Contracts, deposits and mechanic's liens: what Texas homeowners should know

This guide explains how the paperwork protects you and where it does not. It is general information, not legal advice. For a large project, a dispute or anything involving a lien, talk to a Texas real estate or construction attorney.

What a written contract needs

A handshake and a text message are not a contract you can enforce in any useful way. For anything beyond a small repair, get these in writing:

• Legal name of the company, physical address, phone and the license number for licensed trades
• Your name and the property address
• Scope of work, specific enough that a stranger could tell when it is done
• Materials and equipment by brand, model and grade
• Price and how it was calculated
• Payment schedule tied to milestones, not to dates
• Start date and estimated duration
• Who pulls the permit and who schedules inspections
• Change order procedure: no extra charges without a signed change order with a price
• Labor warranty in years and what it covers
• Cleanup, disposal and restoration of anything opened
• Signatures and the date

Texas requires contractors on residential construction projects to give the homeowner certain written disclosures and, for larger projects, a list of subcontractors and suppliers. If your contractor hands you a packet that looks like boilerplate, read it. That packet is where your rights are described.

Texas homestead lien protection

Texas protects homesteads from most liens, and that includes mechanic’s liens from contractors. The protection comes from the Texas Constitution and the Property Code.

For a contractor to have a valid lien on your homestead for improvements, all of these must be true:

1. There is a written contract that describes the work.
2. You signed it before any work started or materials were delivered.
3. If you are married, both spouses signed it.
4. The contract was filed with the county clerk where the property sits.

If any of those is missing, the contractor’s lien on your homestead is generally not valid. That does not mean the contractor cannot sue you for the money. It means they cannot cloud your title or force a sale over an improvement contract that did not follow the rules.

This is why reputable contractors on big projects ask both spouses to sign and may record the contract. It is not a trick. It is how the law works, and a contractor who does it properly is also one who is likely to do the rest of the job properly.

Subcontractors and suppliers

The bigger risk on most projects is not the contractor you hired. It is the subcontractor or supplier you never met who did not get paid by that contractor.

Texas gives subcontractors and suppliers the right to send you a notice of unpaid work. On residential projects the deadlines are short, generally by the fifteenth day of the second month after the work was done. If you get one of these notices, take it seriously. It may let the claimant reach money you still owe the general contractor, and in some cases it can lead to a lien claim.

Texas also expects owners to hold back a portion of the contract price, commonly 10 percent, for a period after the work is complete. This reserved amount protects subcontractors and gives you leverage. If your contractor wants 100 percent on the last day, you have a reason to say no.

Lien waivers

A lien waiver is a signed statement from a contractor, subcontractor or supplier that they have been paid a stated amount and release any lien claim for it. Texas has statutory waiver forms. There are four:

• Conditional waiver on progress payment, which takes effect when your check clears
• Unconditional waiver on progress payment, which takes effect immediately
• Conditional waiver on final payment
• Unconditional waiver on final payment

Ask for a conditional waiver before each payment and an unconditional waiver after it clears, from the contractor and from every subcontractor and supplier on the job. Make the final payment contingent on final waivers from everyone. A contractor who will not produce them may not have paid their people.

Deposits

Texas does not require or cap deposits for most contractors. What is normal:

• Nothing for small repairs. Pay on completion.
• Ten to thirty percent on large projects, when materials are ordered.
• Progress payments tied to things you can see, such as rough-in passed inspection or the roof decking is on.
• A final payment held until the inspection passes, the punch list is done and the waivers are signed.

A deposit without a contract is a gift. A deposit over half, before anything is delivered, is a loan to a stranger.

The three-day right to cancel

If a contractor came to your door, met you at a home show or otherwise sold you at a place that is not their business, and the total is more than $25, you usually have three business days to cancel. Texas Business and Commerce Code covers home solicitation sales, and the federal cooling-off rule overlaps with it. The contract must tell you about this right and give you a cancellation form. If it does not, the cancellation period may be extended.

This matters most after storms, when roofers and tree services knock on doors. Sign if you want, then take three days to verify the license, the insurance and the reviews. If something is wrong, cancel in writing.

Emergency repairs you asked for, and contracts you went to the contractor’s office to sign, generally do not carry this right.

Keep a file

The contract, every change order, every receipt, every waiver, the permit number and the inspection results. Photos before, during and after. If there is ever a dispute, that file is the difference between a strong position and a story.