Texas 2025 - 89th Regular

Texas Senate Bill SB1530

Filed

2/21/25

Out of Senate Committee

Voted on by Senate

Out of House Committee

Voted on by House

Governor Action

Bill Becomes Law

Caption

Relating to the time period for which certain funds payable under a construction contract must be reserved for the benefit of mechanic's lien claimants.

Impact

The proposed amendment enhances the protection for mechanic's lien claimants by enforcing a clearer timeline within which funds must be reserved. Under the new provisions, once the work under the contract is completed, the owner will be required to reserve these funds for a period that ends either 31 days after completion of the work or 61 days after a certificate of occupancy is issued. This clear delineation is expected to provide greater security for contractors and laborers, ensuring they are compensated for their work in a timely manner.

Summary

SB1530 seeks to amend the Texas Property Code regarding the time period for which certain funds payable under construction contracts must be reserved for the benefit of mechanic's lien claimants. The bill stipulates that during the progress of work under an original contract where a mechanic's lien may be claimed, the owner must reserve either 10 percent of the contract price or 10 percent of the value of the work, depending on which is applicable. This reservation period is meant to safeguard the interests of those who may be owed payment for work completed on construction projects.

Contention

One potential point of contention regarding SB1530 could stem from how the new reservation periods are interpreted and enforced, particularly in the context of existing contracts. The bill specifies that only contracts entered into after the act takes effect will be subject to these new provisions, meaning that disputes might arise about the applicability of the reservation rules in contracts that predate the bill’s effective date. Stakeholders may express varying views on how these changes could impact their operations and legal compliance in the construction industry.

Texas Constitutional Statutes Affected

Property Code

Chapter 53. Mechanic's, Contractor's, Or Materialman's Lien
- Section: New Section

Companion Bills

TX HB3290

Identical Relating to the time period for which certain funds payable under a construction contract must be reserved for the benefit of mechanic's lien claimants.

Previously Filed As

TX HB2928

Relating to the payment or application of funds under construction contracts.

TX SB6

Relating to the establishment of the Texas Energy Insurance Program and other funding mechanisms to support the construction and operation of electric generating facilities.

TX HB1787

Relating to the method used to select engineers and general contractors for certain state highway construction projects.

TX SB2504

Relating to the method used to select engineers and general contractors for certain state highway construction projects.

TX HB2657

Relating to voidable provisions contained in certain construction contracts.

TX SB2207

Relating to voidable provisions contained in certain construction contracts.

TX HB4301

Relating to certain deadlines and other timing factors affecting mechanic's, contractor's, or materialman's liens.

TX SB2627

Relating to funding mechanisms to support the construction, maintenance, modernization, and operation of electric generating facilities.

TX HB2854

Relating to change order limits for construction contracts.

TX HB1054

Relating to the classification of certain construction workers and the eligibility of those workers for unemployment benefits; providing an administrative penalty.