By: Burrows, Deshotel, Romero, Jr. H.B. No. 2237
A BILL TO BE ENTITLED
AN ACT
relating to mechanic's, contractor's, or materialman's liens.
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 or [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), (3), (4), (8), (11), (13), and (14) and
adding Subdivision (7-a) to read as follows:
(2) "Improvement" includes:
(A) a house, building, structure, parking
structure, physical appurtenance, pool, utility, railroad, well,
storage facility, abutting sidewalks and streets, [and] utilities
in or on those sidewalks and streets, land reclaimed from overflow,
and other fixtures or modifications to real property;
(B) clearing, grubbing, draining, or fencing of
land;
(C) machinery or apparatuses used for raising
water or for supplying or storing water for stock, domestic use, or
irrigation; [wells, cisterns, tanks, reservoirs, or artificial
lakes or pools made for supplying or storing water];
(D) work described by Section 53.021(4) [pumps,
siphons, and windmills or other machinery or apparatuses used for
raising water for stock, domestic use, or irrigation]; and
(E) a design, drawing, plan, plat, survey, or
specification provided by a licensed architect, engineer, or
surveyor [planting orchard trees, grubbing out orchards and
replacing trees, and pruning of orchard trees].
(3) "Labor" means:
(A) labor used in the direct performance
[prosecution] of the work; or
(B) a professional service used in the direct
preparation for the work of a design, drawing, plan, plat, survey,
or specification.
(4) "Material" means all or part of:
(A) the material, machinery, fixtures, or tools:
(i) incorporated into the work;
(ii) used [, consumed] in the direct
performance [prosecution] of the work;
(iii) specially fabricated for an
improvement; [,] or
(iv) ordered and delivered for
incorporation or use [consumption];
(B) rent at a reasonable rate and actual running
repairs at a reasonable cost for construction equipment used or
reasonably required and delivered for use in the direct performance
[prosecution] of the work at the site of the construction or repair;
or
(C) power, water, fuel, and lubricants consumed
or ordered and delivered for consumption in the direct performance
[prosecution] of the work.
(7-a) "Purported original contractor" means an
original contractor who can effectively control the owner or is
effectively controlled by the owner through common ownership of
voting stock or ownership interests, interlocking directorships,
common management, or otherwise, or who was engaged by the owner for
the construction or repair of improvements without a good faith
intention of the parties that the purported original contractor was
to perform under the contract. For purposes of this subdivision,
the term "owner" does not include a person who has or claims a
security interest only.
(8) "Residence" means the real property and
improvements for a single-family house, duplex, triplex, or
quadruplex or a unit in a multiunit structure used for residential
purposes in which title to the individual units is transferred to
the owners under a condominium or cooperative system that is:
(A) owned by one or more adult persons; and
(B) used or intended to be used as a dwelling by
one of the owners.
(11) "Retainage" means an amount representing part of
a contract payment that is not required to be paid to the claimant
within the month following the month in which labor is performed,
material is furnished, or specially fabricated material is
delivered. [The term does not include retainage under Subchapter
E.]
(13) "Subcontractor" means a person who labors or 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 construction or repair
of an improvement performed under an original contract.
SECTION 3. Section 53.003, Property Code, is amended by
amending Subsections (b) and (c) and adding Subsection (e) to read
as follows:
(b) Any notice or other written communication required by
this chapter may be delivered:
(1) in person to the party entitled to the notice or to
that party's agent;
(2) by certified mail; or
(3) by any other form of traceable, private delivery
or mailing service that can confirm proof of receipt[, regardless
of the manner prescribed by law].
