In Parts 1 and 2 of this series, we considered the tools available to enforce judgments in Texas, as well as the ways in which a foreign judgment may be domesticated and enforced in the state. In our final installment, we will consider the mineral lien: a method by which a mineral contractor or subcontractor can collect certain debts from a mineral property owner without involving the courts.
Chapter 56 of the Texas Property Code covers liens against mineral property. Section 56.002 grants a mineral contractor or subcontractor a lien to secure payment from a mineral property owner for labor or services related to mineral activities – “digging, drilling, torpedoing, operating, completing, maintaining, or repairing an oil, gas or water well, an oil or gas pipeline, or a mine or quarry.” A mineral property owner includes an owner of land, minerals, leasehold title, pipeline, or pipeline right-of-way. When properly filed, the lien attaches to materials, machinery, supplies, land, leasehold, wells, pipelines, rights-of-way, and the lease associated with the labor or services; and it attaches to other materials and machinery owned by the mineral owner and other wells and pipelines located on the property. It does not attach to the mineral owner’s fee interest, and only takes priority over prior liens for machinery and materials.
The requirements for perfecting a lien differ slightly for contractors and subcontractors. Chapter 56 does not require a contractor to provide notice to the property owner prior to filing the lien, but a subcontractor must provide the owner with written notice of the claim at least 10 days before filing. The content of the notice is governed by Section 56.023. To perfect a lien, the contractor or subcontractor must file for record an affidavit of mineral lien in the county where the property is located. The affidavit must meet the statutory requirements set forth in Section 56.022:
- The name of the mineral property owner;
- The claimant’s name and mailing address;
- The dates the labor or services were performed or provided;
- A description of the land or property to which the lien will attach; and
- An itemized description of the claim.
A subcontractor must also provide the name of the party to whom he provided the labor or services and a statement confirming that statutory notice was provided to the owner. The affidavit must be filed within 6 months from the date the debt accrued.
Often, the filing of the lien will prompt a resolution. Once perfected, a mineral lien prevents the mineral property owner from selling or removing the property to which the lien has attached without the written consent of the lienholder. If the mineral owner sells or removes the property without the lienholder’s consent, the consequences are severe: the lienholder is entitled to possession and sale of the property regardless of whether the debt is due. Where there is no resolution, the contractor or subcontractor (the lien claimant) should seek to enforce the lien through judicial action. The most common method is via an action for foreclosure and a court order forcing a sale of the property. Once the underlying claim has been satisfied, the lien claimant must furnish the property owner with a release to be filed for record with the county clerk.
Kuiper Law Firm, PLLC specializes in oil and gas law and offers comprehensive collection solutions for businesses. If you have any questions about the information in this article and how it applies to your business, do not hesitate to contact us.