Avoiding Potential Construction Pitfalls in the Texas Property Code – Part 1: Project Completion

 Written by Tyler Wright, Associate 

This is the first in a multi-part blog series addressing potential pitfalls that project owners, contractors, subcontractors, and project financers may encounter on Texas construction projects. Texas mechanics’ lien laws have long been some of the most complex lien laws in the country, and Chapter 53 of the Texas Property Code, as many know by now, was substantively amended for the first time in decades for projects beginning in 2022. Rather than rehashing those amendments, this blog series highlights some of the lesser known (or lesser followed) provisions of the Texas Property Code that still can catch unwary parties off guard, and illustrates how proactive measures on the front end of a project can mitigate disputes later.

This first post recaps the two primary subcontractor notices that must be provided before claiming a lien and that remain applicable after the Chapter 53 amendments. Then it addresses project completion, including scenarios involving termination of the contract or abandonment by the original contractor.   

Subcontractor Notices. To preserve their lien rights, subcontractors must provide two key notices before claiming a lien under the Texas Property Code. Unpaid Claim notices under Section 53.056 must be sent by the 15th of the third month for every month a subcontractor works on a commercial project. Retainage Notices under Section 53.057 must be sent within 30 days after the subcontractor completes all of its work on the project, though they also may be included with Unpaid Claim Notices. This timing inconsistency can create a trap for both owners and subcontractors during the closing months of a project. 

Affidavit of Completion. When the project is complete, the owner may file an Affidavit of Completion to establish prima facie evidence of the completion date, which governs lien claim deadlines. The owner must file the Affidavit within 10 days of completion; otherwise, the filing date itself becomes the prima facie completion date. The owner must then send a copy of the Affidavit to any subcontractor that has already provided an Unpaid Claim Notice or a Retainage Notice, within 3 days of filing and within 10 days of any subsequent notice. For any subcontractor that previously requested notice of completion, the owner must send a copy of the Affidavit within 10 days of the request, or by the filing date, whichever is later.

A savvy subcontractor often will include a request for notice of project completion within an Unpaid Claim Notice or Retainage Notice. It is important for owners to note, therefore, if a subcontractor’s request was made at least 10 days before the Affidavit’s filing, the copy must be sent on the filing date, not within 3 days after. Failure to send the copy of the Affidavit by the applicable deadline causes the owner to lose the benefit of prima facie evidence of the completion date as to the unnotified subcontractor.

Notice of Termination and Contractor Abandonment. If the owner terminates the contract or the original contractor abandons the project, the owner must notify each subcontractor within 10 days that requested notice of termination or abandonment. The owner also must send notice to each subcontractor that previously sent an Unpaid Claim Notice or Retainage Notice, regardless of whether the subcontractor specifically included a request for notice of termination or abandonment. If the owner fails to provide notice, the affected subcontractor is excused from the Retainage Notice requirement and may file its lien for retainage by the 15th of the third month after the project is completed or abandoned, without prior notice.  

Why this Matters: Owner’s Obligation to Withhold Retainage. The owner’s notice obligations matter because they directly affect the owner’s duty to withhold retainage under Chapter 53 and provide certainty releasing retainage and closing out the project. The Property Code requires an owner to withhold retainage only for 30 days after the project’s completion, termination, or abandonment, but an owner might be wise to withhold retainage for at least 30 days. Because the statute permits subcontractors to include Retainage Notices in Unpaid Claim Notices, which are not due until the 15th of the third month, an inherent timing conflict arises at the end of the project between the required 30-day retainage withholding period and the later Unpaid Claim Notice deadline.

To mitigate this conflict, subcontractors should promptly provide Retainage Notices upon completing their work, and owners should be diligent in sending the copy of the Affidavit of Completion and any notice of termination or abandonment. Additional mitigation efforts available to owners, such as conditions precedent to payment, will be discussed later in this blog series.       

Smarter Mediation. More Efficient Arbitration. Lessons from the ABA Midwinter Meeting

 Written by Lance Currie, Partner

Four members of our construction group had the privilege of attending the ABA Forum on Construction Law’s Midwinter Meeting in Dana Point last week. The program focused on making mediation and arbitration faster, smarter, and more human-centered. Two major themes stood out: (1) preparation is key to successful mediations, and (2) counsel can influence the efficiency and fairness of arbitration proceedings.

Improving mediation outcomes

Panelists emphasized the need for early preparation, both for the mediator and our clients. As one speaker correctly noted, the actual day of mediation should be viewed as the last step in a process that starts much earlier. In our experience, the initial strategy assessment for a matter must include consideration of whether and when a negotiated resolution could achieve our client’s goals. 

By taking the time to understand our client’s objectives and to consider the obstacles to settlement, we can develop a schedule for potential mediation that allows time to overcome those challenges.  In addition to gathering both the factual and expert information needed for meaningful discussions about risks and opportunities, early conversations about potential negotiated outcomes compared to the best alternative to a negotiated agreement allow clients to see clearly the costs and benefits of settlement. Likewise, we have found that early engagement with mediators to ensure they understand the parties’ positions, legal arguments, personal dynamics, and barriers to agreement increases the likelihood of settlement.

