The GC Won't Pay You: A Texas Subcontractor's Escalation Playbook

Nobody wants rung five. Most Texas payment disputes end on rung two or three, and the subcontractors who get paid fastest are not the most aggressive ones. They are the ones who move up the ladder on a schedule instead of on a mood.

What a Texas subcontractor can do when the GC will not pay

First, work out which job you are on

The ladder above is the private, non-homestead, unbonded, derivative-claimant case, because that is the most common one. Change any of those four facts and something material changes with it, so this is the gate to run before anything else.

Two things that hold in every branch. Contractual retainage is a separate claim with its own notice, which the notices below do not cover on their own except to the extent a notice of claim already included it. And nothing on the ladder pauses a deadline.

The rule that governs every rung: the clock never pauses

Your statutory deadlines do not care that you are in a negotiation, that the controller promised a check on Friday, or that the owner is waiting on a draw.

A subcontractor who skips a month’s notice because a payment felt close has traded that month’s lien rights for a phone call. If the cheque arrives, the notice cost a stamp and irritated nobody who matters, because Texas general contractors see these every week. If it does not, the notice is the only reason a claim for that month still exists. The useful way to hold it: rungs three and four are calendar events, and rungs one, two and five are judgment calls.

The chapter makes exactly one concession to the calendar, and it is newer than most printings. Where a deadline or the last day of a period in which to provide a notice or to take any action required under Chapter 53 falls on a Saturday, Sunday or legal holiday, the period extends to the next day that is not one of those [Tex. Prop. Code § 53.003(e)] — added by SB 929 with effect from 21 May 2025, so an older copy of § 53.003 will not show it. Knowing it exists is useful. Planning around it is not.

Rung 1 — The documented ask

Call whoever can actually release your money, which is rarely your project manager, and ask one question: what is holding this invoice? Then send the email that starts your record.

Following up on our call today. Invoice 2214 for $38,400 covering April work at the Lakeline job is 52 days past due. You mentioned the owner’s pay application timing. Can you confirm the date you expect to release it? I will follow up Monday if I have not heard back.

That is not aggressive. It is a dated, specific, unemotional record that a lawyer will later read as the start of a reasonable escalation. Ten minutes, on the day the invoice ages past your terms.

There is a second letter to consider sending in the same week, and almost nobody does. On written request, the owner must furnish a person furnishing labour or materials with a legally sufficient description of the property, whether there is a surety bond and a copy of it, any prior recorded liens or security interests, and the date the original contract was executed — not later than the 10th day after the request is received. The original contractor owes parallel answers about who it contracted with and whether a payment bond exists, and a subcontractor owes them to the owner, the original contractor, a surety, or anyone furnishing work under its subcontract [§ 53.159]. That single request produces the legal description you will need for the affidavit, tells you whether you are actually on a bond track, and puts the owner on notice that somebody downstream is assembling a file.

Rung 2 — The demand letter

A demand letter is rung one with a deadline attached and a consequence named: amount, project, invoice numbers, a date certain, and what happens if that date passes.

Two things make it work. Specificity — “the balance” is ignorable; “$38,400 on invoice 2214, by 5 September” is not. And a next step you will actually take: a letter that promises a filing and is followed by nothing has taught your customer what your letters are worth.

Texas has a well-worn version of this letter, the notice of intent to lien, which includes a copy-paste template. It is a voluntary demand rather than a statutory notice, and it extends nothing, which is exactly why it belongs on rung two rather than in your deadline calendar.

Rung 3 — The statutory notice, which is also leverage

This is the rung people misread as escalation. In Texas it is neither optional nor hostile.

A claimant other than an original contractor generally must send a notice of claim for unpaid labor or materials to the owner or reputed owner and the original contractor for the lien to be valid, on the form the statute prints, by the 15th day of the third month after the month the work was done — the second month on residential construction [§ 53.056]. This is a validity requirement, not a filing: nothing is recorded at this rung and no clerk is involved. The tables and the worked examples are in Chapter 4 of the Texas guide.

