Monthly Fund Trapping Notices
Texas Monthly Noticing Made Easy
What is a Monthly Fund Trapping Notice?
Texas has some of the most confusing and convoluted mechanics lien and construction notice requirements of any state. With multiple notices potentially required, and a separate notice due for each individual month in which work was performed (and unpaid), the requirements can be difficult to navigate, and even trickier to comply with.
Texas is nearly unique in that a separate notice is required for every month a project participant furnishes labor and/or materials (provided the participant is unpaid for at least a portion of the labor and/or materials provided in that month). This means that, on an extended project, a company can be required to send a large volume of notices. What makes things even more complicated, when viewed in light of the confusingly drafted Texas statutes, is that some parties are required to send more than one notice for each month unpaid labor and/or materials were furnished – and potentially, those notices may be required to be sent in different months.
The specific requirements regarding when (and if) a Texas notice is required to be sent depends on a party’s tier in the project. These requirements are outlined in the following chart.
This chart, however, only provides the basic outline of the notice requirements, not how the notices may be optimized. As noted above, for non-residential projects, parties that did not contract with the property owner or the GC must send monthly notice in both the 2nd and 3rd month following each month in which labor and/or materials were furnished and unpaid. The monthly notice must be delivered to the GC in the second month, and to both the owner and the GC in the third month. Texas law muddies the issue by stating that “the same notice” provided to the GC in the second month is to be provided to the owner and the GC in the third month.
The Texas Monthly Fund Trapping Notice process is confusing, and presents a lot of frequently asked questions. You can explore some FAQs and answers here: Texas Notice FAQs. Further, you may find this Notice Deadline Chart helpful to understand when delivery of these notices are required.
Another aspect of the Texas Monthly Fund Trapping Notice Process is that the notices are adversarial, and companies should send them only as a last resort. Since all Texas notices are due on the 15th day of each month, it’s common for construction pay applications to get approved and for money to flood in on the 14th or 15th of the month, putting administrators, credit teams, and others in a time crunch to determine who should get the notice and getting the notice(s) out of the door.
zlien manages the Texas Monthly Fund Trapping Notice process through proprietary patent-pending technology that eliminates a company’s busywork, and keeps them in control until the very last minute. Transform your “notice week” from chaos, into a routine of checking prioritized action items that takes minutes, with you maintaining complete control until the very last minute over who receives the Texas notices and who does not.
Why zlien's Monthly Notices?
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