(c) If notice is sent by [registered or] certified mail,
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) In computing the period of days in which to provide a
notice or to take any 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 4. Section 53.021, Property Code, is amended to
read as follows:
Sec. 53.021. PERSONS ENTITLED TO LIEN. [(a)] A person has
a lien if[:
[(1)] the person, under a contract with the owner or
the owner's agent, trustee, receiver, contractor, or
subcontractor:
(1) labors[, specially fabricates material,] or
furnishes labor or materials for construction or repair of an
improvement; [in this state of:
[(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 by virtue of
a contract with the owner or the owner's agent, trustee, receiver,
contractor, or subcontractor.
[(b) A person who] specially fabricates material, [has a
lien] even if the material is not delivered;
(3) is a licensed [.
[(c) An] architect, engineer, or surveyor providing
services to prepare a design, drawing, [who prepares a] plan, [or]
plat, survey, or specification;
(4) [under or by virtue of a written contract with the
owner or the owner's agent, trustee, or receiver in connection with
the actual or proposed design, construction, or repair of
improvements on real property or the location of the boundaries of
real property has a lien on the property.
[(d) A person who] provides labor, plant material, or other
supplies for the installation of landscaping for an [a house,
building, or] improvement, including the construction of a
retention pond, retaining wall, berm, irrigation system, fountain,
or other similar installation; or
(5) [, under or by virtue of a written contract with
the owner or the owner's agent, contractor, subcontractor, trustee,
or receiver has a lien on the property.
[(e) A person who] performs labor as part of, or [who]
furnishes labor or materials for, the demolition of an improvement
[a structure] on real property [under or by virtue of a written
contract with the owner of the property or the owner's agent,
trustee, receiver, contractor, or subcontractor has a lien on the
property].
SECTION 5. Sections 53.022(a), (c), and (d), Property Code,
are amended to read as follows:
(a) The lien extends to the [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].
(c) A lien against land in a city, town, or village extends
to each lot on which the [house, building, or] improvement is
situated or on which the labor was performed.
(d) A lien against land not in a city, town, or village
extends to not more than 50 acres on which the [house, building, or]
improvement is situated or on which the labor was performed.
SECTION 6. Section 53.023, Property Code, is amended to
read as follows:
Sec. 53.023. PAYMENT SECURED BY LIEN. The lien secures
payment for:
(1) the labor done or material furnished for the
construction, [or] repair, design, survey, or demolition; or
(2) the specially fabricated material, even if the
material has not been delivered or incorporated into the
construction or repair, less its fair salvage value[; or
[(3) the preparation of a plan or plat by an architect,
engineer, or surveyor in accordance with Section 53.021(c)].
SECTION 7. Section 53.026(a), Property Code, is amended to
read as follows:
(a) A person who labors[, specially fabricates materials,]
or furnishes labor or materials under a direct contractual
relationship with a purported original contractor [another person]
is considered to be [in direct contractual relationship with the
owner and has a lien as] an original contractor for purposes of
perfecting a mechanic's lien [, 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 person through ownership
of voting stock, interlocking directorships, or otherwise;
[(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 8. Section 53.052, Property Code, is amended to
read as follows:
Sec. 53.052. FILING OF AFFIDAVIT. (a) An original
contractor claiming the lien must file an affidavit with the county
clerk:
(1) for projects other than residential construction
projects, not later than the 15th day of the fourth month after the
month in which the original contractor's work was completed,
terminated, or abandoned; or
(2) for residential construction projects, not later
than the 15th day of the third month after the month in which the
original contractor's work was completed, terminated, or
abandoned.
(b) Except as provided by Subsection (c) or (d) [(b)], a
claimant other than an original contractor [the person] claiming
the lien must file an affidavit 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
later of:
(1) the month the claimant last provided labor or
materials; or
(2) the month the claimant would normally have been
required to deliver the last of specially fabricated materials that
have not been actually delivered [day on which the indebtedness
accrues].
(c) [(b)] A claimant other than an original contractor
[person] claiming a lien arising from a residential construction
project must file an affidavit 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 later of:
(1) the month the claimant last provided labor or
materials; or
(2) the month the claimant would normally have been
required to deliver the last of specially fabricated materials that
have not been actually delivered.
