TABLE OF CONTENTS

1. I. Scope of the Article
2. II. Overview of the 1997 Legislative Changes
1. A. HB 740 -- Mechanic's Liens
2. B. SB 241 -- Construction Trust Funds
3. C. HJR 31 -- Liens for Home Improvements
4. D. HB 1185 -- Fraudulent Liens
5. E. HB 3158 -- Treasury Listed Sureties

3. III. Amendments to Chapter 53, Property Code (HB 740 and HB 3158)
1. A. Claims Arising on All Projects
1. 1. Sham Contracts
2. 2. Lien Affidavit Requirements
3. 3. Notice of Filed Affidavit
4. 4. Bills Paid Affidavits
5. 5. Summary Removal of Invalid or Unenforceable Liens
6. 6. Bond to Release Lien
7. 7. Time to Furnish Statutory Payment Bond

2. B. Claims Arising on Residential Construction Projects
1. 1. Definition of Residential Construction
2. 2. Deadlines for Filing Lien Affidavits and Sending Notices

           Notice and Lien Filing Deadlines (Charts)

3. 3. Limitations
4. 4. Disclosures to Owners on Residential Construction Projects
1. a. Contractor's / Lender's Initial Disclosure Statement
2. b. Contractor's List of Subcontractors
3. c. Contractor's Disbursement Disclosures
4. d. Lender's Disbursement Disclosures

5. 5. Loan Closings
6. 6. Bills Paid Affidavits on Residential Projects
7. 7. Reconveyance Restrictions

3. C. Requirements for Sureties for Statutory Payment Bonds

4. IV. Construction Trust Fund Statute (SB 241)
1. A. Cost Plus Contracts
2. B. Contractor's Trust Account/Record Keeping
3. C. Intent to Defraud

5. V. Constitutional Amendment (HJR 31)
6. VI. False and Fraudulent Lien Claims (HB 1185)

APPENDIX -- Forms

1. 1. Affidavit Claiming a Lien (Mechanic's Lien Affidavit)
2. 2. Disclosures for Residential Projects
1. A. Contractor's / Lender's Initial Disclosure Statement
2. B. Contractor's List of Subcontractors and Suppliers
3. C. Contractor's Disbursement Disclosure
4. D. Lender's Disbursement Disclosure
5. E. Lender/Consumer Agreement as to Method of Providing Disclosures
3. 3. Bills Paid Affidavits and Draw Requests
1. A. Bills Paid Affidavit (Progress Payment)
2. B. Final Bills Paid Affidavit and Waiver of Lien

Abstract

The purpose of this paper is to review and discuss the recent changes made by the Legislature in the mechanic's lien and construction credit laws which, for the most part, became effective on September 1, 1997.

The changes made in the mechanic's lien laws and the related construction credit statutes by the Legislature in the most recent Legislative Session will be discussed in some detail throughout this paper; however, the following is a brief explanation of those changes.

Full Text

You must have the free Adobe Acrobat Reader 4.0 (or greater) installed in your computer in order to view or print this paper. It is available as a free download from the Adobe Web site. If you do not have Acrobat Reader installed, click the link to the left to download it. If a menu window opens before the paper, choose the "View" option.