The leverage is the second half of the mechanism, and it is worth stating precisely because it is routinely overstated. If an owner receives a notice under § 53.056 or § 53.057, the owner may withhold from payments to the original contractor an amount necessary to pay the claim, and where notice went under § 53.056 the owner may withhold immediately on receipt [§ 53.081]. Two honest limits:

• The owner may withhold. It is authority, not a duty.
• Except for amounts it failed to reserve, an owner is not liable for money paid to the original contractor before the owner was authorised to withhold [§ 53.084]. There is only something to trap while the owner still owes your customer money.

One more limit worth stating plainly: this is authority to withhold from future payments. It does not create a lien on money the owner has already paid out. Notices sent early therefore have funds to work on; notices sent after the final draw are letters.

Where it does bite, the effect is that your paperwork sits between your customer and their next payment, and they hear about it from the owner rather than from you. That can create real leverage without anything being recorded against anyone’s property, though whether it does depends entirely on whether the owner still holds money.

Rung 4 — The lien affidavit

Recording changes who is in the conversation. A lien clouds title, and title is what a sale, a refinance, or a construction draw runs through. The owner’s lender finds it, the title company puts it on a requirement sheet, and on most projects the general contractor’s own contract obliges them to clear liens quickly. Your customer now has a contractual problem on top of a cash-flow one.

Three fields are where claimants most often hand the other side something to work with: the recorded legal description rather than a street address, the owner or reputed owner rather than whoever you invoiced, and an amount your records support. They are not the only three — the affidavit is sworn and the full list of required contents is in [§ 53.054], and a lien can also be attacked on notice timing, claimant status, service, retainage deadlines and homestead compliance. Small defects can be expensive, which is a reason to have the file reviewed by counsel or a filing service rather than a reason to be confident about three fields. If your arrangement with the general contractor was never papered, the proof questions for an oral agreement apply here too.

Then send a copy of the filed affidavit to the owner or reputed owner at their last known business or residence address, and to the original contractor if you are not one, not later than the fifth day after the date it is filed [§ 53.055]. Use a delivery method the chapter permits: personal delivery to the party or their agent, certified mail, or another form of traceable private delivery or mailing service that can confirm proof of receipt — and note that where the notice is actually received, the method used becomes immaterial [§ 53.003(b), (d)]. Failure to furnish that notice as § 53.055 requires is a listed ground for a summary motion to remove the lien [§ 53.160(b)(3)], which makes it the cheapest deadline in the chapter to blow.

One thing filing early does not buy you: priority over other trades. Perfected mechanic’s liens are on equal footing without reference to the date of filing, and where foreclosure proceeds are insufficient they are paid pro rata among the perfected liens on which suit is brought [§ 53.122]. Chapter 7 covers what comes back: payment, a negotiation, a bond that moves your claim off the title, or a challenge.

Rung 5 — Counsel and foreclosure

If the lien does not produce a cheque, it is a placeholder for a lawsuit. Suit to foreclose must be brought not later than the first anniversary of the last day the affidavit could have been filed under § 53.052 — not a year from your filing, and not a year from the invoice. It can be extended to the second anniversary of the filing date only by a written agreement with the then-current record owner, recorded in the same county before the first period expires [§ 53.158]. That one-year rule applies to contracts entered into on or after 1 January 2022; older contracts may sit on the pre-HB 2237 timetable, which is a question for counsel rather than a calendar.

Fees are the other half of the calculation, and they are not a one-way ratchet. In a proceeding to foreclose a lien, to enforce a bond claim, or to declare a lien invalid or unenforceable, the court “shall award costs and reasonable attorney’s fees as are equitable and just,” and on a residential construction contract the court is not required to order the owner to pay them at all [§ 53.156]. A clean claim gains leverage from that provision. A sloppy one hands it to the other side.

Hand off early — months before the deadline, not weeks — with your notice receipts, the recorded affidavit, and your service proofs in one folder. Chapter 8 explains what the suit involves and where a filing service stops.

Four remedies that never run through the lien

The ladder is about the property. These four are about the money, and none of them cares whether your lien survived.

The reason to know these is not that you will use all four. It is that they change what your customer believes about the next 60 days. A general contractor who has been paid for your work and kept the money is looking at a different conversation from one who is simply slow.

