Everyone who owns a home should understand when a worker can put a lien on their home and what they can do about it. While the term “homestead” has been touted to protect homeowners in Texas, there is much confusion about what the term means and when creditors can actually place a lien on your home.
Texas, in the homestead provision of its Constitution, provides homeowners protection from creditors. For urban areas, homestead protection applies to 10 acres of land with improvements, such as a garage and house primarily used as a home. Homesteads generally are not subject to attachment, execution or forced sale by creditors. There are exceptions, however, to this protection. Mechanic’s and materialman’s liens for improvements are one such exception, and can create liens valid against your homestead if the worker follows the Texas Property Code’s strict requirements.
To place a valid lien against homestead, the Texas Property Code lists a host of provisions that must be included in a contract for residential construction, including remodeling jobs. A lien may be created if a written contract was executed before commencement of improvements or delivery of supplies; the contract is signed by both spouses; and the contract is properly recorded. If the construction contract does not meet strict statutory requirements, the contractor may not be able to enforce a lien on the property. If a creditor wrongfully levies against the homestead, both the creditor and the creditor’s law firm may be liable.
Contractors may threaten to place a lien on a home in cases of disputed remodeling work. A consumer who feels progress on a home improvement is moving too slowly or completed work does not meet required specifications must understand the leverage contractors have once a written contract is properly signed. While a homeowner may have good cause to withhold future payments until construction issues are resolved, the contractor has the ability to file a claim on title or an affidavit of lien with the county’s real-estate records. Homeowners may wish to raise a number of defenses to a lien, including a contractor’s failure to pay subcontractors, incomplete work, poor workmanship and failure to follow required lien procedures. Removal of any and all liens should be part of any dispute resolution with a contractor.
An affidavit of lien recorded by a remodeling contractor against one’s homestead places a “cloud” over title and can make selling your home or refinancing difficult. Consumers should have an experienced attorney review and respond to any claim or lien affidavit to clear any potential cloud on the property’s title.
Once a dispute is resolved, the homeowner should make certain to obtain a release. The Property Code requires contractors to provide an affidavit stating that all bills are paid once construction is complete and before final payment for work performed. Such documentation is important for a homeowner to protect his or her home, especially if a claim is later made on the homestead.
Contractors have strict filing deadlines for filing lien affidavits. Even if the contract contains all the provisions required by statute, the affidavit may not be valid if it was not timely filed. Homeowners should keep records of the date that work was completed or abandoned by the contractor. This date starts the clock on how long a contractor has to file a lien affidavit. In case of disputes, an attorney will want to evaluate the construction timeline to determine whether the lien is barred because of late filing.
Delinquent property taxes, home refinancing, and home equity loans may also create liens on a homestead. A home is often a family’s most valuable possession. Consider consulting an attorney before entering into any contract that affects your home.
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