Mechanic's Liens Commercial Projects

• Must have a contract with the property owner

Must have the following in your Constitutional Lien

How to find out who the owner is:

• The quickest way to search would be the County Appraisal District (CAD) where the property is located.

What are we looking for in the CAD?

• The Owner’s Name
• The Owner’s Address

I’m owed money, now what?

Step 1

Step 2

Step 3

Filing Your Constitutional Lien

Make sure you have all the correct information.

• All of the owner’s addresses.
• The total amount owed.
• a legal description of the property where work was performed.

Because this is a constitutional lien, you do not have to provide notices. You can file a lien at any time as long as the owners continue to own the property.

File the Lien.

• Have the owner’s name;
• The full legal description;
• Total amounts owed;
• Type of work performed and when you performed the work;
• Constitutional language;
• The Lien must be signed and notarized;
• Filed of record;
• Notice of Lien filing must be mailed to owners within 5 days of recording via certified mail return receipt.

You have two years to file a lawsuit to foreclose on your lien in order to perfect your lien on a Commercial Project.

Filing a lawsuit to foreclose on your lien.

To Protect your Lien Rights

Research:

• As with a Constitutional Lien, you will use the CAD of the county the property is located to find all needed information of the owner.

• Find the GC’s address.
• Go through the Secretary of State (SOS) to search for the entity.
• The registered address for the General Contractor will be located here.

NOTICES

• Provide 1st notice to the General Contractor by the 15th day of the 2nd month the debt was incurred- WHEN WORK WAS PERFORMED, NOT WHEN INVOICED
• Notices must be sent to the General Contractor via Certified Mail with Return Receipt.

• Provide 2nd notice to the General Contractor and Owner(s) by the 15th day of the 3rd month the debt was incurred- WHEN WORK WAS PERFORMED, NOT WHEN INVOICED
• Notices must be sent to the General Contractor and Owner(s)via Certified Mail with Return Receipt.

• All Notices must be sent by the 15th day of the month
• Holidays and Weekends are not an exception, you will have to send your notices before these dates.

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• File the memorandum of contract;
• File the lien; and
• File suit on the lien to foreclose & Breach of Contract against the person who hired you.

To Protect your Lien Rights

NOTICES- How to do certified mail

• Each letter must have their own Receipt and their own Green Card.
• The Receipt MUST BE date stamped at the Post Office, to prove notices were timely sent.
• Attach receipt and return receipt to the envelopes.

Timelines you must follow:

Statutory Lien Filing

File the lien

• Have the owner’s name;
• The full legal description;
• Total amounts owed;
• Contain what type of work performed, and when you performed the work;
• Date Intent Notice was sent;
• Include the Statutory Language;
• The Lien must be signed and notarized;
• Filed of record; and
• Notice of Lien filing must be mailed to all parties within 5 days of recording via certified mail return receipt.

Why File a Lien?

Filing a M&M Lien may help you recover unpaid debts accrued when an owner, contractor, or subcontractor doesn’t pay for services, material, or labor.

Because the city or county owns public works jobs, they are exempt from lien. However, they do have a payment bond.

The GC is required to have a payment bond on a public works job; you will have to file a claim with the insurance company if you’re owed money on a public works job.

*Residential Properties owned by an Entity do not fall under Homestead but do fall under the residential time line.

An individual and his or her spouse are only entitled to one homestead at a time

(Even if they own property in a different county).

Example: If you are building a residence while living in your homestead, the new residence will not be a homestead until you are physically living in the home.

Breaking Down Retainage

Retainage is a standard practice within construction projects and is required by nearly all construction loans.

It is 10% of the contract amount between an owner and an original contractor on any project.

Although the legal definition of retainage says nothing about subcontractors, most original contractors take 10% from the amounts due to the subcontractor throughout the project.

Every contractor an owner hires directly is called the original contractor. If any owner hires all of the trades directly, each contract is an original contract. This is important because all lien claimants could be limited to only 10% of the contract where they supplied labor or material.

Why is retainage important?

• First, if adequately withheld, retainage is essential because it can limit the owner’s liability.

*For example, If the owner withholds 10% of the entire project amount from the original contractor until 30 days after completion, the owner’s only liability to lien claimants will be the 10%. If the amount of the lien claimants exceeds the retainage amount, the valid lien claimant’s will share the 10% on a pro-rata basis.

• Second, if the owner properly withholds the 10%, the time frame for filing liens can be shortened. If the project is completed, an affidavit of final completion is filed with the county clerk, and the owner withholds the 10%.

*Remember that all liens must be filed within 30 days of final completion. Normally, a lien claimant has until the 15th day of the 4th calendar month, after the last material is supplied to file its lien. This time frame can be shortened to 30 days after final completion if the owner follows the steps above.

• Retainage generally does not become due to the subcontract until 30 days after final completion and/or when the general contractor receives the retainage payment. This ensures that a subcontractor will have a valid lien on retainage, and they should file their liens at the completion of the project.