Relating to construction contract trust funds.

89(R) HB 3287 - House Committee Report version - Bill Text

89R25968 SCR-F

By: Bell of Kaufman, Button, Hefner, Romero,

H.B. No. 3287

Leach

Substitute the following for H.B. No. 3287:

By: Button

C.S.H.B. No. 3287

A BILL TO BE ENTITLED

AN ACT

relating to construction contract trust funds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter A, Chapter 162, Property Code, is

amended by adding Section 162.011 to read as follows:

Sec.

162.011.

FUNDS RESERVED OR REQUIRED TO BE RESERVED.

(a)

Funds reserved or required to be reserved by a property owner

under Section 53.101 are trust funds under this chapter only to the

extent that:

(1)

beneficiaries have perfected a mechanic's or

materialman's lien claim to those reserved funds under Subchapter

E, Chapter 53; and

(2)

the property is subject to a senior lien in favor

of a lender.

(b)

If an owner finances the construction of improvements to

real property through a loan from a lender independent of the owner

that is secured wholly or partly by a lien on the property, funds

reserved or required to be reserved under Section 53.101 are not

trust funds under this chapter until the lender disburses those

funds to the owner.

(c)

Notwithstanding Section 162.003(a), funds reserved or

required to be reserved under Section 53.101 that an owner in good

faith releases to a contractor or subcontractor before the end of

the period described by Section 53.101 are not trust funds under

this chapter.

SECTION 2. Section 162.003(a), Property Code, is amended to

read as follows:

(a) An artisan, laborer, mechanic, contractor,

subcontractor, or materialman who labors or who furnishes labor or

material for the construction or repair of an improvement on

specific real property in this state is a beneficiary of any trust

funds
:

(1)
paid or received in connection with the

improvement
; or

(2)

reserved or required to be reserved under Section

53.101 in connection with the improvement
.

SECTION 3. Section 162.031, Property Code, is amended by

adding Subsection (a-1) to read as follows:

(a-1)

A trustee's failure to reserve funds that were

required to be reserved under Section 53.101 for the construction

or repair of a new or existing single-family house, duplex,

triplex, or quadruplex, to be used for residential purposes,

including improvements appurtenant to the residence, is not

misapplication of trust funds under this section.

SECTION 4. Section 162.032, Property Code, is amended by

adding Subsection (d) to read as follows:

(d)

A trustee is not liable for any damages to a beneficiary

for misapplication of trust funds unless the trustee misapplied

trust funds with intent to defraud.

SECTION 5. Subchapter B, Chapter 162, Property Code, is

amended by adding Section 162.034 to read as follows:

Sec.

162.034.

ATTORNEY'S FEES AND COSTS.

The court shall

award costs and reasonable attorney's fees to a prevailing party in

an action brought under this chapter.

SECTION 6. (a) Except as provided by Subsection (b) of this

section, the changes in law made by this Act apply only to a

construction contract that is entered into on or after the

effective date of this Act.

(b) Section 162.034, Property Code, as added by this Act,

applies only to an action commenced on or after the effective date

of this Act.

SECTION 7. This Act takes effect September 1, 2025.