If you are a homeowner and a contractor is threatening your homestead with a lien, or if you are a contractor and you need to protect yourself from the potential for not getting paid on a residential contract it is important to know what lien rights exist.  This is a complicated issue, and when related to liens on homesteads, the law becomes even more complex.  Below are some examples of the requirements that need to be considered when evaluating the threat of a lien on a homestead.

Generally, there are specific notice and filing requirements for any M&M lien, which are governed by Chapter 53 of the property code and/or certain Texas Constitutional provisions. Furthermore, there are a number of additional disclosure requirements imposed on contractors and lenders dealing directly with a homeowner to establish an M&M lien on a homestead.  However, it may be possible under certain circumstances for an M&M lien to be placed on a homestead.

In addition to the numerous requirements for perfecting a M&M lien under the Texas Property Code and Texas Constitution (which are not discussed here due to their complexity), a claimant wishing to perfect a claim against homestead property must comply with additional requirements, such as:

(a)    A written agreement, setting out the terms of the contract, must be signed by the contractor and the owner of the homestead property, before work commences.

(b)    If the owner of the homestead is married, both spouses must sign the contract.

(c)    The contract must be filed with the clerk of the county in which the homestead is located.

(d)    If the contract is for the repair or renovation of existing improvements as opposed to new improvements:

(1) The written agreement may not be signed by the owner(s) before the 5th day after the owner(s) makes “written application for any extension of credit for the work and material.”

(2) The written agreement must provide for a right of rescission which would allow the consumer to back out of the agreement without any penalty within three days after the “execution of the agreement by all parties.”

(3) The written agreement must be signed by the owner(s) in the office of a third party lender making an extension of credit for the work, a title company or an attorney at law.

The 5-day waiting period and 3-day right of rescission can be waived by the owner in the event such work and material are necessary to complete immediate repairs to conditions on the homestead property that materially affect the health or safety of the owner or person residing in the homestead.

These are merely additional requirements to all of the normal requirements for perfecting an M&M lien.  Placing an M&M lien on any property is a complicated process, and dealing with a potential M&M lien on a homestead is even more difficult.  However, with the correct procedures in place, it is possible to have an M&M lien filed on a homestead in Texas.  Anyone attempting to place a lien on any property should consult with legal counsel due to the potential penalties for filing an improper lien.  Anyone dealing with a lien on their property should consult with legal counsel to determine if the lien is valid and what rights/obligations they may have.