the date of
filing the lien claim affidavit [claiming the lien].
SECTION 22. Section 53.124, Property Code, is amended by
amending Subsections (a), (b), (c), (d), and (e) and adding
Subsection (f) to read as follows:
(a) Except as provided by Subsection (c) or (e), for
purposes of Section 53.123, the time of inception of a mechanic's
lien is the commencement of construction or repair of improvements
or delivery of materials to the land on which the improvements are
to be located and on which the materials are to be used.
(b) The construction, repair, or materials under Subsection
(a) must be visible from inspection of the land on which the
improvements are being made.
(c) The later of the date the notice of commencement is
filed or is posted on the lien website is the time of inception of a
mechanic's lien for the work or material described by the notice
that is performed or furnished on or after the later of the date the
notice is filed or posted. For work performed or material furnished
before the date a notice of commencement is filed and posted and for
work excluded by the notice of commencement, the time of inception
of a mechanic's lien is provided by Subsection (a). For work under
an original contract entered into after a notice of completion is
filed and posted under Section 53.059, the time of inception of a
mechanic's lien is the date provided by Subsection (a) or the date a
new notice of commencement is filed and posted. [An owner and
original contractor may jointly file an affidavit of commencement
with the county clerk of the county in which the land is located not
later than the 30th day after the date of actual commencement of
construction of the improvements or delivery of materials to the
land. The affidavit must contain:
[(1) the name and address of the owner;
[(2) the name and address of each original contractor,
known at the time to the owner, that is furnishing labor, service,
or materials for the construction of the improvements;
[(3) a description, legally sufficient for
identification, of the property being improved;
[(4) the date the work actually commenced; and
[(5) a general description of the improvement.]
(d) A lien, encumbrance, or mortgage securing an interest in
the land that is filed with the county clerk on or before the date
the notice of commencement is filed has priority over a mechanic's
lien with a time of inception that is the date of the notice of
commencement, regardless of the order in which the notice of
commencement and lien, encumbrance, or mortgage are filed with the
county clerk. [An affidavit filed in compliance with this section
is prima facie evidence of the date of the commencement of the
improvement described in the affidavit. The time of inception of a
mechanic's lien arising from work described in an affidavit of
commencement is the date of commencement of the work stated in the
affidavit.]
(e) The time of inception of a lien that is created under
Section 53.021(c)[, (d), or (e)] is the date of recording of a lien
claim [an] affidavit [of lien] under Section 53.052. The priority
of a lien claimed by a person entitled to a lien under Section
53.021(c)[, (d), or (e)] with respect to other mechanic's liens is
determined by the date of recording. A lien created under Section
53.021(c)[, (d), or (e)] is not valid or enforceable against a
grantee or purchaser who acquires an interest in the real property
before the time of inception of the lien.
(f) Unless the landscaping work for which a person may have
a lien under Section 53.021(d) or the demolition services for which
a person may have a lien under Section 53.021(e) are included in a
notice of commencement, the time of inception of a lien under
Section 53.021(d) or (e) is the date of recording of a lien claim
affidavit under Section 53.052, and priority is determined by the
date of recording. Except as provided by this subsection, a lien
created under Section 53.021(d) or (e) is not valid against a
grantee or purchaser who acquires an interest in the real property
before the time of inception of the lien.
SECTION 23. Subchapter F, Chapter 53, Property Code, is
amended by adding Section 53.125 to read as follows:
Sec. 53.125. NOTICE OF COMMENCEMENT. (a) An owner may file
a notice of commencement with the county clerk of the county in
which the real property being improved under an original contract
is located. An owner who elects to file a notice of commencement
must post the notice on the lien website. A notice under this
section must be acknowledged and be in a form that substantially
complies with the following:
"NOTICE OF COMMENCEMENT
"Improvements will be made to certain real property, and in
accordance with Chapter 53, Property Code, the following
information is provided by this notice of commencement:
"(1) Legal description and, if applicable, street
address of property: _______________.
"(2) Project name and brief description of work to be
performed or materials to be furnished: _______________.
"(3) Work or materials not included in this notice of
commencement: _______________.
"(4) Owner information or lessee information if the
lessee contracted for the work:
(A) Name and address: _______________.
(B) Interest in property (check appropriate
box):
□ Fee simple title
□ Lease
□ Other (explain): _______________.
(C) Name and address of fee simple titleholder to
property (if different from owner listed above): _______________.
"(5) Original contractor(s) for work or designated
portions of the work (repeat as necessary):
(A) Name and address: _______________.
(B) Contractor's phone number: _______________.
"(6) Surety or sureties for original contractor (if
applicable, a copy of the payment bond is attached):
(A) Name and address: _______________.
(B) Phone number: _______________.
"(7) Lender(s) providing financing for the work that
is securing a mortgage on or a security interest in the property
(repeat as necessary):
(A) Name and address: _______________.
(B) Lender's phone number: _______________.
