Texas Mineral Liens — Chapter 56 Filing & Enforcement
Texas Mineral Liens: How to File and Enforce a Chapter 56 Lien
If your Texas oilfield or mineral-services company is owed money for qualifying labor or services, you may have lien rights under Chapter 56 of the Texas Property Code. But mineral lien deadlines and notice requirements can be unforgiving.
Chapter 56 provides a lien to qualifying mineral contractors and subcontractors for labor or services related to mineral activities.
Owed money for oilfield or mineral services?
Have an attorney review your potential Texas mineral lien claim and filing deadline.
- What Is a Mineral Lien in Texas?
- Who Can File a Texas Mineral Lien?
- Texas Mineral Lien Filing Deadline
- Texas Mineral Lien Notice Requirements
- How to File a Mineral Lien in Texas
- What If an Oilfield Company Hasn’t Paid Your Invoice?
- How an Attorney Can Help File a Texas Mineral Lien
What Is a Mineral Lien in Texas?
In Texas, a mineral lien (sometimes called an oil and gas lien) is a tool that helps contractors or subcontractors get paid for “labor or services related to the mineral activities.” Tx. Prop. Code. Sec. 56.002.
Texas Mineral Liens Are Governed by Property Code Chapter 56
Texas mineral liens are governed by Chapter 56 of the Property Code. This is different from ordinary mechanics liens (which are governed by Chapter 53) and different from a constitutional lien — Chapter 56 provides special rules and procedures just for mineral liens.
What Does a Texas Mineral Lien Secure?
Under Section 56.002 of the Texas Property Code, a mineral lien secures a mineral contractor or subcontractors right to payment for work related to “mineral activities.”
“‘Mineral activities’ means digging, drilling, torpedoing, operating, completing, maintaining, or repairing an oil, gas, or water well, an oil or gas pipeline, or a mine or quarry.” Tx. Prop. Code. Sec. 56.001.
What Property Can Be Subject to a Mineral Lien?
Section 56.003 details what property is subject to a Texas mineral lien. Unlike a regular mechanics lien, a mineral lien does not lien the land itself. Instead, the lien is limited to items relating to the mineral activities. The lien attaches to:
(1) “the material, machinery, and supplies” that you (the contractor) supplied;
(2) All of “the land, leasehold, oil or gas well, water well, oil or gas pipeline and its right-of-way, and lease for oil and gas purposes” for which you provided labor or machinery, including the buildings on that land;
(3) all other “material, machinery, and supplies used for mineral activities and owned by the owner of the property”; and,
(4) all “other wells and pipelines used in operations related to oil, gas, and minerals and located on property.”
See Tx. Prop. Code. Sec. 56.003. So, while your lien doesn’t attach to the entire ownership interest in the property, it’s still a very strong lien. It attaches to almost everything on the property relating to oil and gas, whether you provided it or not.
Want more information on a regular mechanics lien? Read our blog post Why Contractors Need a Mechanics Lien.
Who Can File a Texas Mineral Lien?
A mineral contractor or subcontractor can file a Texas mineral lien.
Mineral Contractors
A “mineral contractor” means a general contractor for oil and gas work, who has contracted with the owner of the property.
Chapter 56 of the Texas Property Code describes a “mineral contractor” as someone who “performs labor or furnishes or hauls material, machinery, or supplies used in mineral activities under an express or implied contract with a mineral property owner or with a trustee, agent, or receiver of a mineral property owner.” Tx. Prop. Code Sec. 56.001(2).
Mineral Subcontractors
Likewise, a “mineral subcontractor” is a subcontractor for oil and gas work — meaning their contract is with another contractor, not with the owner.
Chapter 56 of the Texas Property Code describes a “mineral subcontractor” as someone who “furnishes or hauls material, machinery, or supplies used in mineral activities under contract with a mineral contractor or with a subcontractor” or someone who “performs labor used in mineral activities”. Tx. Prop. Code Sec. 56.001(4)(A)-(C).