Whether the trust fund statute is even in play turns on four facts, and they are worth establishing before the subject is raised with anybody:

1. Was the payment a construction payment under a contract for improving specific real property in Texas? That is what makes it a trust fund in the first place [§ 162.001]. A general working-capital transfer is not.
2. Did your customer receive or control it? A contractor, subcontractor or owner — or an officer, director or agent of one — who receives trust funds or has control or direction of them is a trustee [§ 162.002].
3. Are you a beneficiary? An artisan, labourer, mechanic, contractor, subcontractor or materialman who laboured or furnished labour or material for the improvement is [§ 162.003]. On a residential construction contract the property owner is a beneficiary too, which is why an owner sometimes has the same argument you do.
4. Were your current or past-due obligations unpaid when the funds went elsewhere? Misapplication is diverting trust funds without first fully paying those obligations to the beneficiaries [§ 162.031]. Commingling does not defeat the trust, and there is a defence for a trustee who pays the beneficiaries in full within 30 days of written notice of a criminal complaint or pending investigation.

If facts one through four are all present, that is a conversation to have with a construction attorney. It is not a paragraph to put in a collections letter, because a demand that threatens prosecution to collect a civil debt is its own problem.

The five excuses, and what actually answers each

Nonpayment arrives with a reason attached. Four of the five common ones have a specific answer, and one of them is a genuine problem you need to know about early.

What to have in the file before you call anyone

Every remedy on this page runs on the same paper, and two of them turn on a fact most claimants have never checked: whether the party above you was paid for your scope.

Retainage is a separate claim with its own clock

This is where subcontractors most often have a hole they do not know about, and the panel reviewing an earlier version of this post was right to say so.

Retainage needs its own notice. To the extent a retainage claim is not wholly covered by a § 53.056 notice, a derivative claimant whose contract provides for retainage must send a notice of claim for unpaid retainage to the owner or reputed owner and the original contractor, no later than the earlier of the 30th day after the claimant’s contract is completed, terminated or abandoned, or the 30th day after the original contract is terminated or abandoned [§ 53.057]. A claimant who ran only the unpaid-labour notices and then liens retainage has a gap.

The owner has a reserving duty. During the work and for 30 days after it is completed, the owner must reserve 10 percent of the contract price, or 10 percent of the value of the work [§ 53.101]. A claimant who sends the required notices and files an affidavit not later than the 30th day after the earliest of completion, termination or abandonment has a lien on those reserved funds [§ 53.103]. And where the owner fails or refuses to comply, complying claimants have a lien at least to the extent of the amount that should have been reserved [§ 53.105].

Two owner documents can move your retainage clock, and one of them helps you. An owner may file an affidavit of completion, which is prima facie evidence of the completion date, and must send a copy to the original contractor and to each claimant who sent a § 53.056 or § 53.057 notice [§ 53.106]. Separately, on a non-residential project, within 10 days after an original contract is terminated or the original contractor abandons performance, the owner must notify each subcontractor who had already given notice or asked in writing to be told — and if the owner was required to send that notice and failed to, the subcontractor is not required to comply with § 53.057 to claim retainage and may claim by filing an affidavit under § 53.052 [§ 53.107]. If a job went sideways and nobody told you, that is worth checking before you conclude the retainage claim is gone.

Is “we haven’t been paid either” a defence in Texas?

Sometimes, partly, and less often than the person saying it believes. Take it seriously in both directions: it is a solvency warning about your customer, and it may be a defence they intend to raise.

Texas has a statute specifically about contingent payment clauses — the pay-if-paid family — and it cannot be waived by contract; a purported waiver is void [Tex. Bus. & Com. Code § 56.004]. Within that chapter, a contingent payor or its surety may not enforce the clause:

• to the extent the owner’s nonpayment resulted from the contingent payor’s own contractual failures, unless the nonpayment resulted from yours [§ 56.051];
• as to work performed or materials delivered after a properly timed written objection from the subcontractor becomes effective, which the statute allows only after the 45th day following a payment request in the contract’s regular form, subject to exceptions the section sets out [§ 56.052];
• where the payor is in a sham relationship with the owner of the kind described in Property Code § 53.026 [§ 56.053]; or
• where enforcement would be unconscionable, with the burden on the party asserting it, and with a safe harbour for a payor who disclosed the owner’s financial viability in writing before the contract became enforceable and then either pursued collection or offered an assignment of its claim [§ 56.054].