(d) A claimant other than an original contractor claiming a
lien for retainage must file an affidavit with the county clerk not
later than the 15th day of the third month after the month in which
the original contract under which the claimant performed was
completed, terminated, or abandoned.
(e) An affidavit under this chapter must be filed in the
county where the improvements are located [day on which the
indebtedness accrues].
[(c)] 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.
SECTION 9. Section 53.055(a), Property Code, is amended to
read as follows:
(a) A person who files 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 not
later than the fifth day after the date the affidavit is filed with
the county clerk.
SECTION 10. The heading to Section 53.056, Property Code,
is amended to read as follows:
Sec. 53.056. DERIVATIVE CLAIMANT: NOTICE TO OWNER AND [OR]
ORIGINAL CONTRACTOR.
SECTION 11. Section 53.056, Property Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (a-2), and
(a-3) to read as follows:
(a) Except as provided by Section 53.057 [Subchapter K], a
claimant other than an original contractor must give the notice
prescribed by Subsections (a-1) and (a-2) [this section] for the
lien to be valid.
(a-1) For all unpaid labor or materials provided, the
claimant must send a notice of claim for unpaid labor or materials
to the owner or reputed owner and the original contractor. The
notice must be sent:
(1) for projects other than residential construction
projects, not later than the 15th day of the third month after the
month during which:
(A) the labor or materials were provided; or
(B) the undelivered specially fabricated
materials would normally have been delivered; or
(2) for residential construction projects, not later
than the 15th day of the second month after the month during which:
(A) the labor or materials were provided; or
(B) the undelivered specially fabricated
materials would normally have been delivered.
(a-2) The notice may include an invoice or billing statement
and must be in substantially the following form:
"NOTICE OF CLAIM FOR UNPAID LABOR OR MATERIALS
"WARNING: This notice is provided to preserve lien rights.
"Owner's property may be subject to a lien if sufficient funds are
not withheld from future payments to the original contractor to
cover this debt.
"Date:_______________
"Project description and/or address: _______________
"Claimant's name: _______________
"Type of labor or materials provided: _______________
"Original contractor's name: _______________
"Party with whom claimant contracted if different from
original contractor: _______________
"Claim amount: _______________
"_______________ (Claimant's contact person)
"_______________ (Claimant's address)"
(a-3) A claimant may give to the original contractor a
written notice of an unpaid labor or materials invoice that is past
due. A notice under this subsection is not required for a lien to be
valid.
SECTION 12. The heading to Section 53.057, Property Code,
is amended to read as follows:
Sec. 53.057. DERIVATIVE CLAIMANT: NOTICE OF CLAIM FOR
UNPAID [CONTRACTUAL] RETAINAGE [CLAIM].
SECTION 13. Section 53.057, Property Code, is amended by
amending Subsections (a) and (f) and adding Subsections (a-1) and
(a-2) to read as follows:
(a) To the extent that a claim for unpaid retainage is not
included wholly or partly in a notice provided under Section
53.056, a claimant other than an original contractor whose contract
provides for retainage must [A claimant may] give notice under this
section for a lien for unpaid retainage to be valid [instead of or
in addition to notice under Section 53.056 or 53.252 if the claimant
is to labor, furnish labor or materials, or specially fabricate
materials, or has labored, furnished labor or materials, or
specially fabricated materials, under an agreement with an original
contractor or a subcontractor providing for retainage].
(a-1) The claimant must send the notice of claim for unpaid
retainage to the owner or reputed owner and the original contractor
not later than the earlier of:
(1) the 30th day after the date the claimant's contract
is completed, terminated, or abandoned; or
(2) the 30th day after the date the original contract
is terminated or abandoned.
(a-2) The notice may include an invoice or billing statement
and must be in substantially the following form:
"NOTICE OF CLAIM FOR UNPAID RETAINAGE
"WARNING: This notice is provided to preserve lien rights.