One particularly impactful conference session focused on the neuroscience of mediation and negotiation. The panel focused on cognitive biases that impede good decision making. Confirmation bias, for example, can impose blinders, causing one to miss key points on the other side of an issue by assigning greater weight to evidence that supports a predetermined conclusion. Availability and recency bias can cause one to favor readily available information over information they may not have direct access to or that is no longer fresh in their mind. The fallacy of sunk costs often stands in the way of settlement at mediation.  Realizing that the past is done and focusing on what can be done in the future is critical to avoid throwing good money after bad. Catastrophizing means letting your emotions spiral rather than approaching an issue calmly and thoughtfully. Awareness of how these biases may impact either side’s behavior at mediation allows us to think creatively about how to present resolution options that aren’t blurred by the biases. Creative thinking involves considering alternative value levers, such as time, relationships, and risk, rather than focusing only on dollars and cents.  As advocates, we can also reframe the issues through a problem-solving lens, rather than as a zero-sum game. The best negotiated outcomes involve finding ways for all parties to work toward a shared solution.

Making arbitration more efficient

According to survey data gathered for the conference, arbitration leads over litigation in perception and outcomes when it comes to speed and confidentiality. Skepticism continues as to whether arbitration is less costly than litigation, with discovery being a primary driver of costs. Presenters discussed options for improving efficiency in arbitration with resulting lower costs, including:

• Front-load case management at the preliminary hearing: lock in tailored schedules, proportionate discovery, and clear motion practice criteria. As advocates, we have found that arbitrators are often receptive to our suggestions that streamline discovery to what we truly need to present the case, rather than following a rote playbook driven by standard rules of procedure. We often find that the final outcome turns on dozens of documents—not thousands.
• Consider dispositive motions. Despite the perception they are rarely granted, the AAA presented data showing that in 2024, 49% of dispositive motions were granted in whole or in part. From initial selection of arbitrators, through the preliminary hearing and status conferences, we evaluate the importance of dispositive issues to efficiently resolve issues and weigh the time and costs of those efforts against the potential benefits.
• Tailor the final hearing to the needs of the case. Arbitrations can afford significant flexibility for efficiently presenting summary evidence as well as fact and expert witnesses. In a recent arbitration we significantly shortened the final hearing by streamlining the expert testimony and still achieved a $22 million award for our client.

In addition to the valuable learning that conferences like those offered by the ABA Forum on Construction Law provide, our group continues to grow an exceptional network of construction lawyers, experts, and industry professionals around the country who help us better serve our clients. We look forward to learning more this March at the Annual Texas Construction Law Conference in San Antonio and in April when the ABA Forum on Construction Law celebrates its 50^th anniversary in Chicago. 

Solid Foundation: Legal Insights for Successful Construction Projects

Written by Cathy Altman, Partner

Welcome to CCSB’s construction law blog. Our aim is simple: to offer clear, practical legal guidance to support owners, developers, and construction professionals deliver projects on time, on budget, and with fewer disputes.

We believe that bolstering the technical expertise and skills of the project team with a sound legal framework—well‑drafted contracts, thoughtful risk allocation, and solutions‑focused dispute management—improves project outcomes for all stakeholders.

We’ll use this space to translate legal concepts into usable tools for the field and the boardroom.

Our focus is on helping teams build better relationships, better processes, and better outcomes to avoid litigation. But we know that many factors affect the likelihood of project success, so we’ll also share experience-driven insights for those who find themselves in the courtroom.

Learning from the Field: Utility Coordination in Infrastructure Projects

We begin with highlights from the Construction Super Conference, where Carrington Coleman partner Cathy Altman joined panelists to discuss coordination and collaboration supporting utility relocation on infrastructure projects. Lessons learned from projects in high‑growth corridors around the country confirm that challenges with utility conflicts and relocations can have enormous impacts on schedules and budgets. Three practices to mitigate those risks stand out:

Start early and be strategic. Involve utility owners at the planning stage, not after design is “done.” Many utilities operate with aging or poorly mapped assets, complex regulatory constraints, and operational limits that don’t flex—certainly not on short notice.

Early, candid conversations identify conflicts before they become costly, and they reduce the frustrations that disrupt collaboration.

Budget for reality. Utility relocations and upgrades take time and money. Underestimating either is a common source of conflict. Build on the information gathered in step one to include informed time and cost contingencies, rather than wishful thinking or pass the buck approaches.

Make the contract speak plainly. Allocate risks and responsibilities in clear terms to avoid the ambiguity that invites finger‑pointing. Clarity gives the parties a workable roadmap for adjustments and a faster path to resolve disputes. Openly discuss which party is best positioned, in expertise and resources, to mitigate and control risks. Consider statutory and common‑law constraints that may limit your ability to allocate risk by contract in some jurisdictions.

We look forward to sharing more construction‑law insights that you can put to work on your next project.