Texas House Bill HB3485

Texas 2023 - 88th Regular

• Filed: 3/3/23
• Out of House Committee: 5/2/23
• Voted on by House: 5/8/23
• Out of Senate Committee: 5/17/23
• Voted on by Senate: 5/19/23
• Governor Action: 6/10/23

Caption

Relating to a contractor's or subcontractor's right to elect not to proceed with additional work under a contract.

Impact

The legislation is expected to have a substantial impact on the construction industry by clarifying the responsibilities and rights of contractors and subcontractors. Specifically, it defines the scenarios under which contractors can refrain from undertaking additional work without the risk of incurring penalties. By addressing situations where owners give directives without proper documentation, the law aims to enforce better practices in contractual agreements and ensure that financial obligations are met before work proceeds. This change is likely to reduce disputes related to contract modifications and, in turn, promote a more stable environment for construction projects.

Summary

House Bill 3485 addresses the rights of contractors and subcontractors in Texas when it comes to additional work on contracts without formal change orders. The bill allows contractors to elect not to proceed with extra work if the required formal changes exceed 10% of the original contract value and they have not received a signed change order from the owner. This provision aims to mitigate financial risks arising from unresolved change orders, which can be a significant source of conflict and risk for contractors in the construction industry. The bill, therefore, seeks to provide clarity and financial protection for those working on public contracts in Texas.

Sentiment

Overall, the sentiment surrounding HB 3485 appears to be largely positive among industry stakeholders. Supporters, including representatives from the Texas Construction Association, have expressed that the bill could help reduce conflicts related to unresolved change orders and provide necessary protections for contractors facing excessive demands from owners. However, there were also concerns raised during discussions, particularly regarding the balance of power between contractors and subcontractors. Some opponents sided with the fear that the bill could grant excessive leverage to contractors, impacting subcontractors' ability to complete projects without undue pressure.

Contention

Notable points of contention included concerns regarding the implications for subcontractors in situations where contractors might exert pressure to not execute additional work. Critics of the bill fear that while it provides protections for contractors, it may inadvertently place subcontractors in a vulnerable position when it comes to managing projects effectively. Additionally, discussions highlighted varying interpretations of what constitutes acceptable documentation and changes to contracts, which could lead to further challenges in compliance and enforcement of the new provisions.

Texas Constitutional Statutes Affected

Government Code

• Chapter 2251. Payment For Goods And Services
  • Section: 0521
  • Section: 0521
  • Section: 0521
  • Section: 0521
  • Section: 0521

Property Code

• Chapter 28. Prompt Payment To Contractors And Subcontractors
  • Section: 0091
  • Section: 0091
  • Section: 0091
  • Section: 0091
  • Section: 0091