"Owner's property may be subject to a lien if sufficient funds are
not withheld from future payments to the original contractor to
cover this debt.
"Date:________________
"Project description and/or address: ________________
"Claimant's name: ________________
"Type of labor or materials provided: ________________
"Original contractor's name: ________________
"Party with whom claimant contracted if different from
original contractor: ________________
"Total retainage unpaid: ________________
"________________ (Claimant's contact person)
"________________ (Claimant's address)"
(f) A claimant has a lien on, and the owner is personally
liable to the claimant for, the reserved [retained] funds under
Subchapter E if the claimant:
(1) gives notice in accordance with this section and:
(A) complies with Subchapter E; or
(B) files an affidavit claiming a lien not later
than [the earliest of:
[(i)] the date required for filing an
affidavit under the applicable provision of Section 53.052[;
[(ii) the 40th day after the date stated in
an affidavit of completion as the date of completion of the work
under the original contract, if the owner sent the claimant notice
of an affidavit of completion in the time and manner required;
[(iii) the 40th day after the date of
termination or abandonment of the original contract, if the owner
sent the claimant a notice of such termination or abandonment in the
time and manner required; or
[(iv) the 30th day after the date the owner
sent to the claimant to the claimant's address provided in the
notice for contractual retainage, as required under Subsection (c),
a written notice of demand for the claimant to file the affidavit
claiming a lien]; and
(2) gives the notice of the filed affidavit as
required by Section 53.055.
SECTION 14. Section 53.081(a), Property Code, is amended to
read as follows:
(a) If an owner receives notice under Section 53.056 or [,]
53.057, [53.058, 53.252, or 53.253,] the owner may immediately
withhold from payments to the original contractor an amount
necessary to pay the claim for which the owner [he] receives notice.
The withholding may be in addition to any reserve funds.
SECTION 15. Section 53.082, Property Code, is amended to
read as follows:
Sec. 53.082. TIME FOR WHICH FUNDS ARE WITHHELD. Unless
[payment is made under Section 53.083 or] the claim is otherwise
settled, discharged, indemnified against under 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 16. Section 53.084, Property Code, is amended to
read as follows:
Sec. 53.084. OWNER'S LIABILITY. (a) Except for the amount
the owner fails to reserve [required to be retained] under
Subchapter E, the owner is not liable for any amount paid to the
original contractor before the owner is authorized to withhold
funds under this subchapter.
(b) If the owner has received a notice [the notices]
required by Section 53.056 or 53.057 [Subchapter C or K], if the
lien has been secured, and if the claim has been reduced to final
judgment, the owner is liable and the owner's property is subject to
a claim for any money paid to the original contractor after the
owner was authorized to withhold funds under this subchapter. The
owner is liable for that amount in addition to any amount for which
the owner [he] is liable under Subchapter E.
SECTION 17. The heading to Subchapter E, Chapter 53,
Property Code, is amended to read as follows:
SUBCHAPTER E. FUNDS RESERVED [REQUIRED RETAINAGE] FOR BENEFIT OF
LIEN CLAIMANTS
SECTION 18. Sections 53.101, 53.102, 53.103, 53.104, and
53.105, Property Code, are amended to read as follows:
Sec. 53.101. FUNDS REQUIRED TO BE RESERVED [RETAINAGE].
(a) During the progress of work under an original contract for
which a mechanic's lien may be claimed and for 30 days after the
work under the contract is completed, the owner shall reserve
[retain]:
(1) 10 percent of the contract price of the work to the
owner; or
(2) 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.
(b) In this section, "owner" includes the owner's agent,
trustee, or receiver.
Sec. 53.102. PAYMENT SECURED BY RESERVED FUNDS [RETAINAGE].
The reserved [retained] funds secure the payment of artisans and
mechanics who perform labor or service and the payment of other
persons who furnish material, material and labor, or specially
fabricated material for any contractor, subcontractor, agent, or
receiver in the performance of the work.
