Can Patience with Your Clients Cost You Money?

For many business owners, a willingness to work with clients regarding any outstanding invoices comes naturally.  But some clients, either because of financial hardship or because they are not happy with some aspect of the work or services performed, or the cost associated with it, take advantage of complacent business owners—sometimes to the point of precluding businesses from recovering the money owed them.  Exercising too much patience as a contractor, laborer, materialman, or construction supplier, whether residential or commercial, can prevent you from taking advantage of the statutory tools specifically designed for your protection.  The mechanic’s liens statutes in the Texas Property Code are intended to prevent clients or other contractors from benefiting from various improvements to real property without paying for them.  The statutes allow the parties responsible for the improvements to record a lien against the real property as security for payment, but only if they meet the strict timing requirements outlined in the statutes.

In most cases, a contractor or supplier must file a lien against the subject property within 75 days of having completed the work for a residential project, and within 105 days for a commercial project.  The clock starts to run on these time limits on the last day of the month in which the work was performed.  To complicate matters, many businesses do not send invoices until the month following the one in which the work was performed.  That means that if a contractor decides to allow a customer too much additional time to pay, that contractor may be statutorily precluded from filing a lien, which is often the most effective means of recovering money owed.  To avoid this, it is good practice to become familiar with the lien statutes, particularly the notice requirements, and to send standard invoices that comply with those requirements so that you are prepared to file a timely lien if and when necessary.  If you have questions regarding these statutes, and whether and how they might apply to your business, please feel free to contact us.