Mechanic’s Liens 101: Notices of Non-Payment in the Great State of Texas
Here’s the best & worst thing about securing mechanic’s lien or bond claim rights in Texas: Notices of Non-Payment, liens and bond claims are all due by the 15th of the month. One of the earlier steps in the Texas mechanic’s lien process is proper service of the Notice of Non-Payment. A Notice of Non-Payment is much like it sounds — a notice, sent to designated parties, advising of monies that are due/past due. Read on to learn more about the basics of Notices of Non-Payment for Texas projects.
Are You Furnishing to a Private Project?
If you are furnishing to a private commercial project in Texas, and you contracted with a subcontractor, you need to serve the appropriate Notices of Non-Payment by the 15th day of the second & third months following each month in which materials or services were furnished.
Whoa! That’s a mouthful!
Here’s an example: Let’s say I furnished steel beams in April.
If I am not paid for my April furnishing, I must send the 2nd month Notice of Non-Payment to the general contractor by June 15th. Then, if July comes along, and I still haven’t been paid for my April furnishing, I must send the 3rd month Notice of Non-Payment to the owner and the general contractor by July 15th. Lastly, if I remain unpaid, and am finished furnishing, I would need to file my lien by August 15th (one lien is filed, covering all months of furnishing).
Sometimes it’s easier to understand the rolling months when reviewing the months in a table format. To navigate this table, simply locate the month of furnishing in column one and move horizontally from left to right:
(To simplify the notice process, the 2nd and 3rd month Notices of Non-Payment can be combined and sent to the general contractor and the owner by the 15th day of the 2nd month; June 15th in the above example.)
It’s critical for you to send these notices for each month that you furnish materials or labor for which you remain unpaid.
Let’s use the table above, but add in another month of furnishing.
Now, we have an April furnishing and a May furnishing. We already know when I’m going to send my notice(s) for my April furnishings. But, let’s say I’m unpaid for April and May furnishings in July. I must send another notice, by July 15th, identifying the May furnishings as unpaid.
OK, so what if you were paid for your April or May furnishing?
In the event you receive payment for a given month’s furnishing, prior to the deadline for the Notice of Non-Payment, you would not need to serve the notice for those furnishings. Remember, it’s a Notice of Non-Payment, indicating you were not paid.
Are You Furnishing to a Public Project?
Protecting bond claim rights for public projects in Texas is slightly less confusing, primarily because only one Notice of Non-Payment must be served for each month you remain unpaid, instead of the two notices served for private projects.
If you are selling to a subcontractor on a public project, you should serve a Notice of Non-Payment no later than the 15th day of the second month following each month in which materials or labor were furnished for which you remain unpaid. Then, serve the bond claim notice (sworn statement of account) no later than the 15th day of the third month following each month in which you furnished.
Let’s go back to my example from the private project above.
If I am not paid for my April furnishing, I must send the 2nd month Notice of Non-Payment by June 15th. Then, if July comes along, and I still haven’t been paid for my April furnishing, I must serve the Bond Claim (sworn statement of account) by July 15th.
If I remain unpaid for May furnishings, a 2nd month notice would be due by July 15th and a Bond Claim due by August 15th. Note that, unlike liens, bond claims must be served for each month that you remain unpaid.
My timeline table for public projects would look like this:
Great State of Texas is a Great Mess O’Notices
Understanding which notice to serve for respective furnishings can be quite confusing. But have no fear, our Texas team is savvy and ready to tackle the puzzle for you — contact us today!
Oh, & check back soon for more information on Texas, including details about the Notice of Retainage, Specially Fabricated Materials notice, mechanic’s liens, bond claims and suit/foreclosure actions!