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How Texas law protects construction firms from non-paying clients

On Behalf of | Jun 6, 2022 | Residential And Commercial Construction Law

Construction is a dangerous industry. People can fall, get struck by moving machinery or get sickened by hazardous materials. In addition to all of those risks, there are also financial risks to consider.

Very few clients will pay the entire amount quoted for a construction project when they first hire a professional or contract with a company. They may pay a deposit, followed by a payment plan for the remainder of the amount due upon completion of the work.

Occasionally, property owners will fail to pay the remaining amount due to the construction company after the completion of the project. How does Texas law help construction professionals and companies get the payment they deserve for the work they have performed?

Service and material providers can request liens

Texas state law allows those that do work on real property and provide materials for construction projects to seek liens against the property. When a property owner fails to follow through with payments and either refuses to pay the balance when the company reaches out or will not communicate at all, going to court can be the most efficient solution.

The Texas courts will review the contract between the supplier or contractor and the property owner. They will review financial records of payments made. They can even review claims by the property owner about why they didn’t make a payment, such as allegations of property defects.

If the documentation supports your claim that there is still a balance owed, then a judge may issue a mechanic’s lien. Both those who would directly work with the property owner and subcontractors hired by a construction firm may have grounds for a lien when they have unpaid invoices on record.

How does a lien help your company?

A mechanic’s lien is valuable because it turns the property where you did the work into the collateral for the remaining balance that the property owner owes you. The property owner will not be able to sell or refinance the property until they pay off and remove the lead. Although it could still be some time before you receive full payment, attaching a lien to a property where you did work will help ensure that you eventually receive the compensation you deserve.

Knowing the laws that apply to Texas construction projects can help companies dealing with problem clients resolve the matter more quickly.