In Texas, a monthly notice is a critical document that safeguards the ability to file a mechanics lien in cases of non-payment. This specialized preliminary notice is unique to construction projects within the state. Below is an overview of the key rules and guidelines for properly sending monthly Texas preliminary notice.
Key Takeaways
- Timely and Proper Notice is Crucial: In Texas, sending monthly preliminary notices by the required deadlines is essential to protect the right to file a mechanics lien. Notices for unpaid labor or materials must be sent on time to both the property owner and the general contractor (GC) depending on the project type and the contractor’s role.
- Residential and Commercial Project Requirements Differ: While general contractors (GCs) may be exempt from sending preliminary notices on commercial projects, subcontractors and suppliers must adhere to specific timelines for sending notices, typically within the second or third month after services or materials are provided.
- Strict Documentation and Delivery Methods: Notices must include detailed project information and be sent via certified mail or delivered in person, with proper documentation. Failure to follow these procedures can lead to the forfeiture of lien rights.
Who Needs to Send Texas Notices on Private Projects?
Contracts Entered Into on or After January 1, 2022
For contracts initiated on or after this date, general contractors are typically not obligated to provide a preliminary notice. However, for residential projects, they must adhere to specific requirements:
- A disclosure statement must be given to the property owner prior to signing the contract.
- A written list of all subcontractors and suppliers planned for use must be provided and updated as needed unless the property owner has explicitly waived this requirement in writing. Such a waiver can be included in the original contract.
Homestead Projects To secure a lien on a homestead property, general contractors must file a written contract with the county clerk before providing labor or materials. This contract must outline the terms and be signed by both spouses if the property owner is married.
Subcontractors and Suppliers Subcontractors and suppliers who are not directly hired by the owner must send monthly notices for residential and commercial projects. These notices must be sent in the second and/or third months after labor or materials are provided.
Special Notice for Retainage Claims For claims related to contractual retainage, subcontractors or suppliers not directly contracted with the owner have additional notice requirements to protect their payment rights.
Contracts Entered Into Before January 1, 2022
Under Texas’ previous lien laws, an additional notice requirement applied only to suppliers of specially fabricated materials. These suppliers had to send a notice to secure lien rights for materials specifically manufactured for a project, regardless of whether they were delivered or incorporated into the construction.
When Is the Deadline to Send a Notice in Texas?
Contracts Entered Into on or After January 1, 2022
Residential Projects
- Homeowner Disclosure Statement: General contractors (GCs) must provide the owner with a disclosure statement before executing the contract or include it in the agreement.
- Homestead Projects: To secure a mechanics lien, the GC must file a written contract with the county clerk prior to providing labor or materials. The contract must be signed by both spouses if the owner is married.
Monthly Notices for Commercial Projects
- All claimants except the GC must serve a notice by the 15th day of the 3rd month following the month in which labor or materials were provided.
Monthly Notices for Residential Projects
- Notices are due by the 15th day of the 2nd month after each month that labor or materials were supplied.
Notice of Claim for Unpaid Retainage
- The notice must be sent no later than:
- 30 days after the claimant’s contract is completed, terminated, or abandoned, or
- 30 days after the original contract is terminated or abandoned, whichever occurs first.
- Deadline Adjustment: If the 15th falls on a weekend or federal holiday, the deadline is extended to the next business day.
Contracts Entered Into Before January 1, 2022
Commercial Project Monthly Notices
- Hired by the GC: Notices must be sent by the 15th day of the 3rd month after the month labor or materials were supplied.
- Hired by Others:
- Notices are required by the 15th day of the 2nd month and the 15th day of the 3rd month following each month labor or materials were furnished.
Specially Fabricated Materials
- Notice must be provided by the 15th day of the 2nd month after the claimant accepts the material order.
Deadline Adjustment for Holidays/Weekends: If the 15th falls on a weekend or federal holiday, the notice must be served before the deadline.
Who Do I Send a Texas Preliminary Notice To?
Contracts Signed on or After January 1, 2022
Residential Projects: Homeowner Disclosure Requirements
- General contractors (GCs) must provide a disclosure statement to the property owner for residential projects.
- For homestead improvements, the contract must be officially filed with the Texas county clerk in the county where the property is located.
