Solar Applications Engineering, Inc. v. T.A. Operating Corp.
327 S.W.3d 104 | Texas Supreme Court | 2010
What This Case Means for Subcontractors
Solar, a general contractor, sued for final payment after substantially completing a truck stop project. The owner refused to pay, claiming Solar didn't provide a lien-release affidavit and arguing this was a required condition for payment. Texas Supreme Court ruled that lien-release provisions are promises (covenants), not conditions that block payment. A contractor who substantially performs can recover the contract balance even without a lien release, though the owner can still sue for damages caused by unpaid liens.
Key Takeaways
- •Lien-release requirements in contracts are not deal-breakers—they're enforceable promises, not gates to payment. Substantial performance still entitles you to final payment.
- •If an owner withholds final payment claiming you didn't release liens, you can still sue for breach of contract and recover what you're owed, minus any legitimate defects.
- •Protect yourself by understanding the difference: owners can sue you for damages from liens, but they can't use a missing lien release to block your entire final payment claim.
The lien-release provision is a covenant, not a condition precedent to Solar's recovery.
Frequently Asked Question
Can an owner refuse to pay me my final invoice because I didn't sign a lien release?
No. A lien-release requirement is a promise the owner can enforce, not a condition that blocks your right to payment. If you substantially completed the work, you can sue for the balance owed, even without the lien release. The owner can still sue you separately for damages caused by unpaid subcontractor liens, but they can't use the missing release to deny you payment entirely.
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