Constitutional Mechanic’s Liens in Texas
Did you know you that contractors have a constitutional right to a lien?
There are two types of mechanic’s liens in Texas. A constitutional mechanic’s lien, which is a right conveyed to contractors by the Texas Constitution and a statutory mechanic’s lien, which is a right conveyed to contractors by the Texas Property Code. The statutory lien expands the rights given in the constitutional lien.
“Mechanic’s, artisans and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.”
The Power of the Constitutional Lien
The great thing about a constitutional lien is they are self-executing. You don’t have comply with the tedious pre-lien notice requirements found the in statutes and you don’t even have to file the lien in the property records. If you have a contract with the owner of a property and you provide labor and materials for construction or repair of “buildings and articles” on that property, you have a lien. This is a great safety net for contractors who miss deadlines imposed by the statutory lien.
The Limitations of the Constitutional Lien
Constitutional liens only apply to those who contract directly with the owner of the property (called “Original Contractors” in Texas). Subcontractors, who’s contract is with the general contractor or another subcontractor, do not have a right to assert a constitutional lien. They must assert a statutory lien. Another limitation of a constitutional lien is there is more uncertainty about its scope. There is only a sentence dedicated to it in the constitution so many of the particulars about its scope are determined by case law. Court interpretations can vary by jurisdiction which leads to uncertainty in litigation. Questions arise such as whether there is a 4-year statute of limitations to enforce a constitutional lien or the interpretation of the term “building” in the constitutional language.
Why You Should File the Lien in the Property Records
While a constitutional lien does not need to be filed in the property records to be effective, the best practice is to file an affidavit claiming one. This provide public notice of your claim to any potential future buyers of the property. If the property on which you filed a lien is sold, most title companies (depending on the size of the lien) will require that the lien be satisfied or bonded around for closing to go through. Often, this results in you getting paid at closing.
If the lien is not filed and the property is sold to someone who does not know about your lien, it is no longer enforceable against the new owner.
How to Enforce a Constitutional Lien
If the owner of a property refuses pay your lien, you must enforce the lien by lawsuit to foreclose on the property. A lawsuit to foreclose is a civil lawsuit that asks the court to force the sale of the property and use the proceeds of the sale to satisfy the lien.