The lien laws treat retainage like any other failure to pay. Therefore, in order to protect your right to file a lien to recover the withheld retainage, you must serve the proper parties with notice that contractual retainage is being withheld. There are two ways to accomplish the notice requirement:
First, you may treat contractual retainage as unpaid monthly progress payments and for each month retainage is withheld, you can serve the owner (and general contractor if your contract is with a subcontractor) with the standard third and/or second month pre-lien notices. Click here to Serve A Pre-Lien Notice Letter.
In the alternative, you can serve just one notice under Texas Property Code Section 53.057 at the outset of the project. Proper notice is sent under Section 53.057, when you serve the owner and the original contractor with written notice no later than the 15th day of the second month following delivery of materials or performance of labor, of: (1) the contractual sum to be retained; (2) the due dates, if known; and (3) the nature of the agreement. By sending notice in this manner, you eliminate the need to send monthly fund trapping notices for retainage; however, unlike the fund trapping notices, the Owner is not required to withhold any additional funds until you file the lien affidavit.