Texas 2013 - 83rd Regular

Texas House Bill HB3316 Compare Versions

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1	1	83R24788 NC-F
2	2	By: Keffer H.B. No. 3316
3	3	Substitute the following for H.B. No. 3316:
4	4	By: Oliveira C.S.H.B. No. 3316
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to an account or bond for construction retainage under
10	10	certain contracts.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 162.001, Property Code, is amended by
13	13	adding Subsection (b-1) to read as follows:
14	14	(b-1) Funds required under this chapter to be deposited into
15	15	a construction trust fund account are trust funds.
16	16	SECTION 2. Section 162.003(a), Property Code, is amended to
17	17	read as follows:
18	18	(a) An artisan, laborer, mechanic, contractor,
19	19	subcontractor, or materialman who labors or who furnishes labor or
20	20	material for the construction or repair of an improvement on
21	21	specific real property in this state is a beneficiary of any trust
22	22	funds paid, [or] received, withheld as retainage, or required to be
23	23	deposited into a construction trust fund account under this chapter
24	24	in connection with the improvement.
25	25	SECTION 3. Section 162.004(a), Property Code, is amended to
26	26	read as follows:
27	27	(a) This chapter does not apply to:
28	28	(1) a bank, savings and loan, or other lender;
29	29	(2) a title company or other closing agent; or
30	30	(3) a corporate surety who issues a payment bond
31	31	covering the contract for the construction or repair of the
32	32	improvement, except as provided by Section 162.0064.
33	33	SECTION 4. Section 162.005, Property Code, is amended by
34	34	adding Subdivisions (7) and (8) to read as follows:
35	35	(7) "Construction trust fund account" means an account
36	36	in a federally insured financial institution into which are
37	37	deposited only funds required by Section 162.0061(a) to be
38	38	deposited in a construction trust fund account and other funds
39	39	deposited by the property owner that are necessary to pay charges
40	40	imposed on the account by the financial institution.
41	41	(8) "Retainage" is an amount or agreed percentage of
42	42	money in a construction contract between an owner and a contractor
43	43	that is withheld from a payment and not due to be paid until
44	44	completion of the contract or on an agreed date.
45	45	SECTION 5. Subchapter A, Chapter 162, Property Code, is
46	46	amended by adding Sections 162.0061, 162.0062, 162.0063, 162.0064,
47	47	162.008, and 162.009 to read as follows:
48	48	Sec. 162.0061. CONSTRUCTION TRUST FUND ACCOUNT REQUIRED IN
49	49	CERTAIN CIRCUMSTANCES. (a) Except as provided by this section or
50	50	Section 162.0062, a property owner who enters into a construction
51	51	loan or financing agreement to pay toward the improvement of real
52	52	property that is secured wholly or partly by a lien on the property
53	53	or improvement shall deposit in a construction trust fund account
54	54	not later than contemporaneously with payment to a contractor any
55	55	money withheld from the payment as retainage. The deposited funds
56	56	are held in trust for the benefit of a person described by Section
57	57	162.003(a). Trust funds deposited in a construction trust fund
58	58	account under this section shall be used first to satisfy the
59	59	owner's obligations and liabilities for retainage and a claimant's
60	60	rights under Chapter 53. Trust funds remaining in the construction
61	61	trust fund account after the satisfaction of those obligations,
62	62	liabilities, and rights may be used by the owner for other
63	63	construction payments under this chapter or direct costs of the
64	64	owner. Trust funds under this section are not subject to seizure,
65	65	offset, or taking by the financial institution or a creditor of the
66	66	owner. This subsection does not alter the owner's obligation or
67	67	liability under any other law.
68	68	(b) This section does not apply to a property owner who
69	69	enters into a construction loan or financing agreement to pay
70	70	toward the construction, remodeling, or repair of a single-family
71	71	house or duplex used for residential purposes or for related land
72	72	development.
73	73	(c) This section does not apply to a property owner
74	74	improving real property if the value of the improvement to be made
75	75	is $500,000 or less.
76	76	Sec. 162.0062. BOND IN LIEU OF TRUST FUND ACCOUNT. (a)
77	77	Instead of establishing a construction trust fund account under
78	78	Section 162.0061(a), a property owner may obtain or furnish a bond
79	79	as described by Subsection (b) or (c).
80	80	(b) A property owner may obtain a bond furnished by the
81	81	contractor that meets the requirements of Subchapter I, Chapter 53.
82	82	(c) A property owner may furnish a bond that:
83	83	(1) meets the requirements of Section 162.0063;
84	84	(2) is in a penal sum at least equal to 10 percent of:
85	85	(A) the value of the total of the original
86	86	contract amount; and
87	87	(B) normal and usual extras not exceeding 15
88	88	percent of the original contract amount;
89	89	(3) is conditioned on prompt payment for retainage
90	90	owed for all labor, subcontracts, materials, and specially
91	91	fabricated materials furnished by any person to accomplish work
92	92	required under a contract between a contractor and an owner; and
93	93	(4) is for the protection and use of each claimant who
94	94	is due prompt payment under Subdivision (3).
95	95	Sec. 162.0063. ADDITIONAL BOND REQUIREMENTS. A bond
96	96	furnished under Section 162.0062:
97	97	(1) must be executed by:
98	98	(A) the contractor as principal if furnished
99	99	under Section 162.0062(b) or by the owner as principal if furnished
100	100	under Section 162.0062(c); and
101	101	(B) a corporate surety authorized to execute
102	102	surety bonds in this state, as provided by Subchapter A, Chapter
103	103	3503, Insurance Code; and
104	104	(2) may not be subject to any notice or perfection
105	105	obligation other than as required by Chapter 53.
