A Collections Firm for the Texas Construction Industry

A/R in construction is its own animal. Construction creditors deal with general contractors, owners, sureties, and lenders, each with different rights and obligations under different statutes. The collection toolkit runs wider than ordinary commercial work: mechanic’s and materialman’s liens under Texas Property Code Chapter 53, retainage rights, joint-check arrangements, prompt-payment-statute claims, surety bond claims on bonded jobs, trust-fund claims under Chapter 162, plus the standard contract and account-stated claims that apply to commercial creditors generally.

Cook Keith & Davis represents construction creditors. Our commercial collections practice extends naturally into the construction context. Construction matters often pair standard collection issues with industry-specific claims, and we handle both.

This page describes our construction collection practice and the industry-specific claims that set it apart from ordinary commercial collection.

Who We Represent on the Construction Side

We represent:

• Suppliers and materialmen who furnish materials to a construction project
• Subcontractors who furnished labor or labor-and-materials
• Equipment lessors and rental companies
• Specialty trades (mechanical, electrical, plumbing, roofing, concrete, drywall, paint, glazing, and the like)
• Trade creditors of construction-industry buyers (suppliers selling to contractors and subcontractors on open account)

We represent creditors. We do not generally represent owners or general contractors defending against construction-creditor claims.

The Texas Construction Lien System in Brief

Texas Property Code Chapter 53 governs mechanic’s and materialman’s liens. The system is detailed, time-sensitive, and procedurally strict.

The constitutional lien. Direct contractors with the owner have a constitutional lien under Article XVI, § 37 of the Texas Constitution. This lien arises by operation of law and does not require the same statutory perfection as the Chapter 53 lien.

The statutory lien. Subcontractors, sub-subcontractors, suppliers, and materialmen perfect their lien rights under Chapter 53. Perfection requires sending a written pre-lien notice to the owner and original contractor for each unpaid month, by the 15th day of the third month on commercial projects and a month sooner on residential ones, followed by recording an affidavit of lien by the statutory deadline. These are strict, non-forgiving dates, and we track them against the current Chapter 53 calendar (the notice regime was overhauled by HB 2237, effective January 1, 2022).

Trust funds under Chapter 162. Construction payments received by contractors are trust funds under Chapter 162. Misapplication of trust funds by a contractor or subcontractor can give rise to civil liability and, in some circumstances, criminal exposure. The trust-fund claim is a useful supplemental claim against contractors who received owner payments and did not pay subs and suppliers.

Bonded jobs. Public works and many private projects are bonded. On bonded projects, the supplier’s or subcontractor’s principal claim is typically against the surety on the payment bond, rather than or in addition to a lien on real property. Texas Government Code Chapter 2253 governs payment bonds on public projects.

We handle all of these claims and the litigation that arises from them. For lien filing specifically, we have a developed practice, including our lien-and-demand-letter generator for time-sensitive notice and lien work. The mechanic’s-lien side of this work has its own home: dallaslienlawyer.com, our dedicated Texas construction-lien resource, which covers lien rights, deadlines, notices, retainage, funds trapping, and bond claims in depth. It is the authority we work from on lien questions, and this page defers to it on the mechanics.

Common Construction Collection Scenarios

Our construction matters fall into recurring patterns.

Supplier with unpaid invoices to a subcontractor. The subcontractor has been paid by the general contractor but has not paid the supplier. The supplier’s claims include direct contract liability against the subcontractor, a Chapter 53 lien against the property if statutory notices were sent timely and the lien is perfected, a trust-fund claim under Chapter 162 against the subcontractor and its principals, and, on bonded projects, a payment-bond claim against the surety.

Subcontractor with unpaid retainage. The job is complete, the subcontractor’s progress billings have been paid, but retainage is being withheld. Texas has a retainage statute under Chapter 53 that creates specific rights and timelines for retainage claims. Prompt-payment statutes (Texas Property Code Chapter 28 for private projects, Texas Government Code Chapter 2251 for public projects) impose timing and interest obligations.

Specialty trade with unpaid change-order or extra-work claims. The base contract has been paid; disputed change-orders or extras remain unpaid. The collection issue is intertwined with the underlying merits dispute. Our approach is matter-specific, but the toolkit includes contract claims, lien claims if perfected, and, where the work was directed by the owner or general, potentially direct claims against the directing party.

