Mechanic’s Lien Rights for Subcontractors Under Texas Property Code Chapter 53

Understanding Mechanic’s Lien Rights for Subcontractors in Texas: What You Can Recover Under Chapter 53

A few months ago, I was tasked with drafting a letter to an entity that had filed a lien against my client’s property, demanding its release. The lienholder, a former subcontractor on a commercial construction project at the property, claimed it was owed payment for labor and materials after the general contractor allegedly failed to compensate it.

In preparing the letter, I set out to answer a key question:

What funds can a subcontractor pursue on a non-residential construction project by attaching a lien to the property when the general contractor fails to compensate it for labor or materials supplied?

Locating a definitive answer proved especially challenging. Significant amendments to the relevant statutory law took effect in 2022, resulting in minimal case law addressing their impact. Additionally, many reputable secondary sources rely on outdated statutes and case law,^[1] and the statutory provisions themselves remain complex and difficult to interpret.

While this article focuses on the lien rights Chapter 53 grants to subcontractors, it is equally important for general contractors and property owners to understand the recoverable funds and lien attachment process outlined in Chapter 53. This chapter provides lien rights to both subcontractors and general contractors, allowing them to pursue recovery of funds from the property owner. For property owners, a clear understanding of the mechanic’s lien process under Chapter 53 is essential to effectively and defend against invalid and baseless liens. Whether you are a subcontractor or general contractor in Texas seeking payment for work performed on a commercial construction project, or a property owner facing a mechanic’s lien, Merritt Law is here to help.*

Can a Subcontractor File a Mechanic’s Lien in Texas?

The short answer is yes. However, subcontractors don’t have a direct contract (or “privity”) with the property owner, instead working under a general contractor or another subcontractor. As a result, their claims are derivative in nature.^[2]

Because of this, a subcontractor’s right to assert a lien cannot arise from the constitution, common law, or contract.^[3] Instead, any lien rights must be grounded exclusively in statute.

Under Chapter 53 of the Texas Property Code, these rights exist only if a subcontractor follows the statute to the letter. That means filing notices and affidavits within strict deadlines and using the correct legal forms. Failure to comply can result in losing the right to recover altogether.^[4]

The Mechanic’s Lien Process for Subcontractors in Texas at a Glance

To recover funds within any of the three categories (outlined further on), a subcontractor must follow a statutorily prescribed process that results in the attachment of a lien on the owner’s property. Although each process has its own distinct features and deadlines, they share the same general framework:

1. Notice of Non-Payment – The claimant subcontractor provides notice to the property owner and the general contractor that it has not been paid by the hiring contractor.^[5] The claimant is required to send the notice of claim to the hiring contractor only if it is the general contractor.^[6] The notice must be delivered within the statutory deadline and must substantially comply with the prescribed form.^[7]
2. Filing Affidavit – Next, the claimant must file an affidavit claiming a lien with the county clerk in the county where the property is located, within the applicable statutory deadline.^[8] The affidavit must meet the content requirements set out in Tex. Prop. Code § 53.054.
3. Notice of Filed Affidavit – After filing, the claimant must send a copy of the affidavit to the property owner and the general contractor at their last known business or residential address within five days of filing.^[9] This requirement applies regardless of which monetary category is being pursued.
4. Deadline Extensions – If a deadline for sending the notice of non-payment, filing the affidavit, or serving the notice of the filed affidavit falls on a weekend or legal holiday, it is extended to the next business day.^[10]
5. Owner Withholding Funds – Depending on which notice of claim the owner receives, the owner must either withhold payment to the general contractor immediately upon receipt of the notice of claim or upon receipt of a copy of the affidavit.^[11] The amount the owner withholds from the general contractor must total an amount sufficient to cover the claim.^[12] However, the owner can only withhold funds to the extent contract payments remain unpaid.

The Three Categories of Recoverable Funds

Chapter 53 of the Texas Property Code provides the statutory framework for a subcontractor’s rights regarding mechanic’s liens. It establishes three monetary categories against which a mechanic’s lien may attach to the owner’s property:

1. Withheld Funds;
2. Retainage; and
3. Reserved Funds.

Each category has distinct features, though they often overlap in practice.

Withheld Funds

“Withheld Funds,” as used here, refers to the portion of unpaid labor or materials the claimant subcontractor seeks to recover from the property owner, beyond the amounts covered by Retainage and Reserved Funds.^[13] A claimant may submit a notice of claim to the property owner and the general contractor for all unpaid labor or materials supplied on a project.^[14] Once the notice is received, the property owner must withhold enough funds to satisfy the claim, even if such funds exceed the sum total of Retainage and Reserved Funds.^[15]

Claiming Withheld Funds

A claimant subcontractor may recover Withheld Funds if:

1. The notice of claim for unpaid labor or materials exceeds the combined value of Retainage and Reserved Funds; and
2. At the time the notice is received, the property owner still owes the general contractor contract payments in excess of those funds.

