HOW TO FILE A MECHANICS LIEN IN TEXAS

I’ve been reading long, gas-baggy recorded documents like Declarations of Easements and Restrictive Covenants for so long that my eyes instinctively roll back, revolting at their recognition of the familiar stack of paper. These instruments are particularly prevalent in shopping centers and office and industrial parks, and mixed use projects that incorporate varieties of commercial product types. They mandate owner maintenance and repair, cleanup after a fire or other casualty, insuring each lot’s common area, and other assorted obligations pertaining to their respective parcels.

The declarations customarily make, courtesy of the Declarant, dire threats for non-compliance with this and that obligation, including an owner’s failure to reimburse the Declarant or another intervening owner (called an “intervenor” here) if it must step in and do the work of maintenance, repair, cleanup, payment of delinquent taxes or special assessments, affording of liability insurance, and so forth. The instrument typically provides that the failure to reimburse the intervenor for fixing the mess neglected by the uncooperative or disengaged land owner will constitute grounds to impress a lien for reimbursement against the miscreant’s parcel that “may be foreclosed in the manner of a mechanic’s lien.” Here’s one illustration:

 

Any sums remaining unpaid in accordance with Article [number] or Section [number], together with interest calculated at three percent (3%) above the prime rate charged by Wells Fargo Bank, N.A., or any successor thereto, or at the then-highest annual interest rate allowed by law (whichever is less), may be secured by a lien on the parcel of the owner in default and may be perfected in accordance with the laws of the state fact sheet, which lien shall retain the priority of title of this Agreement and may be foreclosed upon within one (1) year of the date that the lien is perfected.

Sounds awfully impressive, even though that text fails to describe the type of lien contemplated. I’m thinking, however, that this is wholly unenforceable claptrap, noble statement of remedial purpose notwithstanding. Item First: the manner of lien perfection goes unexpressed, perhaps with good reason. There are only two means in Arizona to perfect a lien on commercial real property (excluding fixtures filings, and a certificate of purchase creating a lien for the repayment of “funded” real property taxes and assessments) validly held by a non-governmental entity-via the mechanic’s lien statutes and the mortgage/trust deed statutes.

I can dispose of the latter avenue for a wannabe lien in a few words. A consensual lien against real property must be signed by its owner or someone authorized by law to do so on behalf of that owner. Merely participating in a larger development of property governed by CC&Rs–however assertive these may be–does not constitute a grant of authority by a land owner sufficient to constitute an intervenor his attorney-in-fact to legitimize recording a foreclosure-worthy, mortgage-type lien.

Their various types can be applied against a property and they are generally created by contract or a court order.

  • Contractual lien: an agreement voluntarily entered into by the property owner to accept attachment of a lien to the property as compensation.
  • Court order/judicial lien: a judge gives a party (creditor) the right to another person’s property through a final judgment. The creditor is legally entitled to take possession of the property through the assistance of the sheriff’s office.
  • Property tax lien: It has priority over all other lien forms (including a mortgage). The government can have your property sold to pay back taxes.
  • IRS lien: a more extreme process that places a lien against all your property – real estate and other possessions.
  • Mechanic’s lien: filed by a contractor to whom you owe money for work or materials provided but for which you have not paid as agreed to.
  • Child support lien: the recipient may place a lien on your real estate when you owe a substantial amount of alimony or child support. That lien remains in place until all moneys are paid.

Generally, there are two primary options for resolving a lien filed against your property: dispute the lien, or satisfy the debt.

  • Satisfy the debt: the lien will be removed once the debt related to it is paid.
  • Dispute: a legal challenge to the “underlying claim” on which the lien is based. If it can be demonstrated that the lien was obtained by fraud, duress, or other unlawful means, a court order may be obtained for the lien to be removed.
  • Bad faith payment demands: the court may remove the lien as punishment of the lien-holder for demanding more than is owed (an act of bad faith involving fraud or threats).
  • Sale or destruction of property: the lien can be removed if the property is sold or destroyed (although it is unlikely that fraudulently selling a property to cause removal of the lien will succeed).
  • Property is sold or given to the lien-holder: this transaction should trigger removal of the lien.
  • Lien-holder does not claim property rights: if the lien-holder fails to assert the rights granted by it for a continuous period of time, the lien can be removed.

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