Release Your Texas Property: Remove Constitutional Liens

A constitutional lien, also known as a Constitutional Lien Affidavit, is a legal claim placed on a person's or entity's property. In Texas, constitutional liens are only available for original contractors with a direct contractual relationship with the property owner. However, in the case of a sham contract, a first-tier subcontractor may also have lien rights. Texas constitutional liens are self-executing, meaning they arise automatically. This makes them more difficult to challenge compared to statutory liens, which have stringent deadlines and notice requirements. If you are a homeowner in Texas and a constitutional lien has been improperly filed against your property, you may be entitled to file a motion to remove it.

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Know your rights as a homeowner or contractor

In Texas, contractors are aware that Texas law provides for mechanic's liens, also known as "statutory liens". The statutory lien process is complex and has stringent deadlines. Constitutional liens, on the other hand, are automatic and self-executing.

Know Your Rights as a Homeowner

As a homeowner, you have certain rights when it comes to residential construction projects. Here are some key points to be aware of:

• You have the right to obtain references for your contractor and request their license number, if applicable.
• You should have a written agreement with the contractor that includes a clear description of the work to be performed, the estimated timeline for completion, the cost of the work, and the method of payment.
• Before construction begins, you have the right to receive a list of subcontractors and suppliers that the general contractor intends to use. You should also receive updated information on any changes to this list.
• You should not sign a written waiver of your rights to receive information about subcontractors and suppliers.
• You have the right to request a copy of the contractor's change order form, as changes to residential construction projects are common.
• You can include builder's risk insurance coverage in the contract, which will protect against theft, vandalism, accidental losses, or damage to the property.
• If you are signing a contract for work on your homestead, it must contain a specific warning stating that you and the contractor are responsible for meeting the terms and conditions. Failure to include this language may invalidate any lien the contractor places on your home.
• If a lien has been placed on your property, review the requirements to ensure they have been met. If not, the lien may have been improperly filed.
• If you are a judgment debtor, Texas Property Code states that a judgment lien does not attach to your exempt real property, including your homestead.

Know Your Rights as a Contractor

As a contractor, there are also certain rights and requirements you should be aware of:

• You have the right to place a lien on a homestead if the homeowner fails to meet the terms and conditions of the contract, which could result in taking ownership of the home.
• You should provide a disclosure statement to the homeowner, informing them of their rights, responsibilities, and potential risks in the construction project transaction.
• You are required to provide a list of subcontractors and suppliers before the commencement of work, unless the homeowner waives this right.
• You can include a TX Residential Construction Liability Act notice in the contract, which addresses construction defects and the opportunity to cure them.
• You can offer financing options to the homeowner, but they must understand the terms and be able to make the payments.
• You can require the homeowner to sign a credit contract, but they should be fully aware of the terms and potential implications.

Understand the difference between statutory and constitutional liens

In the construction industry, liens are a common way for contractors and suppliers to secure payment for their work and materials. However, not all liens are the same. Understanding the differences between the types of liens is crucial for contractors, suppliers, and property owners.

Statutory liens, also known as mechanic's liens, are created by state law and provide contractors, subcontractors, and suppliers with a legal claim to the property they worked on or supplied materials to. They are a powerful tool as they allow claimants to secure payment for their work and materials even if the property owner fails to pay. These liens have strict requirements that must be met to be valid, such as stringent deadlines and notice requirements. In Texas, statutory liens are provided for under Chapter 53 of the Texas Property Code.

Constitutional liens, on the other hand, are only recognised in a handful of states and are typically used when statutory lien laws do not apply or do not provide adequate protection. These liens are automatic and self-executing, and they are not subject to the same statutory requirements as statutory liens. In Texas, constitutional liens are provided for by Article XVI, Section 37 of the Texas Constitution. This allows mechanics, artisans, and material men to have a lien on the buildings and articles they made or repaired to secure payment for their labour or materials.

It is important to note that the process of filing and removing a lien can be complex and may require legal assistance. In Texas, an owner can attempt to remove a lien through a summary motion if the lien was improperly filed or failed to meet the statutory requirements. However, there may not be a quick statutory method for removing a constitutional lien, and other avenues, such as a fraudulent lien claim, may need to be pursued.

