Understanding the purpose of a mechanic’s lien in Texas

On Behalf of | Dec 12, 2022 | Real Estate

Real estate projects can be expensive and time-consuming. However, when real estate disputes arise, it can be difficult for contractors, subcontractors and suppliers to get the payment they are owed. This is where a mechanic’s lien comes in.

What is a mechanic’s lien?

A mechanic’s lien is a legal tool that can help contractors, subcontractors and suppliers get the payment they’re owed for work completed on real estate projects. It is essentially a security interest in real estate. This allows them to collect their payment from the real property owner or their lender if there is no other way to receive compensation. This prevents prolonged and costly real estate disputes.

How does a mechanic’s lien work?

A mechanic’s lien gets filed in the real property records of the county where the real estate project got completed. This puts all parties connected to the real estate on notice that someone else has an interest in the property until payment is made. If payment is not made, then a real estate foreclosure action may get filed, allowing the lien-holder to collect their payment.

What if a mechanic’s lien is not properly filed?

If a mechanic’s lien is not properly filed in the real property records of the county where the real estate project got completed, then it will not be effective. It is important to make sure the lien is properly filed and all required paperwork gets completed in order for it to be valid.

What happens when a mechanic’s lien is satisfied?

Once payment is made in full, the real property owner or their lender can file a release of mechanic’s lien with the real property records office. This will release the real estate from the mechanic’s lien and allow the real property owner or their lender to move forward with any real estate transactions. Lastly, if there is a dispute over the amount owed, then a court order may be necessary to settle the matter.

So, whether you are a real estate contractor, subcontractor or supplier, it is important to understand how a mechanic’s lien works. Knowing how and when to use this legal tool can help ensure that you get your fair compensation.