Construction Lien Law Attorneys

9 Answered Questions

Scott Wolfe Jr

CEO zlien

Answered 1 year ago

This is a great question because it relates to the practical way that many liens get resolved, and since it's handled so practically by escrow agents and others who deal with liens all the time, it can be confusing about how the process actually works. When a home or a property is sold, it's very common for the escrowing and title agencies to have to deal with liens. In fact, they most commonly must deal with the "mortgage" or bank loan on the property, which is just another type of lien. The job of the closing managers (attorneys, title insurance, escrow, etc.) is to deliver a property to the buyer that is free and clear of any previous liens. So long that your lien is still valid, that will include your lien.

The escrowing agent frequently contacts lien holders to ask for the amount that will satisfy the lien. They will then include this as part of the closing process to "hold back" enough money from the sale transaction to satisfy that lien. It is then distributed directly to the lien holder, if all parties agree, or if there is a dispute, the escrowing agent will hold the money until the dispute is resolved.

So, let's say you have a lien for $10,000 on a house and the house is being sold for $100,000. The escrowing company would get $100,000 from the buyer and will then deliver $90,000 to the seller. The escrowing company will hold the other $10,000 in trust for the lien holder. And either:

a. The buyer will agree, and the escrow company will send the $10,000 to the lien holder, which will remove the lien; or

b. The buyer will claim the lien is in dispute, and the escrow company will deliver the $10,000 to the county office, where they will be able to get the lien removed, but only in exchange for the cash. At that point, the lien holder can still "enforce the lien." The only difference is that when the lien is enforced, instead of having to foreclose the property to get the $10,000 -- which will take time -- the lien holder will be able to just take the $10,000 in cash. Much easier.

So, in sum, this is a very good sign and a step in the right direction. There may soon be some light at the end of the tunnel. Stay in touch with the escrow agent to understand what will happen (i.e. a or b, as per above). And if b, start getting more aggressive on the enforcement to try and push the parties toward option a. Good luck.

0 Answered Questions

Andy Mau

Attorney Smiley Law Firm

No comments

999 Answered Questions

Matt Viator

Legal Associate zlien

Answered 1 hour ago

These are good questions! I'll approach them in opposite order. On Texas public projects, in order to make a claim on the prime contractor's bond, all subcontractors who have not contracted directly with the prime contractor must first send the 2 month notice. Parties hired directly by the contractor who posted the bond need not send that contractor. This is supported by Sec. 2253.047 of the Texas Little Miller Act, which reads: "a payment bond beneficiary who does not have a direct contractual relationship with the prime contractor for public work labor or material must mail notice as required by this section." "notice as required by this section.", of course, refers to the 2 month notice. While that section does create a 2 month notice requirement for subcontractors hired by someone other than the prime contractor on the project, it creates no such requirement for those who have directly contracted with the prime. If a previous answer contradicted this rule - I apologize! I'll be happy to go back through and correct it. It's worth mentioning, though, that a Lien on Contract Funds (which operates independently of the rules on bond claims), does not require any preliminary notice - and the deadline to make a Lien on Contract funds is actually the same deadline as a 2 month notice, which can certainly create some confusion. Now, for the first question, including all addresses where work was performed is certainly the safest way to proceed. The more clearly and directly the properties where work was performed can be identified, the easier it will be to support the claim being made. Whether that be through listing all of the addresses on the text of the claim or by doing so through including "see attached addresses" and attaching the addresses on a separate page should have little effect considering Texas bond claims do not have a specific, statutory form. Rather, Texas mandates what information must appear - and claimants typically have a little discretion as to how that information will be presented.

0 Answered Questions

Matt Thomas

Attorney Smiley Law Firm

No comments

419 Answered Questions

Nate Budde

Chief Legal Officer zlien

Answered 4 days ago

This must be a frustrating situation.

Mechanics liens are specifically available and limited to protecting construction participants' right to be paid for labor or materials furnished to improve property. Because mechanics liens are set forth by statute, and are involuntary security interests, there are specific rules and situations that limit their availability. If the lien does not arise out of non-payment related to work done to improve the property, a mechanics lien is not the correct remedy.

There are, however, other types of liens or paths to get what is owed in other situations. To the extent that a judgment has been or can be obtained against a party, a judgment lien can be an option to secure the amount due.

2 Answered Questions

Seth Smiley

Owner Smiley Law Firm

Answered 3 months ago

Hi, Matt gives a very good answer on this post. Often as a construction law attorney, I get calls from individuals who want contractors to get arrested for mishandling funds or downright stealing. Typically, due to lack of resources, criminal relief only happens in extreme circumstances. You can contact your local district attorney or even your local police department, but often times they will tell you it is a "civil" matter. As a civil construction attorney here in Louisiana there are a number of tools you can use to secure payment. Depending on your role in the project you have some options. Demand letters are a great place to start but often they are ignored. From there you can file a lien to protect your rights to payment. Finally, your last resort is to file a civil lawsuit to enforce your rights to payment. Filing a lawsuit against a party for non-payment is the only way to ensure payment. However, lawsuits come with the risk of being counter-sued or risk of paying high costs and attorneys fees for the potential of little to no return. You need to speak to a construction law attorney to weigh your options carefully before making a final decision.