What Types of Oilfield Work May Qualify?
Many types of oilfield work qualify for a Texas mineral contractor lien. The following types of work allow you to file an oilfield lien:
- (1) digging,
- (2) drilling,
- (3) torpedoing,
- (4) operating, completing, maintaining, or repairing
If this work was done on:
- (a) “an oil, gas, or water well“
- (b) “an oil or gas pipeline,”
- (c) “or a mine or quarry.”
Tx. Prop. Code Sec. 56.001(1) (emphasis added).
Do You Need a Written Contract?
No, you do not need a written contract to file a Texas mineral lien or mineral subcontractor lien. The statute allows for a written contract, or an “implied” contract. Tx. Prop. Code Sec. 56.001(2)(4).
While a written contract is always better, a skilled attorney can help you file a lien even without one. If you don’t have a written contract but you discussed the work with the owner or general contractor, they saw you out there working and didn’t tell you to leave, or you sent invoices and they didn’t object, these are all things that help you form an implied contract.
Texas Mineral Lien Filing Deadline
Texas mineral lien filing deadlines are very strict. You must act urgently to protect your rights.
How Long Do You Have to File a Texas Mineral Lien?
Determining your mineral lien filing deadline varies based on the specific facts of each case. The Property Code allows “six months” from “the day the indebtedness accrues.” Tx. Prop. Code. Sec. 56.021. This is not always as simple as counting six months from your last date of work, nor is it six months from your invoice date.
When Does the Six-Month Period Begin?
Generally speaking, the “indebtedness . . . accrues on the date the material or services were last furnished.” Tx. Prop. Code. Sec. 56.005. However, this can change if you had multiple contracts or had large gaps of time in between performed work. It is always best to consult with an attorney to make sure you don’t miss your affidavit deadline. If you miss your mineral lien deadline, you permanently lose your lien rights.
What Happens If You Miss the Filing Deadline?
If you miss your Texas oilfield lien deadline, your lien rights are permanently lost. However, do not assume that you’ve missed your deadline without speaking to an attorney. Usually with a quick telephone call we can help you determine if there’s still time to file a mineral lien. If you have missed your lien deadline, we can connect you with experienced litigation counsel to discuss other ways to collect the money owed to you.
Why You Should Not Wait Until the Deadline
You should never wait until the last minute to file a Texas mineral lien.
- A rushed lien might not hold up in court. A good mineral lien takes time to prepare. As attorneys, we need to research the property ownership, well and oil leases, and operator information. We need to make sure we give notice to all required parties, ensuring that your lien is valid.
- As time passes, records get lost. This makes it harder to gather all of the information we need for a valid mineral lien.
- If a party files bankruptcy, your collection actions might be put on hold. You can — and must– still file your mineral lien during bankruptcy. However, a bankruptcy stay can prevent any collection on your lien. It’s better to file your lien and start collecting before this happens.
Texas Mineral Lien Notice Requirements
For a mineral subcontractor, a lien affidavit is not enough — you also need to send a special notice of your intent to file a lien. Tx. Prop. Code. Sec. 56.023.
What Notices Are Required?
The Texas Property Code Chapter 56 requires oilfield subcontractors to send a notice 10 days before filing a lien affidavit. If you don’t do this, your lien is invalid.
Beware —> Sometimes a general contractor can be deemed a subcontractor. As an extra precaution, we usually recommend any mineral lien claimant submit a 10-day notice.
This is different from the subcontractor’s pre-lien notice under Chapter 53 of the Property Code. Read our blog post Texas Mechanics Lien Filing Dates You Must Know (Filing Requirements Under Texas Property Code Chapter 53).
Who Must Receive Notice?
The mineral lien subcontractor’s notice must be sent to the owner of the “property owner.” Tx. Prop. Code. Sec. 56.023.