"(8) Secretary of state's lien website address:
_______________.
"Date: ______________
"_____________ (Owner name)
"By:_______________ (Signature)
"(Insert acknowledgment)."
(b) Incorrect information contained in the notice of
commencement furnished by an owner does not adversely affect the
rights of a lien claimant reasonably relying on the information
against the owner or the property of the owner. If a subcontractor
performs labor or furnishes materials or specially fabricated
materials described by the notice of commencement and the notice of
commencement does not identify the original contractor under which
the labor was performed or materials were furnished or specially
fabricated at the time the subcontractor first performs the labor
or furnishes or specially fabricates the materials, the notice of
furnishing by the subcontractor preserves the lien claimant's
rights for the period provided by Section 53.0561(c).
(c) The owner shall send a copy of the notice of
commencement to each subcontractor not later than the fifth day
after the date the owner receives a written request for a copy from
the subcontractor, unless the subcontractor has received a physical
copy of the notice.
(d) Unless a notice of commencement has been filed and
posted under this section, a subcontractor who has not received a
physical copy of the notice may request in writing a copy from the
original contractor or a subcontractor with whom the requesting
subcontractor has privity of contract. If the original contractor
or subcontractor has a copy of the notice, the original contractor
or subcontractor shall send a copy of the notice to the requesting
subcontractor not later than the fifth day after the date of receipt
of the written request. If the requesting subcontractor does not
receive a copy of the notice as required by this section, the person
failing to send the copy under this subsection is liable to the
requesting subcontractor for all actual expenses reasonably
incurred by the requesting subcontractor in obtaining the
information that would have been contained in the notice.
(e) A notice of commencement posted on the lien website may
be amended by the owner by posting the amended notice on the lien
website. The effective date of the amended notice is the date the
amended notice is posted on the lien website. The owner shall send
notice of the amended notice to a person who has provided a notice
of furnishing to the owner before the effective date of the amended
notice of commencement.
SECTION 24. Section 53.151(b), Property Code, is amended to
read as follows:
(b) A surety issuing a payment bond or performance bond in
connection with the work [improvements] has a priority claim over
other creditors of its principal to contract funds to the extent of
any loss it suffers or incurs. That priority does not excuse the
surety from paying any obligations that it may have under its
payment bonds.
SECTION 25. Section 53.153(a), Property Code, is amended to
read as follows:
(a) If a lien claim [an] affidavit [claiming a mechanic's
lien] is filed by a person other than the original contractor, the
original contractor shall defend at the original contractor's [his]
own expense a suit brought on the claim unless the owner is in
breach of the owner's contractual obligations to the original
contractor under the original contract.
SECTION 26. Section 53.154, Property Code, is amended to
read as follows:
Sec. 53.154. FORECLOSURE. (a) A mechanic's lien may be
foreclosed only on judgment of a court of competent jurisdiction
foreclosing the lien and ordering the sale of the property subject
to the lien.
(b) A suit to foreclose the lien must be brought in a court
of competent jurisdiction in the county in which the real property
that is subject to the lien is located.
SECTION 27. Section 53.157, Property Code, is amended to
read as follows:
Sec. 53.157. DISCHARGE OF LIEN. A lien claim [mechanic's
lien or] affidavit [claiming a mechanic's lien] filed under Section
53.052 may be discharged of record by:
(1) recording a lien release signed by the claimant
under Section 53.152;
(2) failing to institute suit to foreclose the lien
[in the county in which the property is located] within the period
prescribed by Section 53.158, 53.175, or 53.208;
(3) recording the original or certified copy of a
final judgment or decree of a court of competent jurisdiction
providing for the discharge;
(4) filing the bond and notice in compliance with
Subchapter H;
(5) filing the bond in compliance with Subchapter I;
or
(6) recording a certified copy of the order removing
the lien under Section 53.160 and a certificate from the clerk of
the court that states that no bond or deposit as described by
Section 53.161 was filed by the claimant within 30 days after the
date the order was entered.
SECTION 28. Section 53.158, Property Code, is amended to
read as follows:
Sec. 53.158. PERIOD FOR BRINGING SUIT TO FORECLOSE LIEN.
(a) Except as provided by Subsection (b), suit must be brought to
foreclose the lien not later than the first anniversary of [within
two years after] the last date [day] a claimant may file the lien
claim affidavit under Section 53.052 [or within one year after
completion, termination, or abandonment of the work under the
original contract under which the lien is claimed, whichever is
later].
(b) The period of limitations under Subsection (a) may be
extended to not later than the second anniversary of the last date
the claimant may file the affidavit if the claimant enters into a
written agreement with the then-current record owner of the
property to extend the period and files the written agreement with
the clerk of the county in which all or part of the property is
located before the expiration of the period provided by Subsection
(a). [For a claim arising from a residential construction project,
suit must be brought to foreclose the lien within one year after the
last day a claimant may file a lien affidavit under Section 53.052
or within one year after completion, termination, or abandonment of
the work under the original contract under which the lien is
claimed, whichever is later.]
