Foreclosure of Your Mechanic’s Lien
So you filed a lien on a property and now you want to know what else you might do to get paid. And the answer is it depends (I’m sure you’ve never heard that answer from an attorney!). There are a lot of factors that go into the different alternatives to getting you paid. Is it a commercial property? Is it considered a residential property? A homestead? Is there a bank note on the property or are they paying cash? Was it a onetime close at the beginning of the project? When was the lien placed on the property? Did the General Contractor post a bond? That and many other factors go into determining other alternatives to get you paid. I would like to go over a few of the other options you may have to get paid.
I’m going to focus on properties that don’t have bonds, since those really don’t involve Mechanic’s Liens. The intent of the law is to allow a way for contractors and suppliers to secure a method of payment if they are not paid by the GC. So, if everything goes according to plan, when the construction is substantially complete, the title to the property is clouded and the owner and/or builder or general contractor must work out a payment with the mechanic’s lien holder to remove the cloud of title. So, what happens if the stars don’t line up and that doesn’t happen?
If for some reason this doesn’t work and you don’t get paid or the payment does not come quickly, you can also institute a suit to foreclose on your mechanic’s lien. Just like how a bank can foreclose their lien if they don’t get paid, you can institute a lawsuit to obtain an order from a District Court foreclosing (or allowing you to sell at the county’s monthly foreclosure sale) the property subject to your lien. In addition to, or in the alternative, you can seek an Order from the Court allowing you to enter the property and remove a “removable” from the Property to help compensate you for the amount owed to you. Generally, you file a Petition in court alleging non-payment and proving that you have filed a valid lien affidavit. There are many rules and timelines that go into the process; however, there are a few that you should be specifically aware:
Non-Residential – The lien filing deadline is the 15th day of the 3rd month after the month the contract was completed, terminated, or abandoned. An action to enforce the lien must be initiated within one year of the last date that you could’ve filed a lien.
Residential (but not homestead) – You have 1 year after the last day claimant could have filed lien affidavit or 1 year after completion, termination, or abandonment of the work under the original contract under which the lien is claimed, whichever is later.
Homestead – you are unable to foreclose on a homestead, but you are able to seek an order from the court to remove any “removable” that can be removed to help satisfy the debt.
A Removable – this is generally something you provided for the project that can be removed with little or no damage. The Texas courts have held that items such as these are considered removable:
- Garbage disposals and dishwashers,
- Air conditioning and heating system equipment such as furnaces, air conditioning coil, compressor, thermostat, and condensing unit,
- Windows and doors,
- Lighting fixtures, cabinets, chimes, buttons, mailboxes and lamps, and
- Pumps fastened to beds of concrete.
Here are some examples that the Courts have considered to be non-removable:
- Concrete roof tiles,
- Window frames, and
- Cabinets
If you decide to go through the process of foreclosure, you really need to look at this like any other business decision. This is a real lawsuit and could be potentially costly if there is a dispute or if the facts aren’t straight forward, in some situations, if your lien is not for a large enough amount, equity would indicate that it is not financially worth your while to pursue your lien through a foreclosure.