Materialman whose lien window is closing. The materialman delivered materials, has not been paid, and the deadlines for sending statutory notices and recording the lien are approaching or have just passed. Our lien-and-demand-letter generator lets us turn around notice and lien work quickly when timing is critical.

Contractor’s customer is a property flipper or single-asset entity. The customer is set up as a single-asset entity, an LLC formed to develop or flip the specific property, with no assets beyond the property itself. The lien on the property is the realistic recovery path, and personal guaranties from the entity’s principals, where obtained, provide a parallel path.

The Lien-and-Demand Process

For construction matters where the lien deadline is the time-critical issue, our process is:

Intake. We take basic information about the project: owner, original contractor, location, type of work, dates of work, amount unpaid, status of statutory notices already sent, and presence of a payment bond.

Notice review. We confirm what notices have been sent, what notices still need to be sent, and the deadlines for each.

Demand letter and notices. We prepare and send the appropriate statutory notices and a demand letter. The demand letter often produces resolution where the owner or general contractor has been holding payment and the threat of perfected lien rights changes the calculus.

Lien affidavit. Where notice has been sent and the lien deadline has been reached, we prepare the affidavit of lien (constitutional, statutory, or both, as the facts support) and record it in the appropriate county.

Suit on the lien. Where the lien does not produce payment, we file suit to foreclose it. The suit typically combines lien-foreclosure claims with direct contract claims and, on bonded projects, bond claims.

We use an internal lien-and-demand-letter generator to produce these documents reliably and quickly when time is short.

Bonded Projects: Suing the Surety

On bonded jobs, the surety is often the more reliable target. Sureties pay valid claims, they are licensed and capitalized, and they have reputational and regulatory incentives to resolve legitimate claims rather than litigate them.

The bond claim has its own procedural requirements.

Notice to the surety. Texas Government Code § 2253 imposes notice requirements for public-project bond claims, with specific timing and content requirements depending on the claimant’s position in the contractual chain. Private-project bond claims are governed by the bond’s own terms and any incorporated statutory provisions.

Suit on the bond. Where notice has been given and the surety has not paid or has wrongfully denied the claim, we file suit on the bond against the surety, and typically also the principal obligor on the bond.

Our bond practice is integrated with our lien practice. Many construction matters involve both bond and lien claims, sometimes with strategic choices between them.

Construction Trust-Fund Claims Under Chapter 162

Texas Property Code Chapter 162 makes construction payments trust funds. A contractor who receives payment from an owner for work performed by a subcontractor, or for materials supplied by a materialman, holds those funds in trust for the subcontractor or materialman. Misapplication of trust funds, using the funds for other purposes before paying the trust beneficiary, gives rise to civil liability and, in some circumstances, criminal exposure.

The trust-fund claim is a useful supplement to the contract and lien claims. It sometimes reaches the contractor’s principals personally, because misapplication may be characterized as fraud or fiduciary defalcation that pierces the corporate veil and creates personal liability for the responsible individuals. It also has bankruptcy implications: trust-fund liability may be non-dischargeable under 11 U.S.C. § 523(a)(4) (fiduciary defalcation), which is a powerful tool against contractors who file bankruptcy.

We pursue trust-fund claims as part of our construction collection practice.

Prompt-Payment Statute Claims

Texas has prompt-payment statutes for both private and public construction projects.

Private projects, Chapter 28. Texas Property Code Chapter 28 imposes timing obligations on owner-to-general and general-to-sub payments and provides interest and attorney’s-fees recovery for late payment.

Public projects, Chapter 2251. Texas Government Code Chapter 2251 imposes similar timing obligations on government-entity contractors and sub-tier payments and provides interest and fees for late payment.

These statutes are useful additional claims layered onto the underlying contract and lien work. The interest and fee recovery they provide can be material on slow-paid matters.

Move on the Lien Window

Construction collection is time-critical. Lien deadlines, notice deadlines, retainage deadlines, and bond-claim deadlines all run on statutory calendars that do not pause for your internal collection efforts.

If you are a Texas construction supplier, subcontractor, or materialman with an unpaid balance, contact us. Bring what you have: the project information, the contract, the notice history, and the unpaid balance. We will identify what claims are available, what deadlines are running, and how to move.

Contact us to get started or call 214-368-4686.

Related Pages

• For A/R Departments
• Our Debt Collection System
• Collecting Judgments in Texas
• Promissory Note and Guaranty Enforcement
• Coordinating With Bankruptcy Counsel
• Texas Collections Law FAQs