Notice of Non-Payment

For all unpaid labor or materials provided, the claimant subcontractor must send a notice of claim for unpaid labor or materials to the property owner and the general contractor.^[16] The claimant must send the notice by the 15th day of the third month following the month in which the labor or materials were provided or when specially fabricated but undelivered materials would normally have been delivered.^[17] For example, if labor was provided on February 23, 2025, the deadline to send notice would be May 15, 2025. The notice must substantially comply with the statutory form in Tex. Prop. Code § 53.056(a-2).

Once the notice is received, the property owner must immediately withhold from the general contractor an amount sufficient to cover the claim, including any Withheld Funds.^[18]

Affidavit

The claimant subcontractor must file an affidavit claiming a lien for unpaid labor or materials no later than the 15th day of the fourth month after the month in which the labor or materials were provided, or when specially fabricated but undelivered materials would normally have been delivered.^[19] For example, if labor was provided on February 23, 2025, the deadline to file the affidavit would be June 16, 2025 (since June 15 falls on a Sunday). A copy of the affidavit must then be sent to the property owner and general contractor within five days—by June 23, 2025 (deadline extended because the fifth day fell on a Saturday).

Retainage

Retainage is a portion of the contract price that the subcontract specifies will be retained by the hiring contractor and not paid to the claimant subcontractor for a defined period.^[20] That period is determined solely by the subcontract, as it is not set by statute.^[21] A common condition for this payment to be released is completion of the project.

Chapter 53 of the Texas Property Code does not require a subcontract to provide for Retainage, but if it does, the chapter establishes certain rules governing it.^[22] If the subcontract does not provide for Retainage, the claimant subcontractor has no right to secure a lien on the property for this category. Likewise, there is no statutory percentage or dollar amount prescribed for Retainage; Chapter 53 simply defines it as “an amount representing part of a contract payment,” leaving the value to be determined by the subcontract.^[23]

Notice of Non-Payment

To recover unpaid Retainage, the claimant must send a notice of claim for unpaid Retainage under Tex. Prop. Code § 53.057 to both the property owner and the general contractor. Alternatively, Retainage may be included in a broader notice of claim for unpaid labor and materials under Tex. Prop. Code § 53.056, which was discussed in the Withheld Funds section.^[24]

The claimant subcontractor must send notice of the claim for unpaid Retainage to the property owner and the general contractor within 30 days of the earliest of the following dates:

1. The subcontract’s completion;
2. The subcontract or original contract’s termination; and
3. The subcontract or original contract’s abandonment.^[25]

The notice must substantially comply with the statutory form set out in Tex. Prop. Code § 53.057(a-2).

Affidavit

The claimant subcontractor must then file an affidavit claiming a lien for Retainage by the 15th day of the third month after the month in which the original contract is completed, terminated, or abandoned.^[26]

For example, if the original contract was abandoned on February 23, 2025, the claimant subcontractor would have until May 15, 2025 to file the affidavit, and until May 20, 2025 to provide copies to the property owner and general contractor.

Upon receiving such an affidavit, the property owner must withhold contract payments from the original contractor in an amount sufficient to cover the claimant subcontractor’s Retainage claim.^[27] This withholding may equal or even exceed the value of Reserved Funds, provided unpaid contract funds are still available.^[28]

Reserved Funds

Reserved Funds are unique because they are mandatory. Under Tex. Prop. Code § 53.101, a property owner must withhold 10% of the original contract price (or 10% of the value of completed work) during the course of a project. These Reserved Funds are retained by the property owner and cannot be released to the general contractor until 30 days after completion of the original contract work, or longer, if a claimant timely files both a notice and affidavit.^[29]

Reserved Funds are the most heavily regulated of the three categories, with all of Subchapter E of Chapter 53 devoted to them. Unlike Retainage, they are not optional. If the work under the original contract could give rise to a mechanic’s lien, the property owner is legally required to reserve these funds, regardless of whether the original contract mentions them.^[30]

The purpose of Reserved Funds is to ensure payment to subcontractors and suppliers engaged by the general contractor or by other subcontractors.^[31] While a claimant subcontractor’s recovery is not limited to Reserved Funds, they are the primary pool the property owner will use to satisfy lien claims, whether arising from unpaid labor, materials, or Retainage.^[32]

Notice of Non-Payment

As long as the claimant subcontractor sends notice in the time and manner required by Chapter 53, it is sufficient notice as it relates to Reserved Funds.^[33] Chapter 53 recognizes two types of notices: (1) a notice of claim for unpaid Retainage (discussed in the Retainage section), and a notice of claim for unpaid labor or materials (discussed in the Withheld Funds section).

Affidavit

The rules for filing an affidavit against Reserved Funds are less clear. Chapter 53 sets out explicit deadlines when the claim is based on unpaid labor or materials, but is ambiguous and internally inconsistent when the claim is based on unpaid Retainage. While a full analysis of these statutory issues is beyond the scope of this article, the paragraphs below reflect both the clear rule and my interpretation of the unclear one.

