Results 1 to 5 of 5
  1. #1
    Join Date
    Apr 2006
    Location
    Texas
    Posts
    31

    Default Residential Construction Contract Problems

    My question involves real estate located in the State of: TEXAS

    Quick background: 10+ acres completely paid for (100% owned), loacted in country, zoned as "agricultural" w/no improvements. Is it normal for a home builder to place a "Mechanic's Lien" on property prior to start of construction? I thought ML's were only placed if there's any unpaid debt. Anyone know for sure?

    Also my home builder is requiring the line "Owner and Builder agree that there will be no retainage of funds" be added to the contract. Is this normal. I thought as an owner i should be able to retain 10% funds at end of construction if my builder hasn't paid his subs. Any thoughts?

    Thanks!

  2. #2

    Default Re: Residential Construction Contract Questions

    Is it normal for a home builder to place a "Mechanic's Lien" on property prior to start of construction
    No but the lien laws in Texas may be different.

    Retainage until completion is also normal.

    Before you sign any contract you need to have it reviewed by an attorney and you need to check out the builder. Be sure to get insurance certificates and a copy of all permits. Have him submit to you a copy of all material invoices and subcontractor invoices and get a lien release for the amount of each payment. That way you can be sure he is paying his bills.

  3. #3
    Join Date
    Apr 2008
    Location
    Coppell, Texas
    Posts
    8

    Default Re: Residential Construction Contract Questions

    97C5ENVY, do you know the title of the document?

    In many States, the term "mechanic's lien" refers to a negative recordation of a failure to pay a contractor for services performed. In Texas, a mechanic's lien is a mechanism used to record an effective lien against property that can be financed. If you were to build a new home, install a pool, or something of that nature; it would be common for a mechanic's lien to be filed. The lender would then renew and extend that lien to have a valid Deed of Trust.

    If, on the otherhand, you had a "claim of lien" recorded against the property, then this would be a tool used by contractors to cloud title and open a potential claim for a judgment against your property for failure to pay.

    Under either circumstances, you should carefully review the construction contract for any issues. If you are unfamiliar with what to look for or have any doubts, definitely obtain counsel from a local attorney.

    Hope this helps!

  4. #4
    Join Date
    Apr 2006
    Location
    Texas
    Posts
    31

    Default Re: Residential Construction Contract Questions

    Mr.Aycock,

    The title on my contract is "Residential Construction Contract - Fixed Price" by TAB.

    Thanks!

  5. #5
    Join Date
    Apr 2008
    Location
    Coppell, Texas
    Posts
    8

    Default Re: Residential Construction Contract Questions

    It sounds to me that you are dealing with a regular construction contract and not a "Claim of Lien", which is the Texas version of a "Mechanic's Lien" as used in other States. All major contractors will use a construction contract to form a valid lien against your property and then have this lien assigned to a lender for financing.

    If there is something more that has been filed, then that could be an issue.

    As far as the retainage of funds language, you should challenge this if you do not want it in the contract. Contracts are always negotiable and you can modify and change terms as you see fit. If the builder is busy, they will be less apt to negotiate down; but if they are hurting for business, you may have a greater bargaining position.

    Hope this helps!

    1. Sponsored Links
       

Similar Threads

  1. Purchase Contracts: Residential Contract of Sale - What is the Legal Action to Cancel or Terminate It
    By Negativeion in forum Buying, Selling and Conveying Real Estate
    Replies: 1
    Last Post: 10-01-2010, 03:26 AM
  2. Business Disputes: Construction Company Facing Financial Problems
    By GeorgeJohnson in forum Business Law
    Replies: 2
    Last Post: 12-16-2009, 12:16 AM
  3. Roommates: Mold Problems During Construction
    By jonathan101 in forum Landlord-Tenant Law
    Replies: 1
    Last Post: 06-23-2008, 07:55 AM
  4. Rental Agreements: Verbal Residential Real Estate Contract
    By ktruitt in forum Landlord-Tenant Law
    Replies: 1
    Last Post: 08-29-2007, 01:59 PM
  5. Business Disputes: Construction Arbitration Problems
    By arbitrationproblem in forum Business Law
    Replies: 4
    Last Post: 11-05-2005, 02:15 PM
 
 
Sponsored Links

Legal Help, Information and Resources