Sec. 53.103. LIEN ON RESERVED [RETAINED] FUNDS. A claimant
has a lien on the reserved [retained] funds if the claimant:
(1) sends the notices required by this chapter in the
time and manner required; and
(2) except as allowed by Section 53.057(f), files an
affidavit claiming a lien not later than the 30th day after the
earliest of the date:
(A) the work is completed;
(B) the original contract is terminated; or
(C) the original contractor abandons performance
under the original contract.
Sec. 53.104. PREFERENCES. (a) Individual artisans and
mechanics are entitled to a preference to the reserved [retained]
funds and shall share proportionately to the extent of their claims
for wages and fringe benefits earned.
(b) After payment of artisans and mechanics who are entitled
to a preference under Subsection (a), other participating claimants
share proportionately in the balance of the reserved [retained]
funds.
Sec. 53.105. OWNER'S LIABILITY FOR FAILURE TO RESERVE FUNDS
[RETAIN]. (a) If the owner fails or refuses to comply with this
subchapter, the claimants complying with Subchapter C or this
subchapter have a lien, at least to the extent of the amount that
should have been reserved [retained] from the original contract
under which they are claiming, against the improvements [house,
building, structure, fixture, or improvement] and all of its
properties and against the lot or lots of land necessarily
connected.
(b) The claimants share the lien proportionately in
accordance with the preference provided by Section 53.104.
SECTION 19. Sections 53.106(a), (b), and (d), Property
Code, are amended to read as follows:
(a) An owner may file with the county clerk of the county in
which the property is located an affidavit of completion. The
affidavit must contain:
(1) the name and address of the owner;
(2) the name and address of the original contractor;
(3) a description, legally sufficient for
identification, of the real property on which the improvements are
located;
(4) a description of the improvements furnished under
the original contract;
(5) a statement that the improvements under the
original contract have been completed and the date of completion;
and
(6) a conspicuous statement that a claimant may not
have a lien on retained funds unless the claimant files an affidavit
claiming a lien in the time and manner required by this chapter [not
later than the 40th day after the date the work under the original
contract is completed].
(b) A copy of the affidavit must be sent [by certified or
registered mail] to the original contractor [not later than the
date the affidavit is filed] and to each claimant who sends a notice
[of lien liability] to the owner under Section 53.056 or [,] 53.057
[, 53.058, 53.252, or 53.253] not later than the third day after the
date the affidavit is filed or the 10th day after the date the owner
receives the notice of lien liability, whichever is later.
(d) An [Except as provided by this subsection, an] affidavit
filed under this section [on or before the 10th day after the date
of completion of the improvements] is prima facie evidence of the
date the work under the original contract is completed for purposes
of this chapter [subchapter and Section 53.057]. If the affidavit
is filed after the 10th day after the date of completion, the date
of completion for purposes of this subchapter [and Section 53.057]
is the date the affidavit is filed. This subsection does not apply
to a person to whom the affidavit was not sent as required by this
section.
SECTION 20. Sections 53.107(a) and (b), Property Code, are
amended to read as follows:
(a) Not later than the 10th day after the date an original
contract is terminated or the original contractor abandons
performance under the original contract, the owner shall give
notice to each subcontractor who, before the date of termination or
abandonment, has:
(1) given notice to the owner as provided by Section
53.056 or [,] 53.057 [, or 53.058]; or
(2) sent to the owner [by certified or registered
mail] a written request for notice of termination or abandonment.
(b) The notice must contain:
(1) the name and address of the owner;
(2) the name and address of the original contractor;
(3) a description, legally sufficient for
identification, of the real property on which the improvements are
located;
(4) a general description of the improvements agreed
to be furnished under the original contract;
(5) a statement that the original contract has been
terminated or that performance under the contract has been
abandoned;
(6) the date of the termination or abandonment; and
(7) a conspicuous statement that a claimant may not
have a lien on the retained funds unless the claimant files an
affidavit claiming a lien in the time and manner required by this
chapter [not later than the 40th day after the date of the
termination or abandonment].
