If you’re looking into a mineral lien, also known as an oil and gas lien, here’s some helpful information to help you decide your next steps. A mineral lien can only be provided to a mineral contractor or subcontractor, which is defined in Texas as “a person who performs labor or furnishes or hauls material, machinery, or supplies used in mineral activities under an express or implied contract with a mineral property owner…” So when might you be interested in filing a mineral lien? We discuss this below.
What is a Lien?
If you’re unfamiliar with the mineral lien process and why you might choose to file for a lien, we’re here to help. A lien is “a right to keep possession of property belonging to another person until a debt owed by that person is discharged.” A mineral lien in Texas would cover equipment and property involved in any mineral activities.
These mineral activities mean “digging, drilling, torpedoing, operating, completing, maintaining, or repairing an oil, gas, or water well, an oil or gas pipeline, or a mine or quarry.” If you or your business is currently involved in mineral activities, you may choose to file a mineral lien if you have not been compensated for your work.
Who Can File a Mineral Lien?
If you’ve been working on-site as a general contractor or other contractors for an oil and gas project and are incurring debt from the project, you can file a mineral lien. A notice is required before you file for the lien.
Filing a mineral lien can protect you from incurring debt and from not receiving your contractually obligated payments. Once you file a lien, you can file a lawsuit to foreclose on your lien within two years. If you choose to foreclose your lien due to non-payment, the owner may need to sell the equipment or property to pay their debt to you.
Filing for a mineral lien can help protect contractors from losing money. A lien helps you secure payment for your time and efforts, and if you don’t file a lien, you could lose leverage down the line to receive your deserved payments. Our experienced legal team is available to counsel you throughout the process.
The Filing Process
Navigating the laws and regulations around filing a mineral lien can be complex. Texas and Alaska are the only two states with mineral lien laws, and each state has its own specific requirements. Hiring an attorney who specializes in Texas mineral liens can make all the difference in your filing.
Digging and extracting oil and gas can get pricey over time. The process can be slow-moving, and if the owners are not paying for the costly equipment and upfront costs incurred, you have rights as a contractor.
How Do I Foreclose a Mineral Lien?
If you choose to, the holder of the lien can foreclose to ensure they receive their payments. Sometimes a lien can avoid foreclosure if a lawyer can help negotiate with the property owner and contractor to get on a payment plan.
However, sometimes it is necessary to foreclose on a lien to secure payment. Knowing your rights can make all the difference, and an experienced mineral lien lawyer can help you.
If you have mineral lien questions, please do not hesitate to contact The Stuart Firm at (432) 284-4411. We offer consultations, and we’re looking forward to hearing from you. We offer aggressive and passionate representation, and we’re ready to help you today.