SECTION 29. Sections 53.159(a), (b), (c), (d), and (f),
Property Code, are amended to read as follows:
(a) If a notice of commencement has not been filed and
posted under Section 53.125, an [An] owner, on written request,
shall furnish the following information within a reasonable time,
but not later than the 10th day after the date the request is
received, to any person furnishing labor or materials for the
project:
(1) a description of the real property being improved
legally sufficient to identify it;
(2) whether there is a surety bond and if so, the name
and last known address of the surety and a copy of the bond;
(3) whether there are any prior recorded liens or
security interests on the real property being improved and if so,
the name and address of the person having the lien or security
interest; and
(4) the date on which the original contract for the
project was executed.
(b) If a notice of commencement has not been filed and
posted under Section 53.125, an [An] original contractor, on
written request by a person who furnished work under the original
contract, shall furnish to the person the following information
within a reasonable time, but not later than the 10th day after the
date the request is received:
(1) the name and last known address of the person to
whom the original contractor furnished labor or materials for the
construction project;
(2) whether the original contractor has furnished or
has been furnished a payment bond for any of the work on the
construction project and if so, the name and last known address of
the surety and a copy of the bond; and
(3) the date on which the original contract for the
project was executed.
(c) A subcontractor, on written request by an owner of the
property being improved, the original contractor, a surety on a
bond covering the original contract, or any person furnishing work
under the subcontract, shall furnish to the person the following
information within a reasonable time, but not later than the 10th
day after the date the request is received:
(1) the name and last known address of each person from
whom the subcontractor purchased labor or materials for the
construction project, other than those materials that were
furnished to the project from the subcontractor's inventory;
(2) the name and last known address of each person to
whom the subcontractor furnished labor or materials for the
construction project; [and]
(3) whether the subcontractor has furnished or has
been furnished a payment bond for any of the work on the
construction project and if so, the name and last known address of
the surety and a copy of the bond; and
(4) the date the subcontractor first performed labor,
furnished materials, or furnished specially fabricated materials
for the construction project for which any claim for payment is
being sought.
(d) Not later than the 30th day after the date a written
request is received from the owner, the contractor under whom a
claim of lien or under whom a bond is made, or a surety on a bond on
which a claim is made, a claimant for a lien or under a bond shall
furnish to the requesting person a copy of any applicable written
agreement, purchase order, or contract and any billing, statement,
or payment request of the claimant reflecting the amount claimed
and the work performed by the claimant for which the claim is made.
[If requested, the claimant shall provide the estimated amount due
for each calendar month in which the claimant has performed labor or
furnished materials.]
(f) A person, other than a claimant requested to furnish
information under Subsection (d), who fails to furnish information
as required by this section not posted on the lien website is liable
to the requesting person for that person's reasonable and necessary
costs incurred in procuring the requested information.
SECTION 30. Sections 53.160(b), (c), and (d), Property
Code, are amended to read as follows:
(b) The grounds for objecting to the validity or
enforceability of the claim or lien for purposes of the motion are
limited to the following:
(1) notice of furnishing or notice of unpaid balance
[claim] was not furnished to the owner or original contractor as
required by Section 53.0561 or 53.0563 [53.056, 53.057, 53.058,
53.252, or 53.253];
(2) a lien claim [an] affidavit [claiming a lien]
failed to comply with Section 53.054 or was not filed as required by
Section 53.052;
(3) notice of the filed lien claim affidavit was not
furnished to the owner or original contractor as required by
Section 53.055 and the owner or original contractor was materially
prejudiced by the violation;
(4) [the deadlines for perfecting a lien claim for
retainage under this chapter have expired and the owner complied
with the requirements of Section 53.101 and paid the retainage and
all other funds owed to the original contractor before:
[(A) the claimant perfected the lien claim; and
[(B) the owner received a notice of the claim as
required by this chapter;
[(5) all funds subject to the notice of a claim to the
owner and a notice regarding the retainage have been deposited in
the registry of the court and the owner has no additional liability
to the claimant;
[(6)] when the lien claim affidavit was filed on
homestead property:
(A) no contract was executed or filed as required
by Section 53.254; or
(B) the lien claim affidavit [claiming a lien]
failed to contain the notice as required by Section 53.254; [or
[(C) the notice of the claim failed to include
the statement required by Section 53.254;] and
(5) [(7)] the claimant executed a valid and
enforceable waiver or release of the claim or lien claimed in the
affidavit.
(c) The claimant is not required to file a response. The
claimant and any other party that has appeared in the proceeding
must be notified not later than the 21st day [by at least 21 days]
before the date of the hearing on the motion. A motion may not be
heard before the 21st day after the date the claimant answers or
appears in the proceeding.
(d) At the hearing on the motion, the burden is on:
(1) the claimant to prove that the notice of a filed
lien claim [and] affidavit was [of lien were] furnished to the
owner, reputed owner, and original contractor as required by
Section 53.055 [this chapter]; and
(2) the movant to establish that the lien should be
removed for any other ground authorized by this section.
