I noticed that my website has been getting more traffic with questions on what steps need to be taken to remove a lien, so I want to write a series of posts meant to explain the process one needs to go through to remove a lien. We’ll start with a few categories the liens may fall under. The first category we will discuss are valid liens where the money is owed and not disputed; the second category would be invalid or disputed liens; and the third category would be liens which were once valid but a foreclosure proceeding had not been brought within the statute of limitations. I’ll cover the first two categories in this article.
The first one is, of course, the easiest. How does an owner, etc. remove a lien which is technically considered valid (meaning, the lien was filed timely and properly perfected in accordance with the Texas Constitution and the Texas Property Code and is a valid assertion of non-payment) and which is not disputed. The typical way to handle these liens is to work out a settlement with the lien holder for full or partial payment in return for a sworn affidavit releasing the lien which is then filed with the county in which the property is located.
The second one is a bit tougher. There are many reasons why a lien can be disputed or considered invalid. One being that a lien can be invalid because the proper procedures/language/timeframes weren’t followed per the Texas Constitution and the Texas Property Code (Texas sometimes can be as picky as Virginia: read here at Construction Law Musings). Another reason for which a lien can be invalid is due to reasons of fraud (such as a contractor falsely/fraudulently placing a mechanic’s lien on a property) or because the lien amount is disputed.
Regardless of why you dispute the lien or believe it is invalid, you follow the same general steps. Typically, I would start with a demand letter explaining why the lien is invalid or disputed and demanding that the lien be removed. Usually, it involves threats to file a trespass to try title, fraud, breach of contract, or similar suit to remove the lien. I have been successful with just a demand letter in many cases. The success of a demand letter depends many times on whether the Claimant has an attorney that knows and understands the quagmire of Texas’ Mechanic’s Lien statutes and is really willing to look at the facts and give their client the opinion that ‘yes this deadline/notice, etc. was missed so the lien is invalid’ or ‘you failed to include the mandatory language in your notice letter or lien, you should remove the lien or be possibly subject to substantial damages and attorney’s fees in a lawsuit.’ Sometimes the Claimant is just misinformed, got bad advice, and is just dead set on not removing the lien.
If they still aren’t willing to remove the invalid or disputed lien the last recourse is to file a suit to remove the lien. You could also possibly bond around the lien, which is rarely done, should be done with caution, and is probably the subject of another blog post. Both of these options require that you follow through with your threat as contained within your demand letter. If you file a lawsuit, it could vary in timeframe and costs depending on the facts of the case. If it was obvious the lien holder didn’t follow the deadlines, didn’t have the right statutory language in the notice or the lien, or did not fit the definition of a service which qualifies for a lien (see blog post Does your work fit the requirements for a mechanic’s lien), etc., the process is relatively simple but can sometimes be a lengthy time before you actually get your case heard by a Judge. If the situation involving the dispute is a disagreement with the GC or contractor due to costs, it may be a very fact intensive case based on the events that lead up to non-payment. However, on the other hand, you might get lucky and have a case where you file the lawsuit and actually get a default judgment removing the lien because the Defendant never responds. If you prevail you will be able to file the judgment with the county to remove the lien.
So as you can tell, depending on the facts, the fight to remove the lien may not always be an easy one. Next time I’ll go over what you would need to do to clear the title of old liens that are past the statute of limitations timeframe.