Texas 2017 - 85th Regular

Texas House Bill HB2668 Compare Versions

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Version 2 (New)

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1	1	85R5274 BEE-F
2	2	By: Wray, Villalba, Leach H.B. No. 2668
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a mechanic's or materialman's lien for retained funds
8	8	under certain construction contracts.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subchapter F, Chapter 53, Property Code, is
11	11	amended by adding Section 53.125 to read as follows:
12	12	Sec. 53.125. PRIORITY OF LIEN FOR CERTAIN RETAINED FUNDS.
13	13	(a) This section does not apply to funds retained under a contract
14	14	for construction or repair of a single-family house or a duplex used
15	15	for residential purposes.
16	16	(b) A lien for retained funds withheld from the original
17	17	contractor that is perfected under this chapter has equal priority
18	18	with a lien of a person with whom the owner has entered into a loan
19	19	or financing agreement to fund the construction of an improvement
20	20	of real property that is secured by a lien on the property or
21	21	improvement, unless a preference for the retained funds is provided
22	22	by other law.
23	23	(c) The priority provided under Subsection (b) does not
24	24	apply to retained funds that have been paid to the original
25	25	contractor.
26	26	(d) A waiver or release of the priority provided by this
27	27	section is unenforceable unless the waiver or release is contained
28	28	in:
29	29	(1) an accord and satisfaction of an identified
30	30	dispute;
31	31	(2) an agreement concerning an action pending in a
32	32	court or arbitration proceeding; or
33	33	(3) an agreement that is executed after an affidavit
34	34	claiming a lien for retained funds has been filed.
35	35	SECTION 2. The heading to Subchapter I, Chapter 53,
36	36	Property Code, is amended to read as follows:
37	37	SUBCHAPTER I. CONTRACTOR'S BOND TO PAY LIENS OR CLAIMS
38	38	SECTION 3. Chapter 53, Property Code, is amended by adding
39	39	Subchapter I-1 to read as follows:
40	40	SUBCHAPTER I-1. OWNER'S BOND IN LIEU OF LIEN FOR RETAINED FUNDS
41	41	Sec. 53.221. BOND IN LIEU OF LIEN FOR RETAINED FUNDS. The
42	42	lien for retained funds under this chapter does not attach to the
43	43	owner's property if, before withholding retained funds from the
44	44	original contractor, the owner furnishes and files a bond under
45	45	this subchapter.
46	46	Sec. 53.222. BOND REQUIREMENTS. A bond under this
47	47	subchapter must:
48	48	(1) be in a penal sum at least equal to the total of:
49	49	(A) 10 percent of the original contract amount;
50	50	and
51	51	(B) the lesser of:
52	52	(i) 10 percent of the normal and usual
53	53	extras; or
54	54	(ii) 1.5 percent of the original contract
55	55	amount;
56	56	(2) be in favor of each claimant who is due prompt
57	57	payment under Subdivision (4);
58	58	(3) be executed by:
59	59	(A) the owner as principal; and
60	60	(B) a corporate surety authorized to execute
61	61	surety bonds in this state under Subchapter A, Chapter 3503,
62	62	Insurance Code;
63	63	(4) be conditioned on prompt payment of retained funds
64	64	owed for all labor, subcontracts, materials, and specially
65	65	fabricated materials furnished by any person to accomplish work
66	66	required under an original contract; and
67	67	(5) clearly and prominently display on the bond or on
68	68	an attachment to the bond:
69	69	(A) the name, mailing address, physical address,
70	70	and telephone number, including the area code, of the surety
71	71	company to which any notice of claim should be sent; or
72	72	(B) the toll-free telephone number maintained by
73	73	the Texas Department of Insurance under Subchapter B, Chapter 521,
74	74	Insurance Code, and a statement that the address of the surety
75	75	company to which any notice of claim should be sent may be obtained
76	76	from the Texas Department of Insurance by calling the toll-free
77	77	telephone number.
78	78	Sec. 53.223. RECORDING OF BOND AND CONTRACT. The
79	79	requirements for recording a bond and contract under Section 53.203
80	80	apply to a bond issued under this subchapter and to the related
81	81	contract.
82	82	Sec. 53.224. RELIANCE ON RECORD. A purchaser, lender, or
83	83	other person acquiring an interest in the owner's property or an
84	84	insurer of title is entitled to rely on the record of the bond and
85	85	contract as constituting payment of all claims and liens for
86	86	retained funds owed for labor, subcontracts, materials, or
87	87	specially fabricated materials incurred by the owner as if each
88	88	person furnishing labor or materials for the work performed under
89	89	the original contract had filed a complete release and
90	90	relinquishment of a lien for retained funds of record.
91	91	Sec. 53.225. ENFORCEABLE CLAIMS. The bond protects all
92	92	persons with a claim for retained funds. A claimant is not required
93	93	to give any notice to the surety to bring a claim under this
94	94	subchapter.
95	95	Sec. 53.226. ACTION ON BOND. (a) The claimant must sue on
96	96	the bond within two years following the date on which the claim on
97	97	retained funds becomes due.
98	98	(b) The suit must be brought in the county in which the
99	99	property being improved is located in whole or in part.
100	100	Sec. 53.227. CLAIMS IN EXCESS OF BOND AMOUNT. If 10 percent
101	101	of the total of the original contract amount and any modifications
102	102	is an amount that exceeds the penal sum of the bond under Section
103	103	53.222, each person who has perfected a lien claim under this
104	104	chapter is entitled to the priority of the lien under Section 53.125
105	105	for the difference between the total original contract amount, as
106	106	modified, and the penal sum.
107	107	Sec. 53.228. ATTEMPTED COMPLIANCE. Any provision in any
108	108	payment bond furnished or filed in attempted compliance with this
109	109	subchapter that expands or restricts the rights or liabilities
110	110	provided under this chapter shall be disregarded and the provisions
111	111	of this subchapter shall be read into that bond.
112	112	Sec. 53.229. WAIVER AND RELEASE OF PAYMENT BOND CLAIM. Any
113	113	waiver or release of a payment bond claim under this subchapter is
114	114	unenforceable unless the waiver or release is executed under
115	115	Subchapter L or is contained in:
116	116	(1) an accord and satisfaction of an identified
117	117	dispute;
118	118	(2) an agreement concerning an action pending in any
119	119	court or arbitration proceeding; or
120	120	(3) an agreement that is executed after a bond claim
121	121	has been made.
122	122	SECTION 4. Section 53.156, Property Code, is amended to
123	123	read as follows:
124	124	Sec. 53.156. COSTS AND ATTORNEY'S FEES. In any proceeding
125	125	to foreclose a lien or to enforce a claim against a bond issued
126	126	under Subchapter H, I, I-1, or J or in any proceeding to declare
127	127	that any lien or claim is invalid or unenforceable in whole or in
128	128	part, the court shall award costs and reasonable attorney's fees as
129	129	are equitable and just. With respect to a lien or claim arising out
130	130	of a residential construction contract, the court is not required
131	131	to order the property owner to pay costs and attorney's fees under
132	132	this section.
133	133	SECTION 5. The changes in law made by this Act apply only to
134	134	a lien relating to a contract entered into on or after the effective
135	135	date of this Act. A lien relating to a contract entered into before
136	136	the effective date of this Act is governed by the law applicable to
137	137	the lien immediately before the effective date of this Act, and that
138	138	law is continued in effect for that purpose.
139	139	SECTION 6. This Act takes effect September 1, 2017.