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89(R) SB 1612 - House Committee Report version - Bill Text
89R27192 SCR-F
By: Johnson
S.B. No. 1612
(Bell of Kaufman, Button, Hefner, Romero, Leach)
Substitute the following for S.B. No. 1612:
No.
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 failure to reserve funds required to be reserved under Section
53.101 unless the trustee failed to reserve the 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.