SECTION 31. Section 53.161(f), Property Code, is amended to
read as follows:
(f) If the claimant fails to file the bond or the deposit in
lieu of the bond in compliance with this section, the owner may
file:
(1) a certified copy of the order; and
(2) a certificate from the clerk of the court stating
that:
(A) no bond or deposit in lieu of the bond was
filed before the later of:
(i) the 30th day [within 30 days] after the
date the order was entered by the court; or
(ii) the date ordered by the court under
Subsection (b); and
(B) no order staying the order to remove the lien
was entered by the court.
SECTION 32. Section 53.172, Property Code, is amended to
read as follows:
Sec. 53.172. BOND REQUIREMENTS. The bond must:
(1) describe the property on which the liens are
claimed;
(2) refer to each lien claimed in a manner sufficient
to identify it;
(3) be in an amount that is double the amount of the
liens referred to in the bond unless the total amount claimed in the
liens exceeds $60,000 [$40,000], in which case the bond must be in
an amount that is the greater of 1-1/2 times the amount of the liens
or the sum of $60,000 [$40,000] and the amount of the liens;
(4) be payable to the parties claiming the liens;
(5) be executed by:
(A) the party filing the bond as principal; and
(B) a corporate surety authorized and admitted to
do business under the law in this state and licensed by this state
to execute the bond as surety, subject to Section 3503.005,
Insurance Code [1, Chapter 87, Acts of the 56th Legislature,
Regular Session, 1959 (Article 7.19-1, Vernon's Texas Insurance
Code)]; and
(6) be conditioned substantially that the principal
and sureties will pay to the named obligees or to their assignees
the amount that the named obligees would have been entitled to
recover if their claims had been proved to be valid and enforceable
liens on the property.
SECTION 33. Sections 53.173(c) and (d), Property Code, are
amended to read as follows:
(c) The notice:
(1) must be served on each obligee by mailing a copy of
the notice and the bond to the obligee by certified United States
mail, return receipt requested, addressed to the claimant at the
address stated in the lien claim affidavit for the obligee; and
(2) may not be given by posting on the lien website or
by e-mail.
(d) If the claimant's lien claim affidavit does not state
the claimant's address, the notice is not required to be mailed to
the claimant.
SECTION 34. Section 53.201(b), Property Code, is amended to
read as follows:
(b) If a valid bond is filed, a claimant may not file suit
against the owner or the owner's property and the owner is not
authorized to withhold funds or pay a claimant on demand [relieved
of obligations] under Subchapter D [or E].
SECTION 35. Section 53.202, Property Code, is amended to
read as follows:
Sec. 53.202. BOND REQUIREMENTS. The bond must:
(1) be in a penal sum at least equal to the total of the
original contract amount;
(2) be in favor of the owner;
(3) have the written approval of the owner endorsed on
it;
(4) be executed by:
(A) the original contractor as principal; and
(B) a corporate surety authorized and admitted to
do business in this state and licensed by this state to execute
bonds as surety, subject to Section 3503.005, Insurance Code [1,
Chapter 87, Acts of the 56th Legislature, Regular Session, 1959
(Article 7.19-1, Vernon's Texas Insurance Code)];
(5) be conditioned on prompt payment for all labor,
subcontracts, materials, specially fabricated materials, and
normal and usual extras not exceeding 15 percent of the contract
price; and
(6) clearly and prominently display on the bond or on
an attachment to the bond:
(A) the name, mailing address, physical address,
and telephone number, including the area code, of the surety
company to which any notice of claim should be sent; or
(B) the toll-free telephone number maintained by
the Texas Department of Insurance under Subchapter B, Chapter 521,
Insurance Code, and a statement that the address of the surety
company to which any notice of claim should be sent may be obtained
from the Texas Department of Insurance by calling the toll-free
telephone number.
SECTION 36. Sections 53.206(a) and (b), Property Code, are
amended to read as follows:
(a) To perfect a claim against a bond in a manner other than
that prescribed by Subchapter C or K for fixing a lien, a person
must:
(1) give to the original contractor a notice of
furnishing or a notice of unpaid balance, unless the person has
contracted directly with the original contractor [all applicable
notices under the appropriate subchapter]; and
(2) give to the surety on the bond a written notice of
the amount and nature of the claim and a copy of the notice to the
original contractor within the period required for filing a lien
claim affidavit under Section 53.052 [, instead of the owner, all
notices under the appropriate subchapter required to be given to
the owner].
(b) To perfect a claim under this section, a person is not
required to [:
[(1) give notice to the surety under Section 53.057,
unless the claimant has a direct contractual relationship with the
original contractor and the agreed retainage is in excess of 10
percent of the contract;
[(2) give notice to the surety under Section 53.058(b)
or, if the claim relates to a residential construction project,
under Section 53.253(c); or
[(3)] file a lien claim [any] affidavit with the
county clerk.
