Understanding lien laws is the first and most essential step to collecting your money. Unfortunately for Contractors, lien laws can be misleading, since there are 50 different sets of rules: one for each state. We’re here to take away the complexity and confusion and give it to you straight. If you work in Texas and need to know the lien laws, this is the place for you. Here, we break down exactly what the state of Texas requires for you to properly file a valid lien and bond claim.

How to File a Valid Lien in Texas: 

1. Understanding Your Place

The first two steps you will need to take to perfect your lien or bond claim:

  1. Knowing your place in the construction food chain.
  2. Knowing the type of your project.

The first action you must take to begin the perfection of your lien or bond claim depends on your place in the construction food chain. You are considered to be in Place 2* when you have a contract directly with the General Contractor (the Contractor hired by the Owner). Contractors are normally in Place 2* and will have more time than those in Place 3* to make the first move to perfect their lien or bond claim.

Anyone who does work for or supplies materials to a Contractor that is hired by the General Contractor is considered to be in Place 3*. It doesn’t matter if you are in Place 3* or further down the chain; everyone who is not in direct contract with a Contractor hired by the General Contractor is considered in Place 3* for the purpose of lien and bond claims. The people in Place 3* will have to act sooner to perfect their lien or bond claims than those in Place 2*.

2. Requirements for Effective Notice

  • Under current Texas state law, all notices must be sent via certified mail, return receipt requested at the post office. This is the only way to prove that your notice was sent on or before the date required. 
  • The notice is effective when it is sent to the correct address; it does not matter if it is actually signed for by the person you sent it to.
  • Notices need to be sent to the General Contractor and Owner. 

3. Timeline for Notices

The timeline to send notice starts from the first month for which you are owed money. You can keep sending notices for each month that you are owed money, but do not file the lien until your work or the project is complete (whichever comes first). The best rule of thumb: send notice early and often.

4. No Notice Required

Place 1* Contractors do not have to send any of the notices required for statutory liens. There are no timelines to dictate when a constitutional lien must be filed. You may file a constitutional lien at any time, but make sure that it is before the Owner who hired you sells the property.

5. Where to File Liens in Texas:

Liens are filed in the real property records in the county where the property is located. If a property is in more than one county, the lien needs to be filed in the county where the majority of the property is located. 

6. Understanding What Type of Project You are Working On:

  • Homestead
  • Residential
  • Texas Public Works
  • Commercial
  • Federal project

How to have a Lien on a Homestead and Residential Project in Texas: 

Homestead:

  • The first step to have a perfected lien on a homestead is having the Owner sign a contract for the work you will be doing. 
  • The contract must state what you are doing and the amount you agreed to for the work. 
  • It must be signed by the Owner before the work begins (both must sign if married).
  • Before you can file a lien, this contract must be filed in the real property records in the county where the property is located. 
  • There is no requirement that the contract must be filed of record before the work begins, but it must be filed before you file a lien.

Residential Project:

  • A residential construction project does not require a signed contract to file a lien, but it does have the same shortened timelines as a homestead project.
  • If you are a Contractor on a homestead or residential project, the first notice of nonpayment that needs to be sent to perfect your lien is the 15th day of the second month after you are owed money. Keep sending this notice for each month you are owed money for work done on the project. 
  • The next step to having a perfected lien on a homestead or residential project is to file the actual lien. The lien must be filed by the 15th day of the third month after you last worked on the project or thirty days after final completion of the homestead or residence, whichever comes first. 
  • The Texas property code also has a disclosure statement that is required to be given to the Owner before the residential construction contract is signed.
  • A residential construction project does not require a signed contract to file a lien, but it does have the same shortened timelines as a homestead project. 

How to File a Valid Bond Claim in Texas:

You cannot file a lien against a government-owned property, but you can still secure your right to payment in the same way as filing a lien by filing a bond claim. 

Two Ways To Get a Copy on a Bond for a Texas Public Works Project:

  1. Send the General Contractor a written request for a copy of the payment bond (they are required to send you a copy within ten days of the request). 
  2. Send a public information request for a copy of the payment bond to the governmental entity that is having the work done. 

1. How to Perfect Your Bond Claim in Texas:

  • Place 2* Contractors:
    • You need to perfect a bond claim in the same way you perfect a lien claim: by sending timely notice. 
    • If you are a Contractor hired directly by the General Contractor (Place 2*) your bond claim needs to be sent by the 15th day of the third month after the first month you are owed money for. 
    • The Bond claim needs to be sent to the General Contractor and the bond company. 
    • The bond claim must be sworn and notarized and must include the amount you are currently owed, the amount of any retainage that has not yet become due under the terms of your subcontract with the General Contractor, and a statement that all payments and credits have been applied to the amount you are claiming you are owed. 
  • Place 3* Contractors:
    • You need to send the same notice as required for Place 2* Contractors. 
    • You also need to send an additional notice the month before you send that notice. 
    • On the 15th day of the second month after you are first owed money, you need to send the General Contractor notice of your unpaid amounts and any amount of retainage that is not yet due. 

2. Sufficient Notice Includes: 

A statement of the amount you are due, what kind of work you did, and who you were hired by.

3. Respond to the Bond Company’s Request:

When you receive a letter from the bond company requesting your subcontract and all relevant paperwork, you must respond to this letter or your bond claim will not be paid. 

  • Draft a letter explaining how you are owed the amount you are claiming and attach all relevant documents. 

4. When to File a Bond Claim:

Just like a lien claim, you must file suit to enforce your claim, or it will expire. You must file suit against the bond company to enforce your bond claim within one (1) year of the date you mailed your notice of claim letter. 

You must give the General Contractor and the bond company sixty (60) days to respond to your claim before you file suit to enforce your bond claim. 

Quick Facts:

  • Get a copy of the General Contractor’s bond before you sign the subcontract. 
  • Your bond claim is only good for one year from the date you sent your bond claim letter. 

If you work in Texas, be sure the rules above become second nature when it’s time to collect. Your income can make or break your business, so collect your funds the right way! If you’d like to get your hands on Texas’s lien and bond forms, consider purchasing the required materials from us! If you would rather have someone else take care of filing your construction lien or bond, and do it the right way, contact an experienced Texas lien lawyer who knows Texas construction law. Our sister company, The Cromeens Law Firm, has a 90% success rate of collections before having to foreclose on a lien, saving you costly legal fees. Build a better future for your business and file your liens and bonds the right way.

*The “places” referenced in the rules above correlate to the Construction Food Chain Chart from Karalynn Cromeens' book,
Quit Getting Stiffed. The chart can be found here to use when following these lien and bond rules.