Learn about the lien process and requirements

The lien process and requirements in Texas are complex and vary depending on the type of lien and the parties involved. Here is an overview of the process and requirements for a constitutional lien in Texas:

A constitutional lien, also known as a "Constitutional Lien Affidavit," is a legal claim placed on an entity's or person's property. It is derived from the Texas Constitution and the laws of a specific jurisdiction. Original contractors or suppliers who have a direct contract with the project owner and have not been paid in full for their work can file a constitutional lien. This type of lien is self-executing and automatic, meaning it arises without the need for written pre-lien notices or the same stringent deadlines as statutory liens. However, it is essential to note that constitutional liens are only available to those with a direct contractual relationship with the property owner.

To file a constitutional lien, the original contractor or supplier must meet specific requirements. These requirements include having a valid contract with the owner and improving a non-residential building or article. If these criteria are met, the contractor or supplier can file an action to foreclose on the lien.

For residential projects, the requirements are more complex. Section 50(a) of Article 16 of the Texas Constitution outlines the conditions that must be met to trigger a constitutional lien. It is important to note that subcontractors and sub-subcontractors are generally not eligible for a constitutional lien, as they do not have a direct contract with the property owner. However, if the direct contractor's contract is deemed a "sham contract," where the owner has control over the contractor, a first-tier subcontractor may have lien rights.

While constitutional liens do not have the same notice requirements as statutory liens, it is still recommended to file a lien affidavit with the county clerk where the property is located. This serves as notice to potential purchasers of the real estate. Additionally, constitutional liens have a different time frame for enforcement claims than statutory liens, which are typically valid for one to two years.

It is important to consult with an experienced real estate attorney when dealing with constitutional liens, as the procedures and applications can be complex and confusing.

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Seek legal guidance from a real estate attorney

If you are dealing with a constitutional lien on your property in Texas, it is highly recommended that you seek legal guidance from a real estate attorney. The lien removal process can be complex, and an experienced lawyer will be able to provide valuable expertise and guidance.

A real estate attorney can help you navigate the intricacies of Texas property law and determine the best course of action for your specific situation. They will be able to advise you on the validity of the lien and explain the options available for removal. This is especially important if the lien is impacting your ability to sell, mortgage, or refinance your property.

One of the critical steps in the lien removal process is contacting the judgment creditor or their attorneys. A real estate attorney can assist in drafting and sending an explanatory demand letter, along with a request for a partial release of the lien. This letter should outline the potential liability for the creditor if they fail to release the lien. By having an attorney draft this letter, you can ensure it is credible and effective, increasing the likelihood of a positive response from the creditor.

Additionally, a real estate attorney can review your case and identify if there are any grounds for the lien to be deemed invalid or unenforceable. For example, in Texas, there are specific requirements that must be met for a constitutional lien to be valid, as outlined in Section 50(a) of Article 16 of the Texas Constitution. If these requirements have not been fulfilled, your attorney can help you file a motion to remove the lien.

Furthermore, if litigation becomes necessary, a real estate attorney will represent your interests in court and work to achieve a favorable outcome. They can also assist in gathering the necessary documentation and evidence to support your case during the hearing.

Given the potential complexities and legal implications involved in lien removal, consulting with a qualified real estate attorney is a prudent step to protect your interests and ensure a successful resolution.

Know the options for lien release and removal

In Texas, a constitutional lien is a legal claim placed on a person's or entity's property, allowing original contractors to secure payment of a debt or obligation. It is derived from the Texas Constitution and laws of a particular jurisdiction and is not subject to the notice statutes of the Texas Property Code.

There are a few options for releasing or removing a lien in Texas. If a lien has been improperly filed, you can file a motion to remove it. This applies if you are a homeowner and not all the requirements for a valid lien have been met, or if you are an original contractor and the contract was signed without meeting all the necessary conditions.

For judgement liens, Texas Property Code Section 52.0012(c) states that a judgement lien does not attach to a judgement debtor's exempt real property, including their homestead. This means that if the subject property is clearly indicated as a residential homestead, a judgement creditor may choose to execute a partial release of that property from the judgement lien.

Additionally, Texas mechanics lien laws offer two types of mechanics liens: a statutory lien and a constitutional lien. The latter is only available to original contractors with a direct contractual relationship with the property owner. However, if the direct contractor's contract is deemed a "sham contract," a 1st-tier subcontractor may have lien rights. Sham contracts are when an owner has control over the prime contractor or vice versa through ownership, directorship, or other means.

It is important to note that the statutory lien process is complex, with stringent deadlines and notice requirements. Constitutional liens, on the other hand, are self-executing and automatic. If a lien claimant misses a statutory deadline or notice requirement, they can fall back on constitutional protections.

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