Texas 2011 - 82nd Regular

Texas Senate Bill SB1425 Compare Versions

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1	1	By: Wentworth S.B. No. 1425
2	2	(Deshotel)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to an account for construction retainage; providing a
8	8	civil penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 162.005, Property Code, is amended by
11	11	adding Subdivision (7) to read as follows:
12	12	(7) "Construction trust fund account" means an account
13	13	in a federally insured financial institution into which are
14	14	deposited only funds required by Section 162.0061(a) to be
15	15	deposited in a construction trust fund account and other funds
16	16	deposited by the property owner that are necessary to pay charges
17	17	imposed on the account by the financial institution.
18	18	SECTION 2. Subchapter A, Chapter 162, Property Code, is
19	19	amended by adding Sections 162.0061 and 162.008 to read as follows:
20	20	Sec. 162.0061. CONSTRUCTION TRUST FUND ACCOUNT REQUIRED IN
21	21	CERTAIN CIRCUMSTANCES. (a) Except as provided by this section, a
22	22	property owner who enters into a construction loan or financing
23	23	agreement to pay toward the improvement of real property that is
24	24	secured wholly or partly by a lien on the property or improvement
25	25	shall deposit in a construction trust fund account in a financial
26	26	institution not later than contemporaneously with payment to a
27	27	contractor the amount retained under Subchapter E, Chapter 53, and
28	28	other retainage, as defined by Section 53.001, retained by the
29	29	owner from the contractor to be held in trust for the benefit of a
30	30	person described by Section 162.003(a). Trust funds deposited in a
31	31	construction trust fund account under this section shall be used
32	32	first toward the satisfaction of the owner's obligations and a
33	33	claimant's rights under Subchapter E, Chapter 53. Trust funds
34	34	remaining in the construction trust fund account after the
35	35	satisfaction of those obligations and rights may be used by the
36	36	owner for other construction payments under this chapter or other
37	37	purposes of the owner. Trust funds under this section are not
38	38	subject to seizure, offset, or taking by the financial institution
39	39	or a creditor of the owner. This subsection does not reduce the
40	40	owner's obligation or liability under Subchapter E, Chapter 53.
41	41	(b) This section does not apply to a property owner who
42	42	enters into a construction loan or financing agreement to pay
43	43	toward the construction, remodeling, or repair of a single-family
44	44	house or duplex used for residential purposes.
45	45	(c) This section does not apply to a property owner
46	46	improving real property if the value of the improvement to be made
47	47	is $250,000 or less.
48	48	Sec. 162.008. MANAGEMENT OF CONSTRUCTION TRUST FUND
49	49	ACCOUNTS. (a) If a property owner required to maintain a
50	50	construction trust fund account under Section 162.0061 opens and
51	51	maintains a separate construction trust fund account with the
52	52	financial institution for each project subject to this subchapter,
53	53	the periodic statement received from the financial institution
54	54	must:
55	55	(1) refer to the account as a "construction trust
56	56	fund" account; and
57	57	(2) identify the project for which the construction
58	58	trust fund account is maintained.
59	59	(b) If a property owner required to maintain a construction
60	60	trust fund account opens and maintains a construction trust fund
61	61	account with the financial institution into which funds for two or
62	62	more projects subject to this subchapter are deposited:
63	63	(1) the periodic statement received from the financial
64	64	institution must refer to the account as a "construction trust
65	65	fund" account; and
66	66	(2) the owner shall maintain an account record for the
67	67	construction trust fund account that provides information relating
68	68	to:
69	69	(A) the source and amount of the funds in the
70	70	account and the date the funds were deposited;
71	71	(B) the date and amount of each disbursement from
72	72	the account and the person to whom the funds were disbursed; and
73	73	(C) the current balance of the account.
74	74	(c) For each construction trust fund account maintained by
75	75	the property owner under Subsection (b), the owner shall maintain
76	76	the account record for each construction project for which trust
77	77	funds have been deposited.
78	78	(d) A property owner shall, not later than the 14th day
79	79	after receipt of a written request, provide a person who is a
80	80	beneficiary of trust funds with a copy of:
81	81	(1) the periodic statement received from the financial
82	82	institution regarding the construction trust fund account into
83	83	which the trust funds of which the person is a beneficiary have been
84	84	deposited; and
85	85	(2) the account record required to be maintained by
86	86	the owner with respect to the construction project for which the
87	87	trust funds have been deposited.
88	88	SECTION 3. Section 162.032, Property Code, is amended by
89	89	adding Subsection (d) to read as follows:
90	90	(d) If a beneficiary of the trust funds required to be
91	91	maintained in a construction trust fund account incurs actual
92	92	damages as a result of the property owner's failure to establish or
93	93	maintain a construction trust fund account in violation of Section
94	94	162.0061 or failure to establish or maintain an account record for
95	95	the construction trust fund account in violation of Section
96	96	162.008, the beneficiary may recover the beneficiary's actual
97	97	damages, reasonable attorney's fees, and a civil penalty of $500,
98	98	in addition to any other remedy provided by law, from the property
99	99	owner and each trustee who is an owner, officer, director, or agent
100	100	of the property owner and who receives trust funds or controls or
101	101	directs trust funds.
102	102	SECTION 4. The change in law made by this Act applies only
103	103	to an amount retained under an original contract entered into on or
104	104	after the effective date of this Act. An amount retained under an
105	105	original contract entered into before the effective date of this
106	106	Act is governed by the law as it existed immediately before that
107	107	date, and that law is continued in effect for that purpose.
108	108	SECTION 5. This Act takes effect September 1, 2011.