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This article addresses procedures available to secure the release of three types of liens:

1. invalid mechanic’s and materialmen’s (“M&M”) liens;
2. judgment liens against the homestead; and
3. child support liens. 

It is no secret that Texas law is biased in favor of the worker who supplies labor and materials in the construction of a new building, whether residential or commercial.  The right to an M&M lien is enshrined in the Texas Constitution (Art 16, Sec. 37) which states:

Mechanics, artisans and materialmen, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speed and efficient enforcement of said liens.

This constitutional lien is in addition to the statutory mechanics lien available pursuant to Sec. 53.001 et seq. of the Texas Property Code.  All of this legal protection assumes that contractors and sub-contractors will act in good faith and file only liens which reflect money that is legitimately owed them.  But what about nefarious characters who file wrongful or invalid liens in an effort to shake-down an owner or stop a closing until they are paid?  Unfortunately, this happens often.  It can adversely affect the marketability of the property since title companies will generally require that the lien be paid and/or released.

The First Step in Lien Removal

Sec. 53.160 of the Texas Property Code provides an expedited procedure for removal of an “invalid or unenforceable” lien from any real property, whether homestead or not. Grounds must be among those specified in the statute, specifically:

(1) notice of claim was not furnished to the owner or original contractor as required by Section 53.056, 53.057, 53.058, 53.252, or 53.253;

(2) an affidavit claiming a lien failed to comply with Section 53.054 or was not filed as required by Section 53.052;

(3) notice of the filed affidavit was not furnished to the owner or original contractor as required by Section 53.055;

(4) the owner complied with the requirements of Section 53.101 and paid the retainage and all other funds owed to the original contractor before:

(5) all funds subject to the notice of a claim to the owner and the perfection of a claim against the statutory retainage have been deposited in the registry of the court and the owner has no additional liability to the claimant;

(6) when the lien affidavit was filed on homestead property:

(7) the claimant executed a valid and enforceable waiver or release of the claim or lien claimed in the affidavit. 

Filing Suit

Although it the statute talks about a “motion to remove a claim or lien,” this assumes that a suit has already been filed or will be filed in order to provide a framework for bringing the motion. Therefore, if a suit is not already on file, it will be necessary to file one, get the defendant served, wait for him to answer, and then followed the procedure for bringing the motion. 

Filing suit also provides the opportunity for the plaintiff to bring additional causes of action, including breach of contract and fraud, as well as to seek other forms of relief such as a declaratory judgment.  It is advisable to bring other causes of action in case the motion to remove the lien fails for any reason. 

Procedural Requirements

The motion procedure requires that the defendant (i.e., the person who filed the lien) be given at least 21 days notice of the hearing. The motion should be supported by all relevant documents and at least one sworn affidavit.  The hearing is an evidentiary hearing, a “mini-trial” really, meaning that testimony will be taken for the record.  The judge then rules and the effect is immediate (i.e., there is no requirement that 30 days elapse before the ruling is final, as is the case with a final judgment in the case).  A certified copy of the order should then be filed in the real property records and forwarded to any title company that may be involved.  Sale of the property can then proceed without further delay. 

Sec. 53.156 provides that “the court may award costs and reasonable attorney’s fees as are equitable and just.” An affidavit of attorney’s fees and costs should be attached to the motion. 

It is at the discretion of the plaintiff as to whether or not, following a ruling on the motion, the underlying suit should continue or be dismissed.  It is likely that this decision will turn on whether or not the ruling itself provides the plaintiff with sufficient compensation. 

Penalties for Fraudulent Liens

Independently of Sec. 53.160 of the Property Code, Chapter 12 of the Civil Practice & Remedies Code addresses “Liability related to … a fraudulent lien or claim filed against real or personal property.”  A person who knowingly and intentionally files a fraudulent lien may be held liable in civil district court for the greater of $10,000 or actual damages, exemplary damages, and recovery of attorney’s fees and costs. It is also a criminal offense (See Sec. 37.01 of the Penal Code). If applicable, a cause of action under Chapter 12 should be included in any suit against the lien claimant. 

Filing of a fraudulent lien may under certain circumstances also form part of a cause of action under the Deceptive Trade Practices Act (Sec. 17.44 et seq., Business & Commerce Code).

Judgment Liens Abstracted after Sept. 1, 2007

Sec. 52.0012(c) of the Property Code (effective September 1, 2007) deals with judgment liens against the homestead rather than M & M liens.  This law affirms that a judgment lien does not attach to, and does not constitute a lien on, a judgment debtor’s exempt real property, including the debtor’s homestead.  It can be difficult, however, to persuade a title company of this fact that they should ignore a judgment.  A title company’s automatic reaction is to require that all liens be cleared.  The homeowner should resist this pressure and insist on his or her homestead rights. 

Section 52.0012 provides that, after 30 days notice to the judgment creditor or the creditor’s attorney, a judgment debtor may file a “Homestead Affidavit as Release of Judgment Lien” which “serves as a release of record of a judgment lien established under this chapter.” The affidavit must be in proper form, meeting the requirements of the statute. However, if the judgment creditor files a contradicting affidavit, and if after filing such contradicting affidavit a purchaser or mortgagee of real property acquires the purchaser’s or mortgagee’s interest from the judgment debtor, then the debtor’s affidavit does not release the judgment lien with respect to the purchaser or mortgagee. 

The following is a checklist for evaluating whether or not this procedure applies in a particular case.  A title company will not “insure over” a homestead lien unless:

1.  The abstract of judgment is recorded after September 1, 2007.

2. You have a copy of the affidavit and letter sent by the judgment debtor to the creditor and its attorney.  The affidavit must substantially be in the form attached to this memo as Exhibit “A”.

3. You have proof that the creditor and its attorney received the letter and affidavit at least 30 days prior to the date that the affidavit was recorded.

4. Your title company’s plant is certified to the 31st day following the mailing of the letter and affidavit. 

5. No contradicting affidavit has been recorded by the creditor.  

6. There is corroborating evidence of the current homestead status of the property.  At a minimum, the tax roll should show a current homestead exemption on the property, and the debtor’s driver’s license should show the address of the property.
 
7. The size of the property does not exceed 10 acres, if urban, or 200 acres, if rural (100 acres if the debtor is single).

8. The purchaser or lender is a bona fide third party, paying money for or lending money against the property.

Judgment Liens Abstracted Prior to Sept. 1, 2007

In the case of judgment liens abstracted prior to September 1, 2007, the old law as set out in the1992 case of Tarrant Bank v. Miller (833 S.W.2D 366) applies.  Tarrant decided that a judgment creditor, in this case a bank, was liable in damages if it failed after demand to give a partial release of a judgment as to the debtor’s homestead.  The best procedure would be to send a demand for a partial release by certified mail to the judgment creditor or its attorney.  If there is no response, suit may be filed.

S.B. 1661, passed by the 81st Legislature, amends the Texas Family Code to establish a process by which an obligor may obtain the release of a child support lien against the obligor’s homestead.  The procedure involves the filing of an affidavit and is identical to that contained in Sec. 52.0012 (discussed above).  The law states that “the obligor is considered to be a judgment debtor under that section and the claimant under the child support lien is considered to be a judgment creditor under that section.”  The person claiming the lien may file a contradicting affidavit: “If the claimant files a contradicting affidavit as described by Subsection (d), the issue of whether the real property is subject to the lien must be resolved in an action brought for that purpose in the district court of the county in which the real property is located and the lien was filed.”  If the property is in the same county in which a divorce or action for child support was had, then the court that heard the case would likely have jurisdiction over the lien issue as well.