Beware: A “mineral property owner” is defined at Chapter 56, Section 56.001. It means “an owner of land, an oil, gas, or other mineral leasehold, an oil or gas pipeline, or an oil or gas pipeline right-of-way.” Tx. Prop. Code. Sec. 56.001(3). The owner of the land might not be the same as the “mineral property owner,” so simple searches of tax records often are not enough. A mineral lien attorney can make sure your notice goes to the correct parties.
When Must Mineral Lien Notice Be Sent?
Under Chapter 56 of the Texas Property Code, a mineral lien notice must be sent at least 10 days before you record a lien affidavit. Tx. Prop. Code Sec. 56.021.
What Information Should Your Notice Include?
The Texas Property Code has very strict requirements for what must go in a subcontractors mineral lien notice. Generally, you must:
- State that you intend to file a lien,
- Identify the general mineral contractor,
- State the amount owed, and,
- Provide a description of the property.
Tx. Prop. Code. Sec. 56.023. Identifying the property can be complex and we always recommend using a mineral lien attorney to prepare both your notice and affidavit. If your notice is wrong, your lien will be invalid.
How to File a Mineral Lien in Texas
Filing a mineral lien in Texas is complex and requires a number of steps.
Step 1: Identify the Mineral Property
Step 2: Confirm the Parties and Ownership Interests
Step 3: Calculate the Amount Owed
Step 4: Determine Your Filing and Notice Deadlines
Step 5: Provide Required Notice
Step 6: Prepare the Mineral Lien Affidavit
Step 7: File With the Appropriate County Clerk
Step 8: Evaluate Enforcement Options
Rather not deal with all of this? Let us handle your Texas mineral lien for you. We will handle the entire process, from start to finish. All you do is sign. Call us today for a free phone consultation.
What If an Oilfield Company Hasn’t Paid Your Invoice?
If an oilfield company hasn’t paid your invoice, the time to act is now. It’s never “too early” to start the mineral lien process. A mineral lien attaches to the mineral property and is a strong enforcement tool — use it to your advantage. Contact us today for a consultation.
How an Attorney Can Help File a Texas Mineral Lien
An experienced Texas lien attorney is essential to properly filing a mineral lien. Mineral liens are complex and require many steps to be done exactly right. If you do one thing wrong, or too late, you can lose your lien rights for good. We can help:
Determine Whether You Have Lien Rights
The first step is to make sure you have lien rights, and distinguish between a Chapter 53 mechanics lien, a constitutional mechanics lien, or a Chapter 56 mineral lien. We will evaluate your unique situation and make sure to file to right kind of lien for you.
Identify the Correct Property and Parties
As described above, identifying the “property” and the “mineral property owner” is not a simple online search. We are experienced in researching property records, and engage the services of a Texas landman when needed, to ensure that we are correctly identifying the property and the parties. This can take several hours to make sure everything is right, even for an experienced attorney.
Calculate the Applicable Deadlines
We will make sure your mineral lien is filed on time. If you’re out of time, we will advise you on other collection options.
Prepare and Record the Lien Affidavit
A Texas mineral lien Affidavit is a complex document. Chapter 56 of the Texas Property Code lists numerous requirements that you must comply with. Get one of these wrong, and your entire lien can be invalid.
Handle Required Notices
To have a valid Texas oil and gas lien, mineral subcontractors must send a pre-lien notice. The notice requirements can be difficult to comply with. Oftentimes, you need to do as much research to prepare a proper notice as you do to prepare an affidavit. Mess up one part of your notice, and your entire mineral lien can be dismissed by a court.
Coordinate the Lien With Other Collection Remedies
Filing your mineral lien affidavit isn’t the end of the line. If you aren’t paid after you file the lien, you can file a mineral lien foreclosure lawsuit. You can also attach your lien to the mineral property if it’s moved to another county. Having a Texas mineral liens attorney in your corner ensures you don’t miss these vital deadlines.