SECTION 37. Section 53.254(f), Property Code, is amended to
read as follows:
(f) A lien claim [An] affidavit [for lien] filed under this
subchapter that relates to a homestead must contain the following
notice conspicuously printed, stamped, or typed in a size equal to
at least 10-point boldface or the computer equivalent, at the top of
the page:
"NOTICE: THIS IS NOT A LIEN. THIS IS ONLY AN AFFIDAVIT
CLAIMING A LIEN.
"If a subcontractor or supplier who furnishes materials or
performs labor for construction of improvements on your property is
not paid, your property may be subject to a lien for:
(1) the unpaid amount if you fail to withhold payment
to your contractor that is sufficient to cover the unpaid claim
after you receive notice of a filed lien claim affidavit; and
(2) an amount up to 10 percent of the contract price or
10 percent of the value of the work performed by your contractor."
SECTION 38. Section 53.255(b), Property Code, is amended to
read as follows:
(b) The disclosure statement must read substantially
similar to the following:
"KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW. You
are about to enter into a transaction to build a new home or remodel
existing residential property. Texas law requires your contractor
to provide you with this brief overview of some of your rights,
responsibilities, and risks in this transaction.
"CONVEYANCE TO CONTRACTOR NOT REQUIRED. Your contractor may
not require you to convey your real property to your contractor as a
condition to the agreement for the construction of improvements on
your property.
"KNOW YOUR CONTRACTOR. Before you enter into your agreement
for the construction of improvements to your real property, make
sure that you have investigated your contractor. Obtain and verify
references from other people who have used the contractor for the
type and size of construction project on your property.
"GET IT IN WRITING. Make sure that you have a written
agreement with your contractor that includes: (1) a description of
the work the contractor is to perform; (2) the required or
estimated time for completion of the work; (3) the cost of the work
or how the cost will be determined; and (4) the procedure and
method of payment, including [provisions for statutory retainage
and] conditions for final payment. If your contractor made a
promise, warranty, or representation to you concerning the work the
contractor is to perform, make sure that promise, warranty, or
representation is specified in the written agreement. An oral
promise that is not included in the written agreement may not be
enforceable under Texas law.
"READ BEFORE YOU SIGN. Do not sign any document before you
have read and understood it. NEVER SIGN A DOCUMENT THAT INCLUDES AN
UNTRUE STATEMENT. Take your time in reviewing documents. If you
borrow money from a lender to pay for the improvements, you are
entitled to have the loan closing documents furnished to you for
review at least one business day before the closing. Do not waive
this requirement unless a bona fide emergency or another good cause
exists, and make sure you understand the documents before you sign
them. If you fail to comply with the terms of the documents, you
could lose your property. You are entitled to have your own
attorney review any documents. If you have any question about the
meaning of a document, consult an attorney.
"GET A LIST OF SUBCONTRACTORS AND SUPPLIERS. Before
construction commences, your contractor is required to provide you
with a list of the subcontractors and suppliers the contractor
intends to use on your project. Your contractor is required to
supply updated information on any subcontractors and suppliers
added after the list is provided. Your contractor is not required
to supply this information if you sign a written waiver of your
rights to receive this information.
"MONITOR THE WORK. Lenders and governmental authorities may
inspect the work in progress from time to time for their own
purposes. These inspections are not intended as quality control
inspections. Quality control is a matter for you and your
contractor. To ensure that your home is being constructed in
accordance with your wishes and specifications, you should inspect
the work yourself or have your own independent inspector review the
work in progress.
"MONITOR PAYMENTS. If you use a lender, your lender is
required to provide you with a periodic statement showing the money
disbursed by the lender from the proceeds of your loan. Each time
your contractor requests payment from you or your lender for work
performed, your contractor is also required to furnish you with a
disbursement statement that lists the name and address of each
subcontractor or supplier that the contractor intends to pay from
the requested funds. Review these statements and make sure that the
money is being properly disbursed.
"CLAIMS BY SUBCONTRACTORS AND SUPPLIERS. Under Texas law, if
a subcontractor or supplier who furnishes labor or materials for
the construction of improvements on your property is not paid, you
may be [become] liable and your property may be subject to a lien
for the unpaid amount, even if you have not contracted directly with
the subcontractor or supplier. To minimize your [avoid] liability,
you should take the following actions:
(1) If you receive a written notice from a
subcontractor or supplier, you should withhold payment from your
contractor for the amount of the claim stated in the notice until
the dispute between your contractor and the subcontractor or
supplier is resolved.
(2) If your lender is disbursing money directly to
your contractor, you should immediately provide a copy of the
notice to your lender and instruct the lender to withhold payment in
the amount of the claim stated in the notice. If you continue to pay
the contractor after receiving the written notice without
withholding the amount of the claim, you may be liable and your
property may be subject to a lien for the amount you failed to
withhold.
