Although the changes to Chapter 53 of the Texas Property Code, the statute governing Mechanic’s Liens in Texas, went into effect on January 1, 2022, questions still abound regarding the rights and responsibilities of project consultants on construction projects, i.e. architects, engineers, and the like. Below is primer on the changes to Chapter 53 and how they affect these specific individuals as well as a brief discussion on the changes to statutory retainage and lien law.

For starters, Section 53.021 removes the requirement that an architect, engineer or surveyor provide services “under or by virtue of a contract with the owner or the owner’s agent, trustee, or receiver” to be entitled to a lien. Practically speaking, subcontractors and sub-consultants to architects, engineers, and surveyors are now entitled to a lien. Design professionals as defined by the statute now have lien rights regardless of whether they contract with an owner or with a prime contractor, which was not the case before the lien law amendments. This alteration was accomplished by including professional services in the definition of improvements and by modifying Sections 53.021 and 53.023.

Further, given the change in definitions, a design-build contractor or a design professional can lien for services even if project does not materialize, since labor is defined, partially, as a “professional service used in the direct preparation for the work of a design, drawing, plan, plat, survey, or specification.”

Additionally, changes to Chapter 53 included renaming “retained” funds to “reserved” funds. Retainage is still defined as an amount representing part of a contract payment that is not required to be paid to the claimant within the month following the month in which labor is performed, material is furnished, or specially fabricated material is delivered, but the modification was intended to help clarify any ambiguity between statutory retainage and contractual retainage.

The reserved funds notice obligations were also slightly modified. Section 53.057 now sets forth the express form of a notice of contractual retainage. A claimant, other than an original contractor, must send the notice of claim for unpaid retainage to the owner or reputed owner and the original contractor not later than the earlier of: (1) the 30th day after the date the claimant’s contract is completed, terminated, or abandoned; or (2) the 30th day after the date the original contract is terminated or abandoned. Not much of a change to the statute other than modifying “claim amount” with “Total Retainage Unpaid.” Also, previously there were a few different deadlines to keep track of to record liens on retainage following a certain event like the termination of the prime contractor or notice from the owner, but now claimants other than original contractors have the 15th day of the third month following completion of entire project to file a retainage (reserved funds) lien (original contractors still have the 15^th day of the fourth month for prime contract debts, including reserved funds).

The attorneys in our Austin and Dallas offices are available to answer and questions you may have about Texas lien laws.  Please contact us at info@gstexlaw.com.

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