What is a Pre-Lien Notice?
A “Pre-Lien Notice” is a document sent to the Property Owner and the General Contractor by certified or registered mail that informs the Property Owner that a debt is owed for labor/materials provided to the property. There is specific statutory language (required by the Texas Property Code) which must be included in the letter in order for it to be valid and to require the Property Owner to withhold construction funds from the General Contractor in order to satisfy the debt in the event it is not paid. The letter must be served (not filed) by a specific date from when the labor/materials are provided to the property. Failure to serve the letter by the statutory deadline (even by one day) may result in a waiver of the right to later file a lien against the property.
- Inside Tip: Every time you prepare/serve a document in regard to your claim (like a Pre-Lien Notice), use it as an opportunity to forcefully demand payment. Remember, you only have a limited number of opportunities to demand payment and you need to make the most out of all of them. For example, we prepare our Pre-Lien Notices in the form of a strong Payment Demand Letter and serve them on everyone who may be affected by the filing of the lien. Typically, we will advise all interested parties that we intend to file the lien and thereafter a lawsuit, if the debt is not immediately paid. When applicable, we also assert violations of the Trust Fund and Prompt Payment statutes. By doing so, we are attempting to enforce payment of the debt now, so in reality we will not have to take the next step of filing the lien or the lawsuit. The goal is to get paid as soon as possible and without having to waste too much time/money in the process.
- Inside Tip: Even though a General Contractor/Original Contractor is not required to serve the Property Owner with notice of its intent to file a lien, we sometimes send a Payment Demand Letter before filing a lien if we think it will prompt the Property Owner to pay the debt. In the letter we advise the Property Owner that we intend to file the lien if payment is not made by a specific date and that we intend to file a lawsuit if payment is not made shortly thereafter. If the letter works to enforce payment, then we have avoided the time, expense, and resources in filing and serving the lien.