Mechanic’s and Materialman’s Liens – A Powerful Tool for Debt Collections

Texas Mechanics Liens - M&M Liens

A. Lewis Ward helps business owners protect themselves and recover debts by properly filing and supporting Texas Mechanics Liens, know as M&M Liens

Mechanic’s and materialman’s liens (M&M liens) can be a very useful tool for debt collections, especially in collecting delinquent accounts. This tool is available to contractors, laborers, suppliers, architects and others who provide labor, services or materials for the improvement of real property.

An M&M Lien is a remedy for debt collections provided under Texas business law and that you must comply with strictly for your lien to be enforceable. Failure to comply with these strict statutory requisites can not only result in an unenforceable lien, but may result in you having to pay attorney’s fees and court costs to the real estate owner if he prevails in an action against you to remove the lien.

The requirements to be met and the applicable deadlines depend upon whether the project is public or private; whether it is residential or commercial; and whether you are a general contractor or a derivative claimant, e.g., subcontractor, laborer, etc.

An M&M Lien claimant usually must provide a notice of the amount due but unpaid within a certain time period in a specifically required manner to very specific persons before filing an M&M Lien affidavit. The M&M Lien affidavit must then be filed within the prescribed time after the accrual of indebtedness (which has a definition that varies according to the type claimant) and contain the information described in the statute. When these things are properly completed, the claimant has a “perfected lien.”

The “perfected mechanic’s and materialman’s lien” can assist a claimant in the following ways:

  1. A subcontractor or other similarly situated claimant can trap funds for his payment in the hands of the real property owner. If the owner does not force the general contractor to pay the subcontractor or withhold funds as instructed, the owner and his property can become liable to the subcontractor.
  2. This subcontractor, by perfecting his lien, effectively stops the land owner from selling the property without first paying the subcontractor (it is possible to bond around the lien). Because of the owner’s plans to sell, this often puts the subcontractor in a very strong position.
  3. Even if the owner has no plans to sell the improved real property, the pending M&M Lien can adversely affect any banking relationship with respect to the subject property and his credit generally.
  4. The subcontractor can foreclose on his M&M Lien, and the court must award costs and attorney’s fees as are equitable and just.

Businesses involved in or affiliated with the construction industry should keep a watchful eye on their accounts receivable – the notice of amount due but unpaid, the first step in perfecting a mechanic’s and materialman’s lien, can be due as soon as 45 days after the end of any month in which labor, services or materials are furnished.

Contact A. Lewis Ward & Associates for assistance in filing a “perfected M&M Lien” and protecting your business and personal interests.