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Law/Courtroom - July 2008

Constitutional Mechanicís Lien Often Overlooked

By Anthony Whitley

The constitutional mechanic’s lien is a powerful tool available to contractors faced with an owner's refusal to pay overdue contract sums.

Autumn Harrison
Anthony Whitley, an attorney at the Dallas office of Ford Nassen & Baldwin PC. Alley is also a part of the Dallas office of Ford Nassen & Baldwin (www.fordnassen.com).

Most Texas contractors have extensive experience with the mechanic’s lien statutes. Fewer, however, understand the constitutional mechanic’s lien, a powerful, often forgotten tool that provides protection similar to the statutory mechanic’s lien. Failure to understand the constitutional mechanic’s lien can mean losing valuable leverage against an owner’s refusal to pay overdue contract sums.

The Congress of the Republic of Texas first incorporated the constitutional mechanic’s lien in the Texas Constitution of 1869. Today the lien provision is found in Section 37 of Article 16 of the constitution. It states: “Mechanics, artisans and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefore…”

While both protect against an owner’s non-payment by potentially attaching to the owner’s property, allowing for the lien’s foreclosure, the constitutional lien is different from the statutory lien. Most significantly, it is only available to a prime contractor working directly for an owner.

Unlike a statutory mechanic’s lien, a constitutional mechanic’s lien is “self-executing.” The constitutional lien automatically arises and becomes enforceable against the owner by virtue of the contractual relationship between the owner and the prime contractor. Although it is not recommended, a constitutional lien does not have to be filed in the same time perioed as is required to enforce a statutory lien under Chapter 53 of the Property Code. A contractor does not even have to file a constitutional lien for it to be enforceable so long as the owner has not sold the property.

When to File a Constitutional Lien Even though the constitutional mechanic’s lien does not necessarily need to be filed to be effective, a contractor should always file the lien as soon as possible after the last work is performed. This will help avoid the risk of a subsequent lien holder or purchaser of the property not having proper notice of the constitutional lien, which could prevent the lien’s enforceability. To provide infallible notice, contractors are advised to record constitutional liens within the time frame for filing statutory liens. If filed within the Property Code’s statutory deadlines, a constitutional lien will “relate back’’ and be considered effective as of the date construction started. The constitutional lien will thereafter share priority (with statutory mechanic’s liens) over non-mechanic’s liens or encumbrances recorded after the start of construction.

If the constitutional mechanic’s lien is not filed within the statutory deadlines, and the owner still owns the property, the lien will still be effective against the owner, and the contractor will still be able to file a suit to foreclose the lien. However, some argue that the constitutional lien no longer will “relate back” to the start of construction and will lose priority over previously filed liens and encumbrances. If eventually filed, the constitutional lien will thereafter have priority over subsequently filed liens or purchasers of the property.

When and How to File and Foreclose the Constitutional LienThe constitutional mechanic’s lien must be in the form of a sworn affidavit and filed in the real property records of the county in which the property is located. Texas law is unclear as to whether a contractor must file its suit to foreclose a constitutional lien according to the same statutory deadlines in Chapter 53 of the Property Code. Prior to 1999, Texas courts allowed a contractor to bring a suit to foreclose its constitutional lien if the statute of limitations had not run out on the underlying debt.

The Property Code was amended in 1999 in an attempt to require contractors to file suit on both statutory mechanic’s liens and constitutional mechanic’s liens within the same limitations period (within two years from the fifteenth day of the fourth month following the last day work was performed). However, the 1999 revisions do not directly mention the constitutional lien, and to date no Texas court has applied the deadlines related to filing a suit to the constitutional lien. Until a court decides the issue, contractors are advised to file their suits to foreclose constitutional liens according to the same deadline required for filing suits to foreclose statutory mechanic’s liens.

Editorís note: The information in this article is not intended as legal advice but to provide a general understanding of the law.

 

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