## Facts

- Worry Free Services, Inc. installed an air conditioning and heating system in the home of Linda M. Camareno.
- Worry Free retained a security interest in the installed system to secure payment.
- Believing Uniform Commercial Code (UCC) Article 9 governed, Worry Free filed a financing statement with the Texas Secretary of State.
- Camareno later filed for bankruptcy.
- Worry Free filed a claim in the bankruptcy case asserting it held a perfected security interest in the HVAC system.
- Camareno moved to avoid Worry Free’s claimed secured interest, arguing the HVAC system became a fixture and that perfection required compliance with Texas Property Code § 53.
- Under § 53, a contractor claiming a lien on an improvement or fixture must file an affidavit describing the lien in the county clerk’s office where the real property is located.
- The bankruptcy court found the system was a fixture and concluded Worry Free had not met § 53’s filing requirements; the district court affirmed, and Worry Free appealed to the Fifth Circuit.

## Issues

1. Whether the installed residential HVAC system was a fixture under Texas law.
2. Whether filing only a UCC financing statement with the Texas Secretary of State perfected Worry Free’s interest, or whether Texas Property Code § 53 required a county-filed lien affidavit.
3. Whether, given the perfection requirements, Camareno could avoid Worry Free’s asserted secured claim in bankruptcy.

## Decision

- The Fifth Circuit affirmed the district court’s judgment, which had affirmed the bankruptcy court’s order.
- The courts treated the installed HVAC system as a fixture attached to the residence rather than freestanding personal property.
- Because the interest asserted was in a fixture/improvement to real property, perfection required compliance with Texas Property Code § 53, including filing the required lien affidavit with the county clerk.
- Worry Free’s UCC filing with the Secretary of State did not substitute for the § 53 filing required for a contractor’s lien on a fixture.
- As a result, Worry Free did not hold a properly perfected secured interest against the bankruptcy estate, and Camareno was entitled to avoid the lien/secured status Worry Free claimed.

## Legal Principles

- Under Texas law, items installed in a home may become fixtures when they are attached to the realty and intended to remain as part of the property.
- A contractor seeking lien rights in an improvement or fixture must perfect the lien in the manner Texas Property Code Chapter 53 requires, including a timely affidavit filed in the real-property records through the county clerk’s office.
- A UCC Article 9 financing statement filed with the Texas Secretary of State does not, by itself, perfect a contractor’s lien on a fixture when Texas law requires the Chapter 53 filing.
- In bankruptcy, a lien that is not properly perfected under applicable state law may be avoided, leaving the creditor without the secured status it asserted.

## Conclusion

In *In re Camareno*, the Fifth Circuit affirmed orders avoiding Worry Free’s claimed secured interest because the installed HVAC system was treated as a fixture under Texas law, and Worry Free’s UCC filing with the Texas Secretary of State did not satisfy Texas Property Code § 53’s county-affidavit requirements for a contractor’s lien on fixtures.


In re Camareno, 105 F. App’x 3 (2004)