SECTION 21. Section 53.155, Property Code, is amended to
read as follows:
Sec. 53.155. TRANSFER OF PROPERTY SOLD. If the [house,
building,] improvement [, or any piece of railroad property] is
sold separately from the land, the officer making the sale shall
provide [place] the purchaser [in possession. The purchaser is
entitled to] a reasonable time after the date of purchase within
which to remove and take possession of the purchased improvement
[property].
SECTION 22. Section 53.157, Property Code, is amended to
read as follows:
Sec. 53.157. DISCHARGE OF LIEN. An [A 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 improvement [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, provided [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 23. Section 53.158, Property Code, is amended by
amending Subsection (a) and adding Subsections (a-1) and (a-2) to
read as follows:
(a) Except as provided by Subsection (a-2) [(b)], suit must
be brought to foreclose the lien not later than the first
anniversary of [within two years after] the last day a claimant may
file the 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].
(a-1) Notwithstanding Section 16.069, Civil Practice and
Remedies Code, or any other law, if suit is pursued solely to
discharge a lien because limitations have expired on bringing a
lien foreclosure suit, the lien claimant's rights to pursue a suit
to foreclose a lien are not revived.
(a-2) The limitations period established under Subsection
(a) may be extended to not later than the second anniversary of the
date the claimant filed the lien affidavit under Section 53.052 if,
before the expiration of the limitations period established under
Subsection (a), the claimant enters into a written agreement with
the then-current record owner of the property to extend the
limitations period. The agreement must be recorded with the clerk
of the same county where the lien was recorded and is considered to
be notice of the extension to any subsequent purchaser.
SECTION 24. Sections 53.160(b) and (c), 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 claim was not timely furnished to the
owner or original contractor as required by Section 53.056 or [,]
53.057 [, 53.058, 53.252, or 53.253];
(2) 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 affidavit was not furnished to
the owner or original contractor as required by Section 53.055;
(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 affidavit was filed on homestead
property:
(A) no contract was executed or filed as required
by Section 53.254;
(B) the 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
(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 by at least 30 [21] days before the date of the
hearing on the motion. A motion may not be heard before the 30th
[21st] day after the date the claimant answers or appears in the
proceeding. The claimant must be allowed expedited discovery
regarding information relevant to the issues listed under
Subsection (b).
SECTION 25. Section 53.173(c), Property Code, is amended to
read as follows:
(c) The notice 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 affidavit for the obligee.
SECTION 26. Section 53.205(a), Property Code, is amended to
read as follows:
(a) The bond protects all persons with a claim that is:
(1) perfected in the manner prescribed for fixing a
lien under Subchapter C [or, if the claim relates to a residential
construction project, under Subchapter K]; or
(2) perfected in the manner prescribed by Section
53.206.
SECTION 27. Section 53.206, Property Code, is amended to
read as follows:
Sec. 53.206. PERFECTION OF CLAIM. (a) Except as provided
by Subsection (b), to [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 notice under Sections 53.056 and 53.057 to
the original contractor and surety on the bond [all applicable
notices under the appropriate subchapter; and
[(2) give to the surety on the bond, instead of the
owner, all notices under the appropriate subchapter required to be
given to the owner].
(b) To perfect a claim for retainage under this section, a
claimant [person] is not required to[:
[(1)] give notice to the surety under Section 53.057
if [, 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 any affidavit with the county clerk].
(c) A claimant that provides the notices described by this
section is not required to file an affidavit claiming a mechanic's
lien to perfect a claim under the bond [For the claim to be valid, a
person must give notice in the time and manner required by this
section, but the content of the notices need only provide fair
notice of the amount and the nature of the claim asserted].