If the claimant sends a notice of claim for unpaid labor or materials, the affidavit claiming a lien on Reserved Funds must be filed within 30 days of the earlier of the following:

1. The work specified in the original contract is completed;
2. The original contract is terminated; and
3. The general contractor abandons performance of the original contract.^[34]

If the claimant subcontractor sends a notice of unpaid Retainage, I believe the affidavit claiming a lien on Reserved Funds must be filed by the 15th day of the fourth month after the month in which the labor or materials were provided, or when undelivered specially fabricated materials would normally have been delivered.^[35] However, neither the affidavit nor the notice should be filed later than 30 days after completion of the work, even if statutory deadline rules might otherwise extend the time. The claimant subcontractor does not have a lien on the Reserved Funds until it has sent the notice and filed the affidavit, and the property owner’s obligation to withhold Reserved Funds ends 30 days after completion of the work, unless such withholding is extended by a lien.^[36]

Compliance Is Everything—Merritt Law Can Help

Because subcontractor lien rights are entirely statutory, there’s no flexibility for “close enough” compliance. Every notice, affidavit, and delivery deadline must be met exactly as prescribed—or the lien will not hold up in court.

And given the significant updates to Chapter 53 in 2022, many online resources are already outdated. It’s wise to seek professional guidance to ensure your lien complies with the current law.

Our team at Merritt Law has substantial experience in construction law matters, with clients ranging from property owners to general contractors and subcontractors. If you’re facing a nonpayment situation or need help preserving your lien rights under Chapter 53, our team can help you evaluate your options, prepare the right filings, and protect your interests from start to finish. Reach out to us to get started.

* This article published by Merritt Law is intended for informational purposes only and is not considered legal advice on any subject matter.

[1] See 51 Tex. Jur. 3d Mechanic’s Liens § 63 (July 2025) (majority of analysis based upon a repealed statute).

[2] See Supply, Inc. v. Lupe’s Shenandoah Reserve, LLC, 363 S.W.3d 901, 905 (Tex. App.—Beaumont 2012, no pet.) (“Because a subcontractor is a derivative claimant and, unlike a general contractor, has no constitutional, common law, or contractual lien on the property of the owner, a subcontractor’s lien rights are totally dependent on compliance with the statutes authorizing the lien.”).

[3] Id.

[4] Id.

[5] Tex. Prop. Code § 53.056; Tex. Prop. Code § 53.057.

[6] Id.

[7] Id.

[8] Tex. Prop. Code § 53.052; Tex. Prop. Code § 53.103.

[9] Tex. Prop. Code § 53.055.

[10] Tex. Prop. Code § 53.003(e).

[11] Tex. Prop. Code § 53.081.

[12] Id.

[13] See Tex. Prop. Code § 53.056(a-1) (claimant has the right to send a notice of claim for any unpaid labor or materials); see also Tex. Prop. Code § 53.057(a) (a notice of claim for unpaid labor or materials may wholly or partly include a claim for Retainage, but only to the extent the subcontract provides for Retainage); see also Tex. Prop. Code § 53.081(a) (the amount withheld by the owner in order to pay a claim “may be in addition to any reserved funds”).

[14] Tex. Prop. Code § 53.056(a-1).

[15] Tex. Prop. Code § 53.081(a).

[16] Tex. Prop. Code § 53.056(a-1).

[17] Tex. Prop. Code § 53.056(a-1)(1).

[18] Tex. Prop. Code § 53.081.

[19] Tex. Prop. Code § 53.053(b), (e).

[20] Tex. Prop. Code § 53.001(11); Tex. Prop. Code § 53.025.

[21] Tex. Prop. Code § 53.001(11).

[22] See Tex. Prop. Code § 53.057(a) (stating that a claimant may only provide a valid notice for a lien for unpaid Retainage if the subcontract provides for retainage).

[23] Tex. Prop. Code § 53.001(11).

[24] Tex. Prop. Code § 53.057(a).

[25] Tex. Prop. Code § 53.057(a-1).

[26] Tex. Prop. Code § 53.052(d-e).

[27] Tex. Prop. Code § 53.081.

[28] Id.

[29] Tex. Prop. Code § 53.101.

[30] Tex. Prop. Code § 53.101.

[31] Tex. Prop. Code § 53.102.

[32] See Tex. Prop. Code § 53.103(1) (specifying that the claimant has a lien on Reserved Funds if the claimant sends a notice in compliance with Chapter 53).

[33] Id.

[34] Tex. Prop. Code § 53.103(2).

[35] Tex. Prop. Code § 53.103(2); Tex. Prop. Code § 53.057(f)(1)(B); Tex. Prop. Code § 53.052(b).

[36] Tex. Prop. Code § 53.101; Tex. Prop. Code § 53.103.