News & Insights

Subcontractor Left With No Remedy Against Homeowner Based Upon Plain Language Of Texas’ Materialman’s Lien Provisions

In Precision Roofing, Inc., Appellant v. David Zavelson & Tracy Zavelson, Appellees, No. 03-17-00550-CV, 2018 WL 5852680, at *1 (Tex. App. Nov. 9, 2018), the Texas Court of Appeals addressed the validity of a subcontractor’s materialman’s liens.

In October 2014, David Zavelson—but not Tracy Zavelson—signed a contract with Cox Development Corporation to remodel and expand their home. Cox subcontracted “roofing and flashing services” to Precision.

In December 2014, David Zavelson terminated the contract with Cox. Shortly after David terminated the contract, Precision filed two affidavits in the real property records of Travis County claiming a lien on both the Property and the retainage in the total amount of $15,374.00. Precision subsequently filed suit to hold the Zavelson’s personally liable. Precision pursued its claim utilizing both the traditional materialman’s lien statute, as well as Texas’s retainage statute. 

Under Texas law, “[t]o fix a lien on a homestead, the person who is to furnish material or perform labor and the owner must execute a written contract setting forth the terms of the agreement.” And, “[i]f the owner is married, the contract must be signed by both spouses.”

The Zavelson’s asserted that this requirement was not met because Tracy did not sign the contract. The trial court agreed and held that because Tracy had not signed the contract, Precision’s traditional materialman’s lien claim could not move forward. Precision would therefore only be left with the option to pursue its retainage claim against David.

Unfortunately for Precision, the Court held that the plain statutory language reflects that the legislature intended [Texas’s retainage statute] to address contractual, rather than statutory, retainage claims. Because David’s contract with Cox did not require him to retain funds as progress payments were made, David could not be held personally liable for Cox’s default. Because Precision was left with no remedy against the Zavelson’s, the statute also required the Court to force Precision to pay the Zavelson’s attorney’s fees for bringing the claim.

Precision maintained that a lien on the owner’s property cannot be a derivative claimant’s sole remedy for the failure to retain because it would undermine the statutory purpose of protecting subcontractors and other derivative claimants working on homesteads. Precision argued that such persons are usually not in a position to see that the “highly technical legalities” to fix a lien to a homestead are fulfilled. The Court of Appeals acknowledged those concerns, but noted that its hands were tied based upon the plain language of the statute.

Although this decision is specific to Texas, this case is nonetheless a good reminder of the harsh outcome that can result in pursuing a materialman’s lien against a property owner. There are specific deadlines and requirements that must be met and a Court will be unable to provide any type of equitable remedy if they are not strictly followed. For this reason, we recommend all contractors should consider consulting a construction attorney to ensure their standard contracts provide an adequate remedy should a general contractor default.