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A BILL TO BE ENTITLED
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AN ACT
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relating to funds reserved or retained for certain construction |
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materials. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2252.032, Government Code, is amended by |
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amending Subsection (e) and adding Subsection (e-1) to read as |
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follows: |
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(e) A governmental entity may not withhold retainage: |
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(1) after completion of the work required to be |
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performed under the contract by the prime contractor, including |
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during the warranty period; [or] |
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(2) for the purpose of requiring the prime contractor, |
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after completion of the work required to be performed under the |
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contract, to perform work on manufactured goods or systems that |
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were: |
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(A) specified by the designer of record; and |
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(B) properly installed by the contractor; or |
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(3) for specially fabricated material that: |
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(A) has been delivered by a subcontractor and |
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accepted by the governmental entity and the prime contractor at the