Unannounced notice from the State that their taxes are overdue is often an unpleasant shock for business owners. These notices, known as “Notice of Determination,” are issued by the Texas Comptroller and must be addressed immediately.
This notice serves as a warning that your company could be subject to forfeiture for failing to file its annual Franchise tax and Public Information report. However, there is hope – reinstatement can be achieved by filing several simple reports.
Who is required to send a notice of intent to lien?
No matter whether you are working as a subcontractor, material supplier, or eligible design professional on a Texas project, there are specific rules you must abide by for submitting monthly fund-trapping notices (commonly referred to as pre-lien notices, Texas monthly notices, or notices of intent to lien (NOIs). It is vital that these notices be submitted accurately to protect your lien rights; by avoiding common errors, you can ensure you get paid as quickly as possible.
Notices of intent to lien (NOIs) aren’t required before filing a mechanics lien in all states; however, sending one nevertheless can serve as an adequate warning to customers that legal action will be taken if payments due aren’t received promptly. A notice like this is often enough to spur prompt payment from slow payers when faced with the possibility of legal action; they usually pay on time once threatened with legal action from you!
However, for those new to the game or unfamiliar with its details, it can seem intimidating and overwhelming. That’s where we come in – this guide to the Texas monthly notice will explain everything you need to know about this vital document — its requirements, deadlines, and best practices.
General, any party involved with a Texas construction project and not paid must send out a monthly notice in Texas. This includes 2nd Tier contractors, subcontractors, and materials suppliers. Information needed on such statements consists of the owner’s name and address information along with date/start/end work dates as well as any required legal description (helpful here).
Keep this in mind to avoid forfeiture of your right to file a mechanics lien in Texas: you must provide your monthly notice within 30 days after the final invoice has been paid, if possible. Failure to do so could result in having your business privileges taken away by the State of Texas – an unwelcome outcome no one wants.
What is a notice of intent to lien?
A notice of intent to lien is a legal document filed by contractors or suppliers who haven’t been paid for goods and services on a construction project to warn property owners about their intentions to file a lien if payment isn’t forthcoming. It gives property owners time to pay their debt before it goes further into collection proceedings, helping avoid costly litigation fees in the form of lawsuits. Requirements vary by state but generally stipulate that suppliers provide details such as property address, name, and contact info of property owner as required by law when filing such notice of intent documents.
Some property owners may assume that receiving a notice of intent to lien cannot be challenged or contested in any way. However, this isn’t always the case; property owners can examine the amount owed or prove goods or services weren’t provided. Therefore, any person receiving one should consult with a lawyer immediately about their options and seek legal advice as soon as possible.
Misconceptions about notice of intent to lien are widespread, one such falsehood being that property owners don’t need to pay their debt when receiving such information from suppliers; however, this is incorrect as property owners must still settle their debt in full, though negotiations between supplier and property owner could result in alternative payment plans being developed between them.
If a business cannot pay its franchise taxes in Texas, the state could revoke its right to conduct business there. This can be devastating to them since this would prevent them from closing real estate deals and opening bank accounts; furthermore, it could cause issues with their credit rating. Texas would send the business a Notice of Intent to Forfeit the Right to Transact Business and an enforced penalty equaling 50% of their total franchise tax liability due.
When do I send a notice of intent to lien?
A notice of intent to lien acts like a demand letter but with more legal weight. After sending out the initial message and before filing your mechanic’s lien claim, this document serves as an important warning that shows property owners you mean business and intend on filing their mechanic’s lien claim if payment does not materialize soon enough – often acting as an incentive towards cost.
When sending out a notice of intent to lien in Texas, it’s vitally important that all the pre-lien requirements are fulfilled. Texas requires you to send out a monthly fund-trapping information (or “monthly notice”) to protect your lien rights; this document has different names, such as monthly notice, notice of nonpayment, or notification of intent to lien.
Texas construction projects must provide any person who contributes labor or materials without being paid a monthly notice, such as subcontractors, 2nd tier subcontractors, suppliers, etc. However, there may be exceptions, such as when providing work directly for the general contractor (GC).
Deadlines for filing notice can differ depending on the nature and month of a project, making this process confusing to those unfamiliar with Texas lien laws. To make things simpler for everyone, we have developed a free monthly notice calendar so you can track deadlines across projects easily.
If you fail to submit your notice by its deadline, the Texas Secretary of State could initiate the forfeiture process, leading to ineligibility of doing business in Texas and potentially closing it down completely. To prevent this from happening, ensure your report is filed on time each year!
Notifying of Intent to Lien If Working on a Project With a Payment Bond If contractors or suppliers can’t perfect their claim by following Texas lien rules, they can still do it through the payment bond itself by giving all notices as would have been provided directly to the owner through sending out notice of intent to lien notifications to the surety on bond – this process can be accomplished via sending notice of intent to lien notifications directly.
How do I send a notice of intent to lien?
Sending a notice of intent to lien depends on your jurisdiction. Nine states mandate it before filing mechanics liens, while Texas does not. Nonetheless, contractors and suppliers can use notices as a voluntary way of informing their customers that if payment isn’t forthcoming, they intend to file a lien against them; additionally, it adds professionalism to payment practices by showing they take their supplier rights seriously.
Send a notice of intent to lien either via email, courier service, or any other form of traceable delivery with proof of receipt (we recommend keeping a receipt for your records). Ideally, it should go to the property owner and general contractor; in the case of subcontractors (2nd Tier), a copy must also go up the chain of subcontractors. Send within 30 days after finishing work on a project to protect lien rights.
Some may mistake a notice of intent to lien for being the same as a demand letter. However, these two documents differ significantly in content and usage. A demand letter typically serves to remind debtors about payments due. A notice of intent to lien, on the other hand, can be filed as evidence in court so its weight exceeds an ordinary demand letter.
No matter how difficult sending a notice of intent to lien may seem, you must follow all necessary steps to preserve your lien rights. A good way of doing this is using Levelset or another professional pre-lien and lien filing service to make sure all notifications arrive on time without any penalties or delays in filing your mechanic’s lien claim formally. Otherwise, familiarize yourself with state regulations on pre-lien notification deadlines so you don’t miss any.
