The 2022 changes to the lien laws in Texas made it possible for lien claimants to email their pre-lien notices to the original contractor and owner, as opposed to certified or registered mail, only. But, what constitutes substantial compliance with the lien laws in terms of providing electronic notice? Is emailing a pay application alone sufficient? The statute is instructive, but case law is scarce since many of the 2022 revisions have yet to be litigated.

Notice under Chapter 53 of the Texas Property Code

The lien statute provides that any notice or other written communication required by the statute must be delivered: (1) in person to the party entitled to the notice or to that party’s agent; (2) by certified mail; or (3) by any other form of traceable, private delivery or mailing service that can confirm proof of receipt. Texas Property Code §53.003(b). The 2022 amendments added the last notice options, which would include email correspondence with a delivery receipt.

If notice is sent by certified mail, deposit or mailing of the notice in the United States mail in the form required constitutes compliance with the notice requirement. Id. at §53.003(c). These requirements do not apply if the law requires receipt of the notice by the person to whom it is directed. Id. If a written notice is received by the person entitled to receive it, the method by which the notice was delivered is immaterial. Id. at §53.003(d).

Timing of Statutory Notice

Subcontractors in commercial projects must comply with the third-month notice requirement to have a valid lien on a property. Texas Property Code §53.056. Subcontractors, to comply with this requirement, must send a notice of claim for unpaid labor or materials to the project owner and general contractor “not later than the 15th day of the third month after” providing labor or materials. Id. at §53.056 (a-1)(1).

Form of Notice under Chapter 53 of the Texas Property Code

The subcontractor’s notice, must be in substantially the following form. Id. at §53.056 (a-2).

 

NOTICE OF CLAIM FOR UNPAID LABOR OR MATERIALS

WARNING: This notice is provided to preserve lien rights. Owner’s property may be subject to a lien if sufficient funds are not withheld from future payments to the original contractor to cover this debt.

Date: ____________________________

Project description and/or address: ______________________________

Claimant’s name: ____________________________

Type of labor or materials provided: ______________________________

Original contractor’s name: __________________________________

Party with whom claimant contracted if different from original contractor: ___________________________________________________________

Claim amount: ______________________________________

______________________________________ (Claimant’s contact person)

______________________________________ (Claimant’s address)

 

Notice from Second and Third Layer Subcontractors

“Sub-subcontractors” in commercial projects have the same obligation (as subcontractors) to comply with the third-month notice requirement above because the definition of “subcontractor” means a person who labors or has furnished labor or materials to fulfill an obligation to an original contractor (i.e. general contractor) or to a subcontractor of any tier to perform all or part of the work required by an original contract. Texas Property Code §53.001(13).

Distinction between Invoice and Statutory Notice

A subcontractor is allowed to send a general written notice to the original contractor when an invoice for labor or materials is past due. However, such general written notice is voluntary and not required for a lien to be valid.  In other words, the voluntary written notice serves as an informal reminder between parties to prompt payment. It does not replace the mandatory third-month notice requirement to properly file a lien.

Why the Distinction Matters

So, while a subcontractor sending an overdue pay application to an original contractor and owner may trigger other recovery mechanisms, like the Texas Prompt Pay Act, for purposes of securing a lien, a subcontractor must include written notice in substantial compliance with the form in the Property Code. Simply sending an invoice via email is not enough.

Chapter 53 of the Texas Property Code

 

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