Texas Senate Bill SB2131

Texas 2025 - 89th Regular

• Filed: 3/10/25

Caption

Relating to funds reserved for certain construction materials.

Impact

The modifications proposed in SB 2131 specifically aim to affect construction law and financial practices in the construction industry by clarifying instances where reserve funds cannot be held. This law will apply only to original contracts entered into after the effective date, which is September 1, 2025, suggesting a transitional period for existing contracts. This approach intends to provide clarity and security for subcontractors and contractors while ensuring that funds are utilized effectively once materials are delivered and accepted.

Summary

Senate Bill 2131 relates to the provisions concerning funds reserved for specially fabricated materials in construction contracts. The bill seeks to amend Section 53.101 of the Texas Property Code by explicitly stating that an owner, contractor, or subcontractor cannot reserve funds for materials that have already been delivered and accepted at the site or are covered by a manufacturer's warranty within their contractual obligations. This change aims to streamline financial oversight and reduce disputes over payment for construction materials that have been previously accepted, ensuring that contractor practices align with the terms agreed upon in their contracts.

Contention

While the bill appears straightforward in its aim to regulate when funds can be reserved for construction materials, there may still be contention surrounding its implications for financial management and payment processes in construction contracts. Stakeholders from both sides of the industry, including contractors, subcontractors, and material suppliers, may have differing perspectives on the potential impact of the bill. Concerns could arise regarding the enforcement of warranty expectations and the financial implications of not being allowed to reserve funds for materials, potentially affecting cash flow and project financing.

Texas Constitutional Statutes Affected

Property Code

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