Monthly Notice Requirements
- For both commercial and residential projects, monthly notices must be sent to both the property owner and the GC.
Unpaid Retainage Claims
- Notices regarding unpaid retainage must be delivered to both the property owner and the GC.
Contracts Signed Before January 1, 2022
Exceptions to General Rules:
Monthly Notice Rules for Commercial Projects
- 2nd-Month Notice: Must be sent to the general contractor.
- 3rd-Month Notice: Must be sent to both the property owner and the GC.
Specially Fabricated Materials Notice
- If the claimant was hired directly by the GC, the notice must be sent to the property owner.
- If hired by a subcontractor, notices must be sent to both the GC and the property owner.
Retainage Claim Notice
- If hired directly by the GC, the notice only needs to be sent to the property owner.
- If hired by a subcontractor, the notice must be provided to both the GC and the property owner.
What Information Is Required on Texas Notices?
Homeowner Disclosure Notice
For residential projects, the homeowner notice must comply with the language outlined in Tex. Prop. Code §53.255.
Monthly Notice Requirements
All monthly notices must adhere to the statutory format under Tex. Prop. Code §53.056(a-2) and include:
- Date of notice
- Project address or description
- Claimant’s name, contact details, and address
- Description of labor or materials provided
- Original contractor’s name
- Hiring party’s name (if different from the original contractor)
- Claimed amount
- For homestead projects, include notice language as required by Tex. Prop. Code §53.254(g)
Notice of Claim for Unpaid Retainage
Retainage claims must follow the format specified in Tex. Prop. Code §53.057(a-2) and include:
- Date of notice
- Project address or description
- Claimant’s name, contact details, and address
- Description of labor or materials provided
- Original contractor’s name
- Hiring party’s name (if different from the original contractor)
- Total unpaid retainage amount
Contracts Signed Before January 1, 2022
While the same general rules apply, there are notable differences:
Monthly Notices
Texas law provides limited guidance on the details for monthly notices, typically requiring only a “notice of unpaid balance.”
However, it’s advisable to include:
- Claimant’s name and address
- Property owner’s name and address
- Hiring party’s name and address
- Brief description of labor or materials supplied
- Property description
Notice for Specially Fabricated Materials
This notice should simply confirm:
- The order was received and accepted
- The total price of the order
Notice of Contractual Retainage
The retainage notice must state:
- The existence of a retainage requirement
- Claimant’s name and address
- If hired by a subcontractor, the subcontractor’s name and address
How Should Notices Be Sent in Texas?
Certified Mail Requirement
In Texas, all construction-related notices are generally required to be sent via certified mail.
Homestead Improvement Contracts
For homestead improvement projects, the contract must be filed with the county clerk in the Texas county where the property is located before any labor or materials are provided.
Alternative Delivery Methods
While certified mail is the standard, Texas law allows for alternative methods of delivering notices:
- Notices or written communications can be delivered in person to the recipient or their authorized agent.
- Texas law states that if the intended recipient receives the notice, the delivery method becomes irrelevant.
Hand-Delivered Notices
If you choose to hand-deliver a notice:
- Ensure the recipient or their agent accepts the notice.
- Document the delivery process carefully, such as by obtaining a signed acknowledgment or using a third-party delivery witness. This documentation may serve as proof if needed.
Is a Texas Notice Considered Served When Sent or When Received?
In Texas, the requirement for sending most construction notices, including monthly notices, is typically met once the notice is mailed.
Key Provision in Texas Property Code
Under Texas Property Code § 53.003(c):
- Notices sent via registered or certified mail are deemed compliant with notice requirements when they are deposited in the U.S. mail in the proper format.
Exceptions to the Rule
While mailing constitutes compliance in most cases, the law specifies that this does not apply if a statute explicitly requires the notice to be received by the intended recipient.
For additional clarity, it’s important to confirm whether the specific notice you’re sending must adhere to the receipt-based requirement.
What Happens If I Send a Texas Lien Notice Late?
For Contracts Dated On or After January 1, 2022
Failing to send a required monthly notice by the deadline typically prevents you from filing a mechanics lien for the unpaid amount in Texas.