[(2) During construction and for 30 days after final
completion, termination, or abandonment of the contract by the
contractor, you should withhold or cause your lender to withhold 10
percent of the amount of payments made for the work performed by
your contractor. This is sometimes referred to as "statutory
retainage.' If you choose not to withhold the 10 percent for at
least 30 days after final completion, termination, or abandonment
of the contract by the contractor and if a valid claim is timely
made by a claimant and your contractor fails to pay the claim, you
may be personally liable and your property may be subject to a lien
up to the amount that you failed to withhold.]
"If a claim is not paid within a certain time period, the
claimant is required to file a [mechanic's] lien claim affidavit in
the real property records in the county where the property is
located. A [mechanic's] lien claim affidavit is not a lien on your
property, but the filing of the affidavit could result in a court
imposing a lien on your property if the claimant is successful in
litigation to enforce the lien claim.
"SOME CLAIMS MAY NOT BE VALID. When you receive a written
notice of unpaid balance [a claim] or when a [mechanic's] lien claim
affidavit is filed on your property, you should know your legal
rights and responsibilities regarding the claim. Not all claims are
valid. [A notice of a claim by a subcontractor or supplier is
required to be sent, and the mechanic's lien affidavit is required
to be filed, within strict time periods. The notice and the
affidavit must contain certain information.] All claimants may not
fully comply with the legal requirements to collect on a claim. If
your property is a homestead and you did not enter into a written
contract with your contractor that complies with the statutory
requirements for a lien on a homestead, your contractor, the
subcontractor, or the supplier may not claim a valid lien on your
property. [If you have paid the contractor in full before receiving
a notice of a claim and have fully complied with the law regarding
statutory retainage, you may not be liable for that claim.]
Accordingly, you should consult your attorney when you receive a
written notice of a claim to determine the true extent of your
liability or potential liability for that claim.
"OBTAIN A LIEN RELEASE AND A BILLS-PAID AFFIDAVIT. When you
receive a notice of unpaid balance or a notice of a filed lien claim
affidavit [claim], do not release withheld funds without obtaining
a signed and notarized release of lien and claim from the claimant.
You can [also] reduce the risk of having a claim filed by a
subcontractor or supplier by requiring as a condition of each
payment made by you or your lender that your contractor furnish you
with an affidavit stating that all bills have been paid. Under
Texas law, on final completion of the work and before final payment,
the contractor is required to furnish you with an affidavit stating
that all bills have been paid. If the contractor discloses any
unpaid bill in the affidavit, you should withhold payment in the
amount of the unpaid bill until you receive a waiver of lien or
release from that subcontractor or supplier.
"OBTAIN TITLE INSURANCE PROTECTION. You may be able to obtain
a title insurance policy to insure that the title to your property
and the existing improvements on your property are free from liens
claimed by subcontractors and suppliers. If your policy is issued
before the improvements are completed and covers the value of the
improvements to be completed, you should obtain, on the completion
of the improvements and as a condition of your final payment,
a 'completion of improvements' policy endorsement. This
endorsement will protect your property from liens claimed by
subcontractors and suppliers that may arise from the date the
original title policy is issued to the date of the endorsement."
SECTION 39. Sections 53.259(a) and (c), Property Code, are
amended to read as follows:
(a) As a condition of final payment under a residential
construction contract, the original contractor shall, at the time
the final payment is tendered, execute and deliver to the owner, or
the owner's agent, an affidavit acknowledging the amount claimed
for payment and stating that the original contractor has paid each
person in full for all labor and materials used in the construction
of improvements on the real property. If the original contractor
has not paid each person in full, the original contractor shall
state in the affidavit the amount owed and the name and, if known,
the address and telephone number of each person to whom a payment is
owed.
(c) A person commits an offense if the person intentionally,
knowingly, or recklessly makes a false or misleading statement in
an affidavit under this section. An offense under this section is a
misdemeanor. A person adjudged guilty of an offense under this
section shall be punished by a fine not to exceed $4,000 or
confinement in jail for a term not to exceed one year or both a fine
and confinement. [A person may not receive community supervision
for the offense.]
SECTION 40. Section 53.281, Property Code, is amended to
read as follows:
Sec. 53.281. WAIVER AND RELEASE OF LIEN OR PAYMENT BOND
CLAIM. (a) Except as provided by Section 53.287, any [Any] waiver
and release of a lien or payment bond claim under this chapter is
unenforceable unless a waiver and release is executed and delivered
in accordance with this subchapter.
(b) A waiver and release is effective to release the owner,
the owner's property, the contractor, and the surety on a payment
bond from claims and liens only if:
(1) the waiver and release substantially complies with
one of the forms prescribed by Section 53.284;
(2) the waiver and release is signed by the claimant or
the claimant's authorized agent and acknowledged [notarized]; and
(3) in the case of a conditional release, evidence of
payment to the claimant exists.