(d) A person satisfies the requirements of this section
relating to providing notice to the surety if the person mails the
notice by certified [or registered] mail to the surety:
(1) at the address stated on the bond or on an
attachment to the bond;
(2) at the address on file with the Texas Department of
Insurance; or
(3) at any other address allowed by law.
SECTION 28. Section 53.207(a), Property Code, is amended to
read as follows:
(a) If the owner receives any of the notices or a lien is
fixed under this chapter [Subchapter C or K], the owner shall mail
to the surety on the bond a copy of all notices received.
SECTION 29. Section 53.208(a), Property Code, is amended to
read as follows:
(a) A claimant may sue the principal and surety on the bond
either jointly or severally, if the [his] claim remains unpaid for
60 days after the claimant perfects the claim.
SECTION 30. Section 53.232, Property Code, is amended to
read as follows:
Sec. 53.232. TO WHOM NOTICE GIVEN; MANNER. The lien
claimant must send written notice of his claim by [registered or]
certified mail to:
(1) the officials of the state, county, town, or
municipality whose duty it is to pay the contractor; and
(2) the contractor at the contractor's last known
business or residence address.
SECTION 31. Section 53.238, Property Code, is amended to
read as follows:
Sec. 53.238. NOTICE OF BOND. The official with whom the
bond is filed shall send an exact copy of the bond by [registered
mail or] certified mail, return receipt requested, to all
claimants.
SECTION 32. The heading to Section 53.254, Property Code,
is amended to read as follows:
Sec. 53.254. CONTRACTUAL REQUIREMENTS FOR LIEN ON
HOMESTEAD.
SECTION 33. Section 53.254(g), Property Code, is amended to
read as follows:
(g) For the lien on a homestead to be valid, the notice
required to be given to the owner under Subchapter C [Section
53.252] must include or have attached the following statement:
"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 the unpaid
amount if:
(1) after receiving notice of the unpaid claim from
the claimant, you fail to withhold payment to your contractor that
is sufficient to cover the unpaid claim until the dispute is
resolved; or
(2) during construction and for 30 days after
completion of your contractor's work [construction], you fail to
reserve [retain] 10 percent of the contract price or 10 percent of
the value of the work performed by your contractor.
"If you have complied with the law regarding the reservation
of 10 percent of the contract price or value of work [retainage] and
you have withheld payment to the contractor sufficient to cover any
written notice of claim and have paid that amount, if any, to the
claimant, any lien claim filed on your property by a subcontractor
or supplier, other than a person who contracted directly with you,
will not be a valid lien on your property. In addition, except for
the required 10 percent reservation [retainage], you are not liable
to a subcontractor or supplier for any amount paid to your
contractor before you received written notice of the claim."
SECTION 34. 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 reservation
of funds [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 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 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. 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 reserve [withhold] or cause your lender to
reserve [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 reserve [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
reserve [withhold].
"If a claim is not paid within a certain time period, the
claimant is required to file a mechanic's lien affidavit in the real
property records in the county where the property is located. A
mechanic's lien 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 a claim or when a mechanic's lien 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 you have paid
the contractor in full before receiving a notice of a claim and have
withheld the 10 percent of the contract price or value of work
[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 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 35. Section 53.281(b), Property Code, is amended to
read as follows:
(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 notarized]; and
(3) in the case of a conditional release, evidence of
payment to the claimant exists.
SECTION 36. The following provisions of the Property Code
are repealed:
(1) Section 53.003(a);
(2) Section 53.026(b);
(3) Section 53.053;
(4) Sections 53.056(b), (c), (d), (e), and (f);
(5) Sections 53.057(b), (b-1), (c), (d), (e), and (g);
(6) Section 53.058;
(7) Sections 53.081(b), (c), and (d);
(8) Section 53.083;
(9) Section 53.158(b); and
(10) Sections 53.252 and 53.253.
SECTION 37. 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 38. This Act takes effect January 1, 2022.