| 1 | 1 | | 81R6395 AJA-F |
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| 2 | 2 | | By: McClendon H.B. No. 1209 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to beneficiaries of construction payment trust funds. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. Section 162.001(c), Property Code, is amended to |
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| 10 | 10 | | read as follows: |
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| 11 | 11 | | (c) A fee payable to a contractor is not considered trust |
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| 12 | 12 | | funds if: |
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| 13 | 13 | | (1) the [If a] contractor and property owner have |
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| 14 | 14 | | entered into a written construction contract for the improvement of |
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| 15 | 15 | | specific real property in this state before the commencement of |
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| 16 | 16 | | construction of the improvement and the contract provides for the |
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| 17 | 17 | | payment by the owner of the costs of construction and a reasonable |
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| 18 | 18 | | fee specified in the contract payable to the contractor; and |
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| 19 | 19 | | (2) [,] the fee is earned as provided by the contract |
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| 20 | 20 | | and paid to the contractor or disbursed from a construction account |
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| 21 | 21 | | described by Section 162.006, if applicable [is not considered |
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| 22 | 22 | | trust funds]. |
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| 23 | 23 | | SECTION 2. Section 162.003, Property Code, is amended to |
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| 24 | 24 | | read as follows: |
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| 25 | 25 | | Sec. 162.003. BENEFICIARIES OF TRUST FUNDS. (a) An |
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| 26 | 26 | | artisan, laborer, mechanic, contractor, subcontractor, or |
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| 27 | 27 | | materialman who labors or who furnishes labor or material for the |
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| 28 | 28 | | construction or repair of an improvement on specific real property |
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| 29 | 29 | | in this state is a beneficiary of any trust funds paid or received |
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| 30 | 30 | | in connection with the improvement. |
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| 31 | 31 | | (b) A property owner is a beneficiary of trust funds |
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| 32 | 32 | | described by Section 162.001 in connection with a residential |
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| 33 | 33 | | construction contract, including funds deposited into a |
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| 34 | 34 | | construction account described by Section 162.006. |
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| 35 | 35 | | SECTION 3. The change in law made by this Act applies only |
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| 36 | 36 | | to funds that become trust funds under Section 162.001, Property |
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| 37 | 37 | | Code, as amended by this Act, on or after the effective date of this |
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| 38 | 38 | | Act. Funds that become trust funds before the effective date of |
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| 39 | 39 | | this Act are governed by the law in effect immediately before the |
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| 40 | 40 | | effective date of this Act, and that law is continued in effect for |
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| 41 | 41 | | that purpose. |
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| 42 | 42 | | SECTION 4. This Act takes effect immediately if it receives |
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| 43 | 43 | | a vote of two-thirds of all the members elected to each house, as |
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| 44 | 44 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 45 | 45 | | Act does not receive the vote necessary for immediate effect, this |
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| 46 | 46 | | Act takes effect September 1, 2009. |
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