(c) A waiver and release that substantially complies with a
form required by Section 53.284 may be combined with a bills-paid
affidavit that substantially conforms to the requirements of
Section 53.085 or 53.259.
SECTION 41. Section 53.282(b), Property Code, is amended to
read as follows:
(b) The filing of a lien rendered unenforceable by a lien
waiver under Subsection (a)(3) does not violate Section 12.002,
Civil Practice and Remedies Code, unless:
(1) an owner or original contractor sends a written
explanation of the basis for nonpayment, evidence of the
contractual waiver of lien rights, and a notice of request for
release of the lien to the claimant at the claimant's address stated
in the lien claim affidavit; and
(2) the lien claimant does not release the filed lien
claim affidavit on or before the 14th day after the date the owner
or the original contractor sends the items required by Subdivision
(1).
SECTION 42. Section 53.283, Property Code, is amended to
read as follows:
Sec. 53.283. UNCONDITIONAL WAIVER AND RELEASE: PAYMENT
REQUIRED. (a) A person may not require a claimant or potential
claimant to execute an unconditional waiver and release for a
progress payment or final payment amount unless the claimant or
potential claimant received payment in that amount in good and
sufficient funds.
(b) Notwithstanding Subsection (a), a contractual
requirement for a claimant to waive or release the claimant's lien
rights under this chapter before performance of the work for which
the claim for payment is asserted is void.
(c) A claimant may tender an unconditional waiver and
release for payment before the actual receipt of a payment to be
delivered in trust to an attorney, title insurance company, title
insurance agent, or federally insured financial institution acting
as an escrow agent. The escrow agent may deliver the waiver and
release only after the claimant has confirmed receipt of payment in
good and sufficient funds.
SECTION 43. Section 53.284, Property Code, is amended by
amending Subsections (b), (c), (d), and (e) and adding Subsection
(f) to read as follows:
(b) If a claimant or potential claimant is required to
execute a waiver and release in exchange for or to induce the
payment of a progress payment and is not paid in exchange for the
waiver and release or if a single payee check or joint payee check
is given in exchange for the waiver and release, the waiver and
release must read:
"CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
"Project ___________________
"Job No. ___________________
"On receipt by the signer of this document of a check from
________________ (maker of check) in the sum of $__________ payable
to _____________________ (payee or payees of check) and when the
check has been properly endorsed and has been paid by the bank on
which it is drawn, this document becomes effective to release any
mechanic's lien right, any right arising from a payment bond that
complies with a state or federal statute, any common law payment
bond right, any claim for payment, and any rights under any similar
ordinance, rule, or statute related to claim or payment rights for
persons in the signer's position that the signer has on the property
of ________________ (owner) located at ______________________
(location) for [to] the following project [extent]:
______________________ ([job] description of the type of work,
materials, equipment, or services provided).
"This release covers a progress payment for all labor,
services, equipment, or materials furnished to the property or to
__________________ (person with whom signer contracted) as
indicated in the attached statement(s) or progress payment
request(s), except for unpaid retention or [,] pending
modifications and changes [, or other items furnished].
"Before any recipient of this document relies on this
document, the recipient should verify evidence of payment to the
signer.
"The signer warrants that the signer has already paid or will
use the funds received from this progress payment to promptly pay in
full all of the signer's laborers, subcontractors, materialmen, and
suppliers for all work, materials, equipment, or services provided
for or to the above referenced project in regard to the attached
statement(s) or progress payment request(s).
"Date ____________________________
"_________________________________ (Company name)
"By ______________________________ (Signature)
"_________________________________ (Title)
"(Insert acknowledgment)"
(c) If a claimant or potential claimant is required to
execute an unconditional waiver and release to prove the receipt of
good and sufficient funds for a progress payment and the claimant or
potential claimant asserts in the waiver and release that the
claimant or potential claimant has been paid the progress payment,
the waiver and release must:
(1) contain a notice at the top of the document,
printed in bold type at least as large as the largest type used in
the document, but not smaller than 10-point type, that reads:
"NOTICE:
"This document waives rights unconditionally and states that
you have been paid for giving up those rights. It is prohibited for
a person to require you to sign this document if you have not been
paid the payment amount set forth below. If you have not been paid,
use a conditional release form."; and
(2) below the notice, read:
"UNCONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
"Project ___________________
"Job No. ___________________
"The signer of this document has been paid and has received a
progress payment in the sum of $___________ for all labor,
services, equipment, or materials furnished to the property or to
_____________________ (person with whom signer contracted) on the
property of _______________________ (owner) located at
______________________ (location) for [to] the following project
[extent]: ______________________ ([job] description of the type of
work, materials, equipment, or services provided). The signer
therefore waives and releases any mechanic's lien right, any right
arising from a payment bond that complies with a state or federal
statute, any common law payment bond right, any claim for payment,
and any rights under any similar ordinance, rule, or statute
related to claim or payment rights for persons in the signer's
position that the signer has on the above referenced project to the
following extent:
"This release covers a progress payment for all labor,
services, equipment, or materials furnished to the property or to
__________________ (person with whom signer contracted) as
indicated in the attached statement(s) or progress payment
request(s), except for unpaid retention or [,] pending
modifications and changes [, or other items furnished].
