Relating to the payment of funds under construction contracts.
Impact
The amendment's effective date is set for September 1, 2025, indicating that it will only affect contracts entered into after this date. By focusing on the definition of good faith disputes, the bill is expected to provide more clarity for contractors and property owners, which can mitigate legal conflicts regarding payment. This may lead to swifter resolutions of payment-related issues, benefitting both construction businesses and clients by establishing clearer expectations for contractual relationships.
Summary
House Bill 3289 aims to amend Section 28.003 of the Texas Property Code relating to the payment of funds under construction contracts. The bill introduces a clarification regarding the definition of a 'good faith dispute'. Specifically, it states that a good faith dispute does not include any disagreements related to contracts, work orders, or other agreements that are not directly connected to the construction contract under which payment is sought. This change seeks to streamline disputes and reduce the potential for frivolous claims in payment issues arising from construction contracts.
Contention
Notably, this bill addresses an ongoing concern regarding the ambiguity in disputes over construction contracts, which can often prolong projects and lead to financial losses. By narrowing the scope of what constitutes a good faith dispute, proponents of HB3289 argue that it will help to facilitate smoother business operations in the construction sector. Critics, however, may argue that such a limitation could hinder the rights of parties involved in legitimate disputes and potentially favor contractors over property owners in payment negotiations.
Texas Constitutional Statutes Affected
Property Code
Chapter 28. Prompt Payment To Contractors And Subcontractors