Additional Clauses for Contractual Mechanic’s Liens
Construction Clause for Mechanic’s Lien Contract
Project as described in [residential construction contract between/plans and specifications agreed on by] Owner and Contractor.
Force Majeure
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Use this clause under “General Provisions.” |
Time is of the essence in the completion and delivery of the Construction. If the Construction is delayed by matters that are beyond the reasonable control of Contractor and that Contractor is unable to prevent or overcome by the exercise of reasonable diligence, the Completion Date will be extended one day for each day the Construction is so delayed, up to a maximum of thirty additional days, provided Contractor notifies Owner of the delay in writing within seven days after its occurrence.
Alternative Payment Terms for Mechanic’s Lien Note
This note, less the reserved funds required by statute, is payable on completion of the construction as provided in the mechanic’s lien contract of even date. Completion of construction is determined by [specify]. The reserved funds, plus interest, if any, are payable as follows: Contractor must first provide Owner with a written list of all subcontractors and suppliers of any tier who have furnished labor, material, equipment, or other improvements for the Project, including each subcontractor and supplier’s name, address, and telephone number, updated and verified by Contractor as accurate as of the date of final completion of the Project, as a condition precedent to Owner action under this section. On receipt of the list, Owner will prepare, file, and send an affidavit of completion within ten days of the date of final completion of the Project. Reserved funds under section 53.081 will be withheld until the time for filing the affidavit of mechanic’s lien has passed or, if a lien affidavit is filed, the lien claim has been satisfied or released. Reserved funds under section 53.101 will be withheld during the progress of the work under the original contract and for thirty days after the work under the contract is completed. Reserved funds will then be released to Contractor.
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Or |
This note is payable in the following installments during progress of the construction as provided in the mechanic’s lien contract [include if applicable: and residential construction contract] of even date:
1.$[amount], less reserved funds required by statute, on completion of foundation, slab, and preliminary rough plumbing;
2.$[amount], less reserved funds required by statute, on completion of rough framing;
3.$[amount], less reserved funds required by statute, on completion of roof and remainder of rough plumbing;
4.$[amount], less reserved funds required by statute, on completion and acceptance of all construction; and
5.The reserved funds required by statute, which will be paid as follows: [Contractor must first provide Owner with a written list of all subcontractors and suppliers of any tier who have furnished labor, material, equipment, or other improvements for the Project, including each subcontractor and supplier’s name, address, and telephone number, updated and verified by Contractor as accurate as of the date of final completion of the Project, as a condition precedent to Owner action under this section. On receipt of the list, Owner will prepare, file, and send an affidavit of completion within ten days of the date of final completion of the Project. Reserved funds under section 53.081 will be withheld until the time for filing the affidavit of mechanic’s lien has passed or, if a lien affidavit is filed, the lien claim has been satisfied or released. Reserved funds under section 53.101 will be withheld during the progress of the work under the original contract and for thirty days after the work under the contract is completed. Reserved funds will then be released to Contractor.
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Or |
This note is payable in the following installments during progress of the construction as provided in the mechanic’s lien contract [include if applicable: and residential construction contract] of even date:
1.$[amount] on [date];
2.$[amount] on [date];
3.at the end of each two-week period after [date], an amount equal to 50 percent of the cost of all labor provided and material in place on the Property at that time, as estimated by [Contractor/the architect], and not already paid for by Owner, until the total amount paid is $[amount];
4.the balance, plus interest, less reserved funds required by statute, on or before [date], or on completion of the construction, whichever is later; and
5.the reserved funds required by statute, which will be paid as follows: Contractor must first provide Owner with a written list of all subcontractors and suppliers of any tier who have furnished labor, material, equipment, or other improvements for the Project, including each subcontractor and supplier’s name, address, and telephone number, updated and verified by Contractor as accurate as of the date of final completion of the Project, as a condition precedent to Owner action under this section. On receipt of the list, Owner will prepare, file, and send an affidavit of completion within ten days of the date of final completion of the Project. Reserved funds under section 53.081 will be withheld until the time for filing the affidavit of mechanic’s lien has passed or, if a lien affidavit is filed, the lien claim has been satisfied or released. Reserved funds under section 53.101 will be withheld during the progress of the work under the original contract and for thirty days after the work under the contract is completed. Reserved funds will then be released to Contractor.
Cost Plus Fixed Fee, Not to Exceed a Certain Amount
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This clause may be placed under “Terms of Payment” or at the end of the mechanic’s lien contract before the notices. |
Owner will pay Contractor the actual cost of all labor and materials furnished by Contractor and used in the Construction, plus a fixed fee of $[amount]. The total contract price, however, will not exceed $[amount not to exceed that of the mechanic’s lien note]. Contractor will keep an accurate record of the labor and material costs, including all original invoices and receipted bills, and on request will give Owner an accurate, documented accounting of these costs.
Cost Plus Percentage, Not to Exceed a Certain Amount
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This clause may be placed under “Terms of Payment” or at the end of the mechanic’s lien contract before the notices. |
Owner will pay Contractor the actual cost of all labor and materials furnished by Contractor and used in the Construction, plus [percent] percent of the actual cost of all labor and materials furnished by Contractor and used in the Construction. The total contract price, however, will not exceed $[amount not to exceed that of the mechanic’s lien note]. Contractor will keep an accurate record of the labor and material costs, including all original invoices and receipted bills, and on request will give Owner an accurate, documented accounting of these costs.
Liability Disclaimer
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If one spouse will not be liable on the debt, the following clause should be inserted in the mechanic’s lien contract before the signature lines. |
[Name of spouse not liable on the debt] is signing this instrument solely to create a lien on the property, and [he/she] is not personally liable on the debt.
For Use with Subordinate/Second Lien Mechanic’s Lien Contract
Owner may furnish any insurance required by this mechanic’s lien contract either through existing policies owned or controlled by Owner or through equivalent coverage from any insurance company authorized to transact business in Texas.
The lien created by this mechanic’s lien contract will be subordinate to the lien securing payment of the note, and any renewals, extensions, and modifications thereof, in the original principal amount of [amount] DOLLARS ($[amount]), dated [date], executed by [name], payable to the order of [name], and more fully described in a deed of trust recorded in [recording data] of the real property records of [county] County, Texas. If default occurs in payment of any part of principal or interest of that $[amount] note or in observance of any covenants of the deed of trust securing it, the entire debt secured by this mechanic’s lien contract will immediately become payable at the option of Contractor or its transferees.
If Owner fails to pay any part of principal or interest secured by a prior lien or liens on the Property when it becomes payable or defaults on any prior lien instrument, the entire debt secured by this mechanic’s lien contract will immediately become payable at the option of Contractor or its transferees.