Texas Mechanics Lien. Can it Be Discharged?
After a mechanics lien in Texas lien is filed, is there anyway an owner can bring a motion in court to discharge it before trial? There certainly is, but it is important to understand the limitations. This involves Texas mechanics lien statute 19(6) which allows the owner to apply for a summary discharge order. Many think it is a “mini trial” in which the amount of the mechanics lien, how much services were performed, back-charges, contested change orders, and other adjustments are determined. But this is not the case. The court can only adjudicate errors on the “face” a mechanic’s lien in Texas.
For example, assume there is a dispute as to work done to a parking lot and rear retaining wall. The old wood retaining wall was 100ft. in length and leaking onto the lot. The specifications are clear that only 50ft. were to be replaced with an additional redwood retaining wall. But in the course of demo, it was determined drainage and gravel should be added and that it would be much more secure to install a CMU wall for the 50 feet. Long story short, the contractor ended up doing the entire 100ft. based on conversations authorizing this work and directions given by the building inspector. There is now a major dispute as to the amount of a possible Texas mechanics lien. Assuming that the Texas lien has the proper wording and was filed on time, this motion is not proper to determine those issues; this must be at trial.
The only way to discharge a Texas mechanics lien under this motion is as follows:
- Improper “character of labor or materials furnished.” A Texas lien can be filed for almost any labor, materials, or equipment that improves the property. On the other hand, services such as title searches, attorneys work, general consultation, feasibility studies, materials delivered from a manufacturer to a supply house, routine maintenance, or work to movable property, would not be covered.
- Failure to comply with Section 9 of the Texas Mechanics lien Lien Act (Property Code). This applies if the wording is incorrect on the mechanic’s lien itself. Our forms follow strictly the statutory mandates.
There is another ground. As seen by the public records, not filing the Texas lien on time under Section 10. An example would be within eight months of completion of the project for commercial work. The real issue here tends to be when the work was completed. For example, there is much controversy as to whether warranty or punch list items extend the time. They typically do not. But remember, if there is a contested issue of fact, this is not the right avenue. Again, it would have to be determined the trial.
The recent 2012 case of Matter of Prospect Hgts. Rising Corp. (Kings County Supreme Court) is instructive. The dispute was the completion date based on last working on the project (February 11, 2011) or the issuance of a stop work order (October 23, 2010). The court declined to make its ruling in the motion and forced the issue to trial it. It was simply too much of a contested issue of fact.
And then there is a Texas Mechanics Lien Section 39. This states that a willfully exaggerated or false mechanic’s lien in Texas can be voided and the lien claimant will not be able to re-file. This can be challenged either by motion or the trial itself. This is becoming more and more popular among owners and general contractors. But in order to discharge the Texas mechanics lien, there must be “conclusive” factual evidence of an exaggerated claim. See generally On the Level Enters Inc. v. 49 East Houston LLC. There, the court declined discharge of the lien because such a determination necessarily involved a decision as to the lienor’s credibility. In that case, the mechanics lien claimant was unable to explain a number of items on the mechanics lien breakdown, but the court held that it might be an innocent mistake and therefore would have to await trial.