"The signer warrants that the signer has already paid or will
use the funds received from this progress payment to promptly pay in
full all of the signer's laborers, subcontractors, materialmen, and
suppliers for all work, materials, equipment, or services provided
for or to the above referenced project in regard to the attached
statement(s) or progress payment request(s).
"Date ____________________________
"_________________________________ (Company name)
"By ______________________________ (Signature)
"_________________________________ (Title)
"(Insert acknowledgment)"
(d) If a claimant or potential claimant is required to
execute a waiver and release in exchange for or to induce the
payment of a final payment and is not paid in good and sufficient
funds in exchange for the waiver and release or if a single payee
check or joint payee check is given in exchange for the waiver and
release, the waiver and release must read:
"CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
"Project ___________________
"Job No. ___________________
"On receipt by the signer of this document of a check from
________________ (maker of check) in the sum of $____________
payable to _____________________ (payee or payees of check) and
when the check has been properly endorsed and has been paid by the
bank on which it is drawn, this document becomes effective to
release any mechanic's lien right, any right arising from a payment
bond that complies with a state or federal statute, any common law
payment bond right, any claim for payment, and any rights under any
similar ordinance, rule, or statute related to claim or payment
rights for persons in the signer's position that the signer has on
the property of _____________________ (owner) located at
______________________ (location) for [to] the following project
[extent]: ______________________ ([job] description of the type of
work, materials, equipment, or services provided).
"This release covers the final payment to the signer for all
labor, services, equipment, or materials furnished to the property
or to __________________ (person with whom signer contracted).
"Before any recipient of this document relies on this
document, the recipient should verify evidence of payment to the
signer.
"The signer warrants that the signer has already paid or will
use the funds received from this final payment to promptly pay in
full all of the signer's laborers, subcontractors, materialmen, and
suppliers for all work, materials, equipment, or services provided
for or to the above referenced project up to the date of this waiver
and release.
"Date ____________________________
"_________________________________ (Company name)
"By ______________________________ (Signature)
"_________________________________ (Title)
"(Insert acknowledgment)"
(e) If a claimant or potential claimant is required to
execute an unconditional waiver and release to prove the receipt of
good and sufficient funds for a final payment and the claimant or
potential claimant asserts in the waiver and release that the
claimant or potential claimant has been paid the final payment, the
waiver and release must:
(1) contain a notice at the top of the document,
printed in bold type at least as large as the largest type used in
the document, but not smaller than 10-point type, that reads:
"NOTICE:
"This document waives rights unconditionally and states that
you have been paid for giving up those rights. It is prohibited for
a person to require you to sign this document if you have not been
paid in full as stated [the payment amount set forth] below. If you
have not been paid, use a conditional release form."; and
(2) below the notice, read:
"UNCONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
"Project ___________________
"Job No. ___________________
"The signer of this document has been paid in full for all
labor, services, equipment, or materials furnished to the property
or to ___________________ (person with whom signer contracted) on
the property of ______________________ (owner) located at
______________________ (location) for [to] the following project
[extent]: ______________________ ([job] description of the type of
work, materials, equipment, or services provided). The signer
therefore waives and releases any mechanic's lien right, any right
arising from a payment bond that complies with a state or federal
statute, any common law payment bond right, any claim for payment,
and any rights under any similar ordinance, rule, or statute
related to claim or payment rights for persons in the signer's
position.
"The signer warrants that the signer has already paid or will
use the funds received from this final payment to promptly pay in
full all of the signer's laborers, subcontractors, materialmen, and
suppliers for all work, materials, equipment, or services provided
for or to the above referenced project up to the date of this waiver
and release.
"Date ____________________________
"_________________________________ (Company name)
"By ______________________________ (Signature)
"_________________________________ (Title)
"(Insert acknowledgment)"
(f) If the owner has filed and posted a notice of
commencement under Section 53.125, the owner may require, as a
condition for final payment, a claimant who has provided a notice of
furnishing to post on the lien website a conditional waiver and
release on final payment described by Subsection (d).
SECTION 44. The following provisions of the Property Code
are repealed:
(1) Section 53.001(11);
(2) Section 53.022(b);
(3) Section 53.025;
(4) Section 53.053;
(5) Section 53.056;
(6) Section 53.057;
(7) Section 53.058;
(8) Section 53.083;
(9) Section 53.084;
(10) Subchapter E, Chapter 53;
(11) Section 53.206(c);
(12) Section 53.252;
(13) Section 53.253; and
(14) Section 53.254(g).
SECTION 45. The changes in law made by this Act apply only
to an original contract entered into on or after the effective date
of this Act. An original contract entered into before the effective
date of this Act is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
SECTION 46. This Act takes effect May 1, 2020.