Construction / 2 min read
The 89th Texas Legislative Session began on Tuesday, January 14, 2025, and will conclude on June 2, 2025. Below are four key bills that, if approved, could affect Lien and other Construction Litigation.
House Bill 533 includes the revision of the definitions section of Chapter 53 of the Texas Property Code to include cleaning services and cleaning supplies. This proposal will permit those providing labor and material to real property for cleaning services, to secure payment through a mechanics and materialmen's lien.
Senate Bill 1530 extends the time for an owner to reserve funds under section 53.101 of the Texas Property Code. As it stands, an Owner is required to reserve 10% of the contract price until 30 days after the work under the contract is completed. The proposed revision would require Owners to reserve the funds for a period ending the earlier of (1) the 31st day after the date the work under the contract is completed; or (2) the 61st day after the date a certificate of occupancy is issued for the improvement; or the improvement is first used for its intended purpose. Arguably this would extend the reservation requirement to the 61st day after occupancy and/or intended use, in the event that the construction contract has not been completed at that time. This could present a fact issue in litigation as to the deadline to reserve, when the owner has not provided a certificate of completion of construction as authorized by Chapter 53 of the Texas Property Code.
House Bill 1864-2023 would extend Chapter 162 of the Texas Property code permitting General Contractors and subcontractors who pay twice due to payment theft by a lower tiered subcontractor, to pursue the individuals who took the funds. The proposed revision to the Misapplication of Construction Trust fund statute provides clear downstream parties with clear rights to recover losses, protecting both contractors and suppliers.
This proposed revision addresses precedent from In re RTX Custom Homes, Inc. No. 14-11732-HCM, 2017 WL 2484850, at *42 (Bankr. W.D. Tex. June 8, 2017). In this case the court ruled that RTX, as general contractor, could not obtain relief under Chapter 162 of the Texas Property code against Cedar Park, its subcontractor, because RTX was not a beneficiary of misapplied trust funds. If applied to these facts, the proposed bill would allow RTX to obtain relief from its subcontractor, Cedar Park, under Chapter 162 of the Texas Property Code, for Cedar Park's failure to pay its lower tiered subcontractors.
Senate Bill 929 clarifies the weekend and holiday extension as it applies to the deadline for sending notice and/or filing a lien under Chapter 53 of the Texas Property Code.