Statutory Damages for Filing a Fraudulent Contractor’s Lien
Statutory Damages for Fraudulent Contractors’ Liens.
As a contractor, you should be wary of the damages for filing a fraudulent lien found in Chapter 12.002 of the Texas Civil Practices and Remedies Code. This provision provides that if a lien is found to have been filed fraudulently (as that term is defined in the statute and by Texas law), damages awarded can include the GREATER of $10,000 or actual damages to the property owner.
This means that even if the lien doesn’t create any actual damages for the property owner (such as loss of credit, costs and issues with any mortgage holder, etc.), the property owner may still recover a minimum of $10,000.
Lien filing history and knowledge of the requirements and deadlines in the Texas Property Code play into whether a contractor knew or should have known the lien was invalid when it was filed. Also, releasing the lien after being sued for filing an invalid or fraudulent lien may not resolve the issue with the property owner or absolve the contractor of liability under this statute.
If you are going to consider filing a lien, speak with a lawyer knowledgeable in construction litigation and collection first. If you are sued by a property owner for filing a fraudulent or invalid lien, immediately seek out counsel knowledgeable in these matters.
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Patric McCallum is a principal attorney with Drew & McCallum. He focuses his practice on family and business law, helping business leaders and Texas families with their legal challenges and needs. He brings a wealth of trial experience and industry knowledge to every matter he handles.