The chapter does not apply to contracts solely for design services, to a listed set of civil-engineering projects, or to improvements to a detached single-family residence, duplex, triplex or quadruplex [§ 56.002].

Read that as a reason to have the clause looked at rather than as a reason to assume it is void. The practical observation worth carrying is narrower and more useful: the unconscionability safe harbour asks whether your customer told you, in writing and before you signed, that the owner could actually pay for the job. Most did not.

Public projects: bond claims instead of liens

Government property generally cannot be liened, so on a public work the ladder above is the wrong ladder. The remedy is a claim against the payment bond under Chapter 2253 of the Texas Government Code, which has its own notice contents and its own deadlines, and getting the track wrong costs the claim rather than delaying it. Chapter 10 of the Texas guide covers the bond route.

Private jobs have a mirror-image trap. Where you contracted directly with a purported original contractor — one that effectively controls or is controlled by the owner, or that was engaged without any good faith intention that it perform — Chapter 53 treats you as an original contractor for perfecting a lien, which changes which notices apply to you [§§ 53.001(7-a), 53.026]. If the entity that hired you looks like the owner wearing a contractor’s hat, that is worth an hour of advice before you calendar anything.

When to skip rungs

Climb in order when the relationship is worth something and the deadlines are comfortable. Jump when either stops being true.

• A deadline is inside 30 days. Protect the deadline; negotiate after. Nothing on rungs one and two preserves anything.
• The GC has gone quiet. Silence is not a negotiation, and two unanswered emails says so.
• You hear “we are waiting to get paid ourselves” twice. See the section above. Either reading argues for moving.
• Other subcontractors are unpaid on the same job. Not because of priority — Texas mechanic’s liens share rank — but because a troubled project has a finite amount of cash and attention, and the claimant who arrives last negotiates over what is left of both.
• An affidavit of completion or a termination notice lands. Both can move your retainage clock. Read the date on it the day it arrives.

Skipping to rung five to make a point is expensive. Foreclosure suits are five-figure engagements, and the fee provision cuts both ways.

The first week, in order

What this costs, and what we do

Rungs one and two cost your time. Rung three costs a stamp and is the cheapest leverage in the chapter. Rung four costs county recording fees plus whatever you value an hour of your own paperwork at, and it is the rung where a mistake gets expensive: three of the grounds for a summary motion to remove a lien are notice and affidavit failures rather than anything about whether you are owed the money [§ 53.160]. Rung five is an attorney engagement, and the fee provision runs both directions.

The honest comparison is not DIY against a service. It is a correct filing against an incorrect one. Through SimpleLiens, notices are $29 each, a Texas lien affidavit is a flat fee, and a person checks the file before anything is recorded: the owner from the deed, the description from the recorded instrument, the months stated properly, the notices dated and served, and proof of service kept where you can find it in a year. See what a Texas filing includes.

Subcontractors who rarely get past rung three run notices as routine paperwork rather than as an escalation: every job, every unpaid month, automatically, while everyone is still friendly. That habit is the difference between a payment problem and a lost year.

Texas subcontractor nonpayment: quick answers

What are my options? Documented ask, demand letter, statutory notice of claim, lien affidavit, foreclosure suit. Plus prompt-pay interest, trust funds, and a plain debt claim, none of which need the lien.

Is it illegal not to pay me? Not paying a bill is not a crime. Diverting construction trust funds can be, at $500 or more.

Can I charge interest? Where Chapter 28 applies, 1.5 percent a month from the day after payment was due, and the chapter cannot be waived.

Can I stop work? There is a statutory route on the tenth day after written notice of nonpayment. Do not improvise it.

Does pay-if-paid end the conversation? Not necessarily. Texas limits contingent payment clauses and forbids waiving those limits.

Does filing first put me ahead of other trades? No. Perfected mechanic’s liens share rank and are paid pro rata.

Is retainage covered by my other notices? Not by itself. It generally needs its own notice on its own deadline.