Owning commercial real estate, such as an office building or strip mall, frequently requires you to hire a contractor. These jobs can range from fairly simple repairs to extensive additions or reconstruction projects. Usually, the contractor and subcontractors do a satisfactory job for an agreed-upon price. But sometimes, shoddy work, missed deadlines or other problems arise. When they do, you naturally will consider withholding payment until the contractor fixes the issues. In other cases, the dispute is between the contractor and its subcontractors.
If the contractor refuses responsibility and demands payment anyway, the dispute could lead to the builder requesting a mechanic’s lien. Understanding what a mechanic’s lien is in Texas is essential for all property owners in the state.
Putting the owner in the middle
Also known as a contractor’s lien, a mechanic’s lien is a lien placed on a property’s title. Like any other lien, a mechanic’s lien can make it difficult to sell or get financing, thus affecting the property’s value. It typically comes from a subcontractor or supplier seeking compensation for the work or materials provided. Technically, the issue is between the contractor and subcontractor, whether the property owner paid the contractor or not. But the lien is the subcontractor’s way of trying to force compensation.
The unpaid party must file an affidavit in court that includes details like a sworn statement of the amount of the claim, the name and last known address of the owner, and a statement detailing the work done and/or material furnished. If these and other details are not included, the court will reject the lien claim. If the court accepts the claim, you, as owner, have several months to negotiate a settlement before the lien takes effect.
Not an insurmountable problem
A mechanic’s lien can be a huge headache, but they can be resolved. The assistance of an attorney experienced in Texas real estate law can help you find a fair outcome.