When it comes to the Notice of Claim on Unpaid Retainage, missing the deadline might not completely eliminate the possibility of recovering the retained funds. If the retainage amount was properly included in earlier notices, the claim may still be valid.
For Contracts Dated Before January 1, 2022
The same general rules apply but with some differences:
- If a supplier of custom-manufactured materials misses the deadline for providing notice regarding specially fabricated materials, they may only claim lien rights for materials that were delivered and incorporated into the project.
Who Needs to Send Texas Notices on Public Projects?
Payment Bond Monthly Notices
Claimants who are not directly contracted with the prime contractor responsible for providing the bond are required to send a preliminary notice to secure their rights. However, laborers making wage-only claims are exempt from this obligation.
Notice for Contractual Retainage
Claimants lacking a direct contract with the prime contractor supplying the bond must also provide a preliminary notice to preserve their rights for unpaid retainage.
Notice for Specially Fabricated Materials
Suppliers delivering specially fabricated materials must issue a notice to safeguard their bond claim rights. This applies to materials that were created for the project but were either undelivered or not utilized in the construction.
When Is the Deadline to Send a Notice in Texas on Public Projects?
Payment Bond Monthly Notices
- First-tier Claimants (those hired directly by the prime contractor) must submit a notice to both the prime contractor and surety no later than the 15th day of the third month following the month in which labor or materials were provided.
- Second-tier Claimants (those hired by subcontractors or lower) are required to send a notice to the prime contractor by the 15th day of the second month after providing labor/materials, and a notice to both the prime contractor and surety by the 15th day of the third month.
Notice for Contractual Retainage
A notice regarding unpaid retainage must be filed no later than 90 days after the final completion of the public work contract.
Notice for Specially Fabricated Materials
Suppliers must issue a notice by the 15th day of the second month following the acceptance of an order for specially fabricated materials.
- If the 15th falls on a weekend or holiday, the notice must be delivered before the 15th.
More About Texas Monthly Notice Rules
IMPORTANT UPDATE: Texas lien laws underwent significant changes, impacting all original contracts signed on or after January 1, 2022 (i.e., contracts made on or after this date).
Under Texas mechanics lien laws, contractors and suppliers must send monthly notices to both the prime contractor and property owner. These notices are crucial to maintaining the right to file a mechanics lien if payment is not received. Given the complexity of Texas lien laws, construction businesses must adhere strictly to the rules.
Texas notices can function as both preliminary notices and intent-to-lien notices, requiring submissions at the beginning of a project and throughout its duration—every month a contractor or supplier provides unpaid labor or materials. This can create a challenging documentation process, particularly for long-term or high-budget projects.
Texas Notice Requirements Based on Role and Project Type: Direct contractors (those contracted with the property owner) are not required to submit preliminary notices for non-residential projects, but must submit a disclosure statement outlining all subcontractors and suppliers working on the project. Subcontractors, material suppliers, and anyone without a direct contract with the property owner must submit monthly notices to protect their right to file a lien.
Texas Construction Notice Deadlines Most notices are due by the 15th of the month. For retainage claims, the deadline is different. A monthly notice should be sent by the 15th of the 2nd or 3rd month after labor or materials are provided but remain unpaid, depending on the project type. Many contractors hesitate to send notices due to their strong language, which often creates stress on the 15th of each month.
Commercial Project Notices For commercial projects, all subcontractors and suppliers must send a 3rd-month notice to both the owner and general contractor by the 15th of the 3rd month after unpaid work was performed.
For projects before 1/1/22, the rules vary:
- First-tier subcontractors (those contracting directly with the prime contractor) must send the 3rd-month notice by the 15th day of the 3rd month.
- Lower-tier subcontractors must send both the 2nd- and 3rd-month notices.
Residential Project Notices For residential projects, all parties who did not contract directly with the owner must send a 2nd-month notice by the 15th of the second month.
Notice of Specially Fabricated Materials If the project begins before 1/1/22, suppliers must submit a notice by the 15th of the second month after they receive an order for specially fabricated materials. This preserves lien rights even if the materials are not used or delivered.
Notice of Claim for Unpaid Retainage To file a lien for unpaid retainage, claimants must send notice within 30 days after the completion, abandonment, or termination of the retainage agreement or original contract.