106	106	Sec. 162.0064. LIMITATION ON ACTION ON BOND. A suit may not
107	107	be filed on a bond furnished under Section 162.0062(c) after the
108	108	first anniversary of the later of:
109	109	(1) the date of completion of the contract between the
110	110	owner and contractor; or
111	111	(2) the date on which retainage is due to the
112	112	contractor.
113	113	Sec. 162.008. MANAGEMENT OF CONSTRUCTION TRUST FUND
114	114	ACCOUNTS. (a) If a property owner required to maintain a
115	115	construction trust fund account under Section 162.0061 opens and
116	116	maintains a separate construction trust fund account with the
117	117	financial institution for each project subject to this subchapter,
118	118	the periodic statement received from the financial institution
119	119	must:
120	120	(1) refer to the account as a "construction trust
121	121	fund" account; and
122	122	(2) identify the project for which the construction
123	123	trust fund account is maintained.
124	124	(b) If a property owner required to maintain a construction
125	125	trust fund account opens and maintains a construction trust fund
126	126	account with the financial institution into which funds for two or
127	127	more projects subject to this subchapter are deposited:
128	128	(1) the periodic statement received from the financial
129	129	institution must refer to the account as a "construction trust
130	130	fund" account; and
131	131	(2) the owner shall maintain an account record for the
132	132	construction trust fund account that provides information relating
133	133	to:
134	134	(A) the amount of the funds in the account for
135	135	each project and the date the funds were deposited;
136	136	(B) the date and amount of each disbursement from
137	137	the account and the person to whom the funds were disbursed; and
138	138	(C) the current balance of the account.
139	139	(c) For each construction trust fund account maintained by
140	140	the property owner under Subsection (b), the owner shall maintain
141	141	the account record for each construction project for which trust
142	142	funds have been deposited.
143	143	Sec. 162.009. DISCLOSURES TO BENEFICIARIES; SUSPENSION OF
144	144	PERFORMANCE. (a) Not later than the 14th day after a property
145	145	owner receives a written request from a person who is a beneficiary
146	146	of trust funds, the property owner shall provide the beneficiary
147	147	with:
148	148	(1) if the owner is maintaining a construction trust
149	149	fund account under Section 162.0061:
150	150	(A) a copy of the periodic statement received
151	151	from the financial institution regarding the construction trust
152	152	fund account into which the trust funds of which the person is a
153	153	beneficiary have been deposited or an original executed
154	154	authorization sufficient to allow the requesting person to obtain
155	155	the periodic statement; and
156	156	(B) the account record required to be maintained
157	157	by the owner with respect to the construction project for which the
158	158	trust funds have been deposited; or
159	159	(2) if a bond has been obtained or furnished under
160	160	Section 162.0062, proof of a bond complying with that section.
161	161	(b) If a property owner does not comply with Subsection (a)
162	162	or the information provided under that subsection does not
163	163	demonstrate that the owner has complied with Section 162.0061 or
164	164	162.0062, a beneficiary may suspend contractually required
165	165	performance the 10th day after the date the beneficiary gives the
166	166	owner written notice that states the intent of the beneficiary to
167	167	suspend performance and the reason for suspending performance if
168	168	the owner does not cure the grounds for suspension under Subsection
169	169	(c) before the beneficiary suspends performance.
170	170	(c) An owner may cure any grounds for a suspension under
171	171	Subsection (b) by complying with Section 162.0061 or 162.0062 and
172	172	providing proof of that compliance to the beneficiary.
173	173	(d) A beneficiary that has suspended performance under
174	174	Subsection (b) is not:
175	175	(1) required to supply further labor, services, or
176	176	materials before the date the owner cures the grounds for
177	177	suspension as provided by Subsection (c) and pays the beneficiary's
178	178	costs for suspending performance and for resuming performance; or
179	179	(2) responsible for damages resulting from suspending
180	180	performance, unless the beneficiary continues to suspend
181	181	performance after the 10th day after the date the owner cured the
182	182	grounds for suspension as provided by Subsection (c) and paid the
183	183	beneficiary for the costs described by Subdivision (1).
184	184	SECTION 6. Section 162.031, Property Code, is amended by
185	185	amending Subsection (b) and adding Subsection (b-1) to read as
186	186	follows:
187	187	(b) It is an affirmative defense to prosecution or other
188	188	action brought under Subsection (a) with respect to trust funds
189	189	described by Section 162.001(a) or (b) that the trust funds not paid
190	190	to the beneficiaries of the trust were used by the trustee to pay
191	191	the trustee's actual expenses directly related to the construction
192	192	or repair of the improvement.
193	193	(b-1) It is an affirmative defense to prosecution or other
194	194	action brought under Subsection (a) with respect to trust funds
195	195	described by Section 162.001(b-1) that the trust funds:
196	196	(1) [or] have been retained by the trustee, after
197	197	notice to the beneficiary who has made a request for payment, as a
198	198	result of the trustee's reasonable belief that the beneficiary is
199	199	not entitled to such funds; or
200	200	(2) have been retained as authorized or required by
201	201	Chapter 53.
202	202	SECTION 7. The change in law made by this Act applies only
203	203	to an original construction contract entered into on or after the
204	204	effective date of this Act. An original construction contract
205	205	entered into before the effective date of this Act is governed by
206	206	the law as it existed immediately before that date, and that law is
207	207	continued in effect for that purpose.
208	208	SECTION 8. This Act takes effect September 1, 2013.