Bill Text: TX HB2668 | 2017-2018 | 85th Legislature | Comm Sub
Bill Title: Relating to a mechanic's or materialman's lien for retained funds under certain construction contracts.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2017-05-09 - Committee report sent to Calendars [HB2668 Detail]
Download: Texas-2017-HB2668-Comm_Sub.html
85R5274 BEE-F | ||
By: Wray, Villalba, Leach | H.B. No. 2668 |
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relating to a mechanic's or materialman's lien for retained funds | ||
under certain construction contracts. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter F, Chapter 53, Property Code, is | ||
amended by adding Section 53.125 to read as follows: | ||
Sec. 53.125. PRIORITY OF LIEN FOR CERTAIN RETAINED FUNDS. | ||
(a) This section does not apply to funds retained under a contract | ||
for construction or repair of a single-family house or a duplex used | ||
for residential purposes. | ||
(b) A lien for retained funds withheld from the original | ||
contractor that is perfected under this chapter has equal priority | ||
with a lien of a person with whom the owner has entered into a loan | ||
or financing agreement to fund the construction of an improvement | ||
of real property that is secured by a lien on the property or | ||
improvement, unless a preference for the retained funds is provided | ||
by other law. | ||
(c) The priority provided under Subsection (b) does not | ||
apply to retained funds that have been paid to the original | ||
contractor. | ||
(d) A waiver or release of the priority provided by this | ||
section is unenforceable unless the waiver or release is contained | ||
in: | ||
(1) an accord and satisfaction of an identified | ||
dispute; | ||
(2) an agreement concerning an action pending in a | ||
court or arbitration proceeding; or | ||
(3) an agreement that is executed after an affidavit | ||
claiming a lien for retained funds has been filed. | ||
SECTION 2. The heading to Subchapter I, Chapter 53, | ||
Property Code, is amended to read as follows: | ||
SUBCHAPTER I. CONTRACTOR'S BOND TO PAY LIENS OR CLAIMS | ||
SECTION 3. Chapter 53, Property Code, is amended by adding | ||
Subchapter I-1 to read as follows: | ||
SUBCHAPTER I-1. OWNER'S BOND IN LIEU OF LIEN FOR RETAINED FUNDS | ||
Sec. 53.221. BOND IN LIEU OF LIEN FOR RETAINED FUNDS. The | ||
lien for retained funds under this chapter does not attach to the | ||
owner's property if, before withholding retained funds from the | ||
original contractor, the owner furnishes and files a bond under | ||
this subchapter. | ||
Sec. 53.222. BOND REQUIREMENTS. A bond under this | ||
subchapter must: | ||
(1) be in a penal sum at least equal to the total of: | ||
(A) 10 percent of the original contract amount; | ||
and | ||
(B) the lesser of: | ||
(i) 10 percent of the normal and usual | ||
extras; or | ||
(ii) 1.5 percent of the original contract | ||
amount; | ||
(2) be in favor of each claimant who is due prompt | ||
payment under Subdivision (4); | ||
(3) be executed by: | ||
(A) the owner as principal; and | ||
(B) a corporate surety authorized to execute | ||
surety bonds in this state under Subchapter A, Chapter 3503, | ||
Insurance Code; | ||
(4) be conditioned on prompt payment of retained funds | ||
owed for all labor, subcontracts, materials, and specially | ||
fabricated materials furnished by any person to accomplish work | ||
required under an original contract; and | ||
(5) clearly and prominently display on the bond or on | ||
an attachment to the bond: | ||
(A) the name, mailing address, physical address, | ||
and telephone number, including the area code, of the surety | ||
company to which any notice of claim should be sent; or | ||
(B) the toll-free telephone number maintained by | ||
the Texas Department of Insurance under Subchapter B, Chapter 521, | ||
Insurance Code, and a statement that the address of the surety | ||
company to which any notice of claim should be sent may be obtained | ||
from the Texas Department of Insurance by calling the toll-free | ||
telephone number. | ||
Sec. 53.223. RECORDING OF BOND AND CONTRACT. The | ||
requirements for recording a bond and contract under Section 53.203 | ||
apply to a bond issued under this subchapter and to the related | ||
contract. | ||
Sec. 53.224. RELIANCE ON RECORD. A purchaser, lender, or | ||
other person acquiring an interest in the owner's property or an | ||
insurer of title is entitled to rely on the record of the bond and | ||
contract as constituting payment of all claims and liens for | ||
retained funds owed for labor, subcontracts, materials, or | ||
specially fabricated materials incurred by the owner as if each | ||
person furnishing labor or materials for the work performed under | ||
the original contract had filed a complete release and | ||
relinquishment of a lien for retained funds of record. | ||
Sec. 53.225. ENFORCEABLE CLAIMS. The bond protects all | ||
persons with a claim for retained funds. A claimant is not required | ||
to give any notice to the surety to bring a claim under this | ||
subchapter. | ||
Sec. 53.226. ACTION ON BOND. (a) The claimant must sue on | ||
the bond within two years following the date on which the claim on | ||
retained funds becomes due. | ||
(b) The suit must be brought in the county in which the | ||
property being improved is located in whole or in part. | ||
Sec. 53.227. CLAIMS IN EXCESS OF BOND AMOUNT. If 10 percent | ||
of the total of the original contract amount and any modifications | ||
is an amount that exceeds the penal sum of the bond under Section | ||
53.222, each person who has perfected a lien claim under this | ||
chapter is entitled to the priority of the lien under Section 53.125 | ||
for the difference between the total original contract amount, as | ||
modified, and the penal sum. | ||
Sec. 53.228. ATTEMPTED COMPLIANCE. Any provision in any | ||
payment bond furnished or filed in attempted compliance with this | ||
subchapter that expands or restricts the rights or liabilities | ||
provided under this chapter shall be disregarded and the provisions | ||
of this subchapter shall be read into that bond. | ||
Sec. 53.229. WAIVER AND RELEASE OF PAYMENT BOND CLAIM. Any | ||
waiver or release of a payment bond claim under this subchapter is | ||
unenforceable unless the waiver or release is executed under | ||
Subchapter L or is contained in: | ||
(1) an accord and satisfaction of an identified | ||
dispute; | ||
(2) an agreement concerning an action pending in any | ||
court or arbitration proceeding; or | ||
(3) an agreement that is executed after a bond claim | ||
has been made. | ||
SECTION 4. Section 53.156, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.156. COSTS AND ATTORNEY'S FEES. In any proceeding | ||
to foreclose a lien or to enforce a claim against a bond issued | ||
under Subchapter H, I, I-1, or J or in any proceeding to declare | ||
that any lien or claim is invalid or unenforceable in whole or in | ||
part, the court shall award costs and reasonable attorney's fees as | ||
are equitable and just. With respect to a lien or claim arising out | ||
of a residential construction contract, the court is not required | ||
to order the property owner to pay costs and attorney's fees under | ||
this section. | ||
SECTION 5. The changes in law made by this Act apply only to | ||
a lien relating to a contract entered into on or after the effective | ||
date of this Act. A lien relating to a contract entered into before | ||
the effective date of this Act is governed by the law applicable to | ||
the lien immediately before the effective date of this Act, and that | ||
law is continued in effect for that purpose. | ||
SECTION 6. This Act takes effect September 1, 2017. |