Texas design professionals, such as architects, engineers and surveyors, now have stronger legal tools to secure payment for their work, thanks to recent amendments to Chapter 53 of the Texas Property Code. Effective for prime contracts dated on or after January 1, 2022, these changes mark a significant expansion of Texas lien law, leveling the playing field for design professionals who previously faced limitations in asserting claims to protect their right to repayment.

First, what is a Chapter 53 Lien?

A lien under Chapter 53 of the Texas Property Code – commonly referred to as a mechanic’s and materialman’s lien – is a legal claim against real property by a construction creditor, such as a general contractor, subcontractor or material supplier, who has not been paid for services or materials provided to improve the property. If the creditor complies with the statutory requirements for perfecting the lien, discussed in more detail below, they may enforce the lien through a court judgment and foreclose on the property to recover the unpaid amount. This right to foreclose once the lien is perfected serves as powerful leverage for construction creditors, often compelling property owners or upstream contractors to promptly resolve outstanding payment obligations.

What Changed?

Previously:
Design professionals could only file a mechanic’s and materialman’s lien in Texas if they had a direct contract with the property owner or the owner’s agent. This excluded many downstream professionals, such as sub-contractors and sub-consultants, from lien protections.

Now:
Lien rights extend to design professionals regardless of whether their contract is with the owner, general contractor, or subcontractor.

Expanded Scope:
The law now covers “professional services used in the direct preparation for the work of a design, drawing, plan, plat, survey or specification.” This means more professionals can claim liens for a wider range of design work, including blueprints, drafting schedules, renderings and more may now be within the protections of Chapter 53.

Lien Perfection: How to Protect Your Right to Payment

Now that this new class of design professionals is entitled to lien their work, they should familiarize themselves with Texas’s lien perfection requirements. To take advantage of these new rights, design professionals must closely follow specific procedures laid out in Chapter 53:

1. Send a Pre-Lien Notice

  • Downstream professionals (not contracting directly with the owner) must send a pre-lien notice by the 15th day of the third month after providing services.
  • This notice “traps” funds in the hands of the owner and preserves the right to file a lien.
  • For ongoing projects, send these notices monthly to protect each month’s services/materials.

2. File a Lien Affidavit

  • Must be filed in the county where the property is located, no later than the 15th day of the fourth month after services/materials were last provided.
  • The affidavit must be notarized and include the amount owed, a description of the work, a legal description of the property and information about the parties involved.

3. Send Notice of Filed Lien

  • A copy of the filed lien must be sent to the property owner within five days of filing.

4. Foreclosure Deadline

  • If payment is not received, the lienholder must file a lawsuit to foreclose within one year of the last eligible lien filing date.

Each of these steps is essential for design professionals wishing to protect their right to repayment with a lien. Failure to comply with any requirement, or even missing a deadline by a single day, can result in the loss of lien rights. Design professionals should take steps to understand and implement these procedures to ensure their right to payment is fully protected.

Attorneys’ Fees: An Added Chapter 53 Benefit

Contractors and suppliers who assert lien rights under Chapter 53 may also recover their reasonable and necessary attorneys’ fees in any proceeding to foreclose on the lien. In other words, if an owner fails to pay the amounts owed even after a lien has been filed, the lienholder can seek reimbursement for its litigation costs as part of the foreclosure action. This statutory protection helps offset the expense of pursuing payment and incentivizes contractors and suppliers to pursue enforcement of their lien rights when faced with nonpayment.

Lienholder Advantages in Bankruptcy Proceedings

Filing a lien offers added protections if an upstream party files for bankruptcy. For example:

  • If the general contractor files for bankruptcy, the lienholder can still seek repayment through a foreclosure action on the owner’s property.
  • If the owner files for bankruptcy, the lien may allow the creditor to assert a secured claim in the proceedings.

Without a lien, creditors face a higher risk of going unpaid when upstream parties become insolvent.

Why It Matters

These recent changes to Texas lien law empower design professionals to secure payment even when working through layers of contractors. In a post-pandemic climate where slow or no-paying are common, the ability to file a lien can be a design professional’s greatest safety net. Not only does it pressure upstream parties to pay outstanding debts, but a lien also provides a legal mechanism to recover funds through foreclosure if necessary.

Design professionals at every level should review the amended laws as well as their internal processes to ensure compliance with the notice and filing requirements. When used correctly, Chapter 53 can be a powerful mechanism to protect the value of their work and ensure they are paid what they are owed.

Contract Clauses as Protection for Payment

While lien rights offer leverage, design professionals should also protect their right to payment through careful contract drafting. Useful provisions include:

  • Clearly defined payment deadlines
  • Interest penalties for late payments
  • Clauses allowing suspension of services if payment is delayed
  • Avoidance of “pay-if-paid” clauses
  • Attorneys’ fees provisions for nonpayment disputes

These contract provisions complement lien rights and help ensure fair compensation.

Conclusion

With expanded lien rights and well thought out contract drafting, design professionals at every level in Texas can strengthen their ability to secure payment for their work. By combining these statutory lien protections with strategic contracting, design professionals can maximize their chances of being paid fully and fairly for the value they bring to a project.

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