Penalties for Missing Deadlines Failure to send required notices, even by one day, may forfeit the ability to file a lien for unpaid work or materials for the associated months. Missing the specially fabricated materials notice on projects started before 1/1/22 means a lien can only be filed for materials that were delivered and incorporated into the project.
How to Send Preliminary Notice in Texas?
If you’re involved in a private construction project in Texas, there’s a strong likelihood that you’ll need to send some form of construction notice to safeguard your mechanics lien rights. However, Texas has a very distinct notice system, one that’s unlike any other in the country. Unfortunately, the process can be overwhelming and difficult to navigate.
Texas’ construction laws are widely regarded as cumbersome, with the confusion stemming from poorly drafted legislation. While there have been many attempts to address this issue, it remains unresolved, leaving contractors and suppliers to deal with the current rules.
This article is designed to help you understand and comply with Texas’ complex notice requirements. It provides a clear, step-by-step guide for contractors and suppliers, covering everything from when and how to send notices to what best practices to follow to ensure your lien rights are protected.
What is a “Texas Monthly Notice”?
In Texas, contractors and suppliers must manage several types of notices, but the “monthly notice” is the most commonly required and confusing one. Often called a Notice of Non-Payment, Preliminary Notice, or Pre-Lien Notice, this notice serves as a way for subcontractors and suppliers to alert property owners that payment is overdue and a lien could be filed. These notices are mandatory each month that work goes unpaid.
What Does a Texas Monthly Notice Do?
The notice informs the property owner that you haven’t been paid for work performed. It’s an early warning that the situation could escalate to a lien if payment isn’t made soon. Interestingly, you may need to send the notice multiple times, depending on the duration of the project or if payments span over multiple months.
Step 1: Determine Which Texas Notices You Need to Send
The type of notice you need to send depends on your position in the payment chain and whether the project is residential or non-residential. Contractors in different roles have different requirements. Residential projects may have different notice deadlines compared to non-residential projects, and lower-tier contractors might need to send notices more frequently.
Step 2: Review Your Unpaid Invoices
At the start of each month, check your unpaid invoices to see if a notice needs to be sent. If the 15th of the month falls on a holiday or weekend, the deadline is moved to the next business day. This constant review of invoices ensures that you stay on top of your lien rights.
Step 3: Prepare and Send Your Monthly Notices
Prepare the necessary forms with all required information and ensure that you send them through the proper channels. Keep proof of delivery to ensure your notice is recorded correctly.
Step 4: Track and Confirm Delivery
Make sure you send the notice to the correct party via the proper method (certified mail, etc.). Tracking your delivery will help prevent any issues later on.
Why Send Texas Monthly Notices?
- Protect Your Lien Rights: Sending these notices is crucial to maintaining your right to file a Texas mechanics lien.
- Get Paid Faster: Promptly sending notices can encourage faster payment.
- Streamline the Process: It’s a simple, effective way to ensure you’re in compliance and avoid future complications.
Common Issues with Texas Monthly Notices
Managing the timing of these notices can be tricky, especially when dealing with overdue payments or slow payment terms in the construction industry. Even if you’re not in a dispute, the notices must be sent according to strict deadlines, which can sometimes create tension between parties.
This guide is your comprehensive resource for navigating Texas’ monthly notice process, ensuring that contractors and suppliers can protect their mechanics lien rights and stay compliant with state regulations.
Get in Touch
Understanding Texas preliminary notice requirements is crucial for anyone involved in construction projects. Whether it’s for residential or commercial projects, sending the correct notices at the appropriate times is vital to securing lien rights in case of non-payment. With clear deadlines, specific recipient guidelines, and detailed formatting, staying compliant with Texas lien laws can prevent potential legal and financial issues. By following these rules diligently, contractors, subcontractors, and suppliers can better protect their payment rights and navigate the complexities of construction projects in Texas.
At CRM Lien Services, we have been serving customers across the country with required reference documentation for lien claims since 1986. We provide expert guidance, helping contractors and suppliers safeguard their payment rights through seamless and timely preliminary notice and lien filings. We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a preliminary notice and mechanics lien, give us a call or shoot us an email.
