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Texas Speed Bumps

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Texas Speed Bumps


Private Speed Bumps

  • Texas is an UNPAID BALANCE lien state with an exception; FULL PRICE the original contract’s 10% retainage.
  • Suppliers to suppliers have lien rights in TX.
  • Assistance with address verification: https://ourcpa.cpa.state.tx.us/coa/Index.html
  • Private projects are not subject to mechanic’s liens when the prime contractor has purchased and recorded in the real property records a payment bond to benefit unpaid claimants.
  • Residential construction by Texas Property Code means the construction or repair of a new or existing single family house, duplex, triplex, quadruplex or a unit in a multi-unit structure used for residential purposes that is
    • Owned by one or more adult persons, and (2) used or intended to be used as a dwelling by one of the owners.
  • Additional remedies may be available under the state’s Construction Trust Fund statutes.
    •  Pursuant to Tex. Prop. Code § 162.001, it is illegal to divert money paid on a construction project except in limited circumstances. Suppliers and laborers on construction projects are deemed to be beneficiaries of these funds that are to be held in trust. The individuals who control the disbursements of such funds can be held personally liable, both civilly and criminally, for the improper diversion of the funds from the beneficiaries.

 Notice Speed Bumps

  • Important Reminder: Claim amounts are required on all statutorily required NTOs.

Mechanic’s Lien Speed Bumps

  • For ordinary progress billings, the lien affidavit must be recorded not later than the 15th day of the fourth calendar month after the date on which the claimant completes its work. The deadline is NOT based upon when the entire project is completed (unless the lien claimant is the original contractor).
  • For contractual retainage to subcontractors (after a timely Notice of Contractual Retainage has been sent, the lien affidavit must be recorded by either:
    • 30 days after original scope work on the project is finally completed or concluded by the original contractor (not including warranty or punch-list work) or
    • The earlier of: (i) the 15th day of the fourth calendar month after the month in which the original contractor was complete, was terminated, or abandoned the project, (ii) 40 days after completion, termination, or abandonment if the owner has provided the claimant with notice of these events, or (iii) 30 days after an owner has demanded that the claimant file a lien affidavit in response to the owner's receipt of the notice letter of contractual retainage.
  • When materials are supplied under a single contract for improvement of multiple lots, the lien attaches to all lots owned by the same owner, so long as the lots are contiguous.
  • A lien cannot be perfected if a copy of the lien affidavit is not sent to the owner.

Foreclosure Speed Bumps

A court may award attorneys fees to the successful party in a lien foreclosure action.

Summary of Changes to Texas Lien Law for General Contacts signed after 1/1/22

Please note other requirements within speed bumps may apply to contracts signed prior to 1/1/22. 

  • Eliminates the Second Month notice requirement to general contracts (remains optional)
  • Ability to still send 2nd month 15th day notice to prompt early payment without penalty
  • Lien notice and filing deadlines are extended to the next business day
  • No more “tiers” of claimants
  • All required Subcontractor/Supplier notices due to Owner and Original Contractor on the 15th day of the third month
  • Shortens the statute of limitations to foreclose on a lien to one year from when the lien could be filed
  • Provides for expedited discovery for information relating to the validity and removal of the lien
  • Makes design services, surveyors, landscapers, demo work and equipment rental lienable
  • Certified Mail no longer required (optional) – Must send certified mail OR any traceable delivery service that can confirm receipt. USPS stamped certified mail receipt/manifest best option.
  • Standardized form for 3rd month (fund trapping) notice
  • “Magic” language now a “magic” form (new notice form requirements)
    1. Magic language heading/warning
    2. Date of notice
    3. Project description
    4. Lien claimant’s name, contact person and address
    5. Description of labor/materials provided
    6. Original contractor’s name and address
    7. Party with whom lien claimant contracted (if different than original contractor)
    8. Claim amount
    9. MAY include invoice or billing (Attorney recommended)
  • Eliminates Specially Fabricated Materials notice due by 15th day of second month when claimant receives and accepts the material order
  • Retainage notice not required when amount is included in 3rd month 15th day notice. 
  • Non-General Contractor retainage lien due by the 15th of the 3rd month of prime contract completion.
  • 10% retainage is referred to in the revised statute as “reserved funds” instead of “statutory retainage”.
  • All tiers have lien rights
  • Conditional/Unconditional lien waivers no longer must be notarized (Attorney recommends continuing notary process.)
  • Residential notice deadlines are unchanged – new form can be used on residential projects
  • Public project notice requirements remain unchanged.  (Ch. 2253 of Texas Govt. Code)
  • When in doubt of when the General Contract was signed always serve 2nd and 3rd month notices. 

Public Speed Bumps


  • Public/Private Partnerships- The Texas Government Code allows governmental entities to enter into comprehensive agreements with private parties to construct qualifying projects, including buildings, hospitals, schools, public works, recreational facilities, and other public projects. Among other things, it provides a process for private parties to submit unsolicited proposals to governmental entities. Chapter 2267 requires subcontractors and suppliers to procure payment and performance bonds in compliance with Chapter 2253 of the Texas Government Code on projects funded by public/private partnerships.
  •  On public jobs, a bond is required by TX statute.  Neither the state of TX nor a TX municipality has the authority to accept an LC in lieu of a bond for contracts above the state thresholds (25k/50k)... With one exception found in § 392.0525:

    § 392.0525. LETTER OF CREDIT ACCEPTED IN LIEU OF PAYMENT AND PERFORMANCE BONDS.  In the award of a contract for the construction, reconstruction, improvement, alteration, or repair  of any public building or for the completion of any public work, an  authority must comply with applicable state laws regarding the  execution of a contractor's performance bond and payment bond.  However, if authorized by a federal program or federal regulation, an authority may accept, in lieu of a performance bond and payment bond, an unconditional and irrevocable letter of credit in the amount of the contract price and payable to the authority. Added by Acts 1989, 71st Leg., ch. 1, § 80(a), eff. Aug. 28, 1989.