SRC-LBB S.B. 551 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 551
78R5804 QS-DBy: Harris
Jurisprudence
4/8/2003
As Filed


DIGEST AND PURPOSE 
 
Generally, liens are prioritized on a first filing basis.  However, this
is not the case for mechanic's liens.  Mechanic's liens arise on the date
work commences and do not need to be filed to take precedence over other
liens.  Problems arise when construction financing is needed after the
inception of work because some banks may not want to provide construction
financing due to the fact that their lien will not have first priority.
As proposed, S.B. 551 provides that the time of inception of a mechanic's
lien is the agreed commencement date of the work stated  in an affidavit
of commencement.  This bill also requires an affidavit of commencement to
be filed if the owner obtains third-party financing. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 53.124, Property Code, by amending Subsections
(a), (c),  and (d) and adding Subsection (f), as follows: 

 (a)  Provides an exception.

(c)  Provides that an affidavit of commencement of construction must
contain an agreed commencement date, rather than the date the work
actually commenced. 

(d)  Provides that the time of inception of a mechanic's lien arising from
work described in an affidavit of commencement filed under this section is
the agreed commencement date of the work stated in the affidavit. 

(g)  Requires the owner and the original contractor to file an affidavit
of commencement under Subsection (c), if the owner obtains third-party
financing for the construction of improvements under a residential
construction contract. 

SECTION 2.  Makes application of this Act prospective.

SECTION 3.  Effective date:  September 1, 2003.