Legal Alert: Texas Lien Statute Significantly Alters Subcontract Management Practices for Contracts Executed After January 1, 2012

Eversheds Sutherland (US) LLP
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Recent revisions to the Texas lien laws, Tex. Prop. Code Ann. § 53.001, et seq., mandate the use of statutory lien release forms. Because the statute voids, as a matter of public policy, agreements that “adversely affect” payment bond or lien claims, many standard release forms previously employed by general contractors may be unenforceable. As a result, a general contractor’s subcontract administration practices should be carefully tailored to the statute if it wishes to resolve outstanding subcontractor claims during the course of a construction project.

The New Statutory Scheme Invalidates Many Prior Contracting Practices -

The required statutory forms for the release of lien rights and payment bond rights raise significant contracting issues for Texas general contractors. The new Texas statute significantly impairs a general contractor’s freedom to contract insofar as it relates to a subcontractor’s release of lien or payment bond rights.

Tex. Prop. Code Ann. § 53.281(a) provides that “[a]ny waiver and release of a lien or payment bond claim under this chapter is unenforceable unless a waiver and release is executed and delivered in accordance with this subchapter.” Tex. Prop. Code Ann. § 53.282 provides that a “statement purporting to waive, release, or otherwise adversely affect a lien or payment bond claim is not enforceable” unless it complies with the statutory form prescribed by Section 53.284 (emphasis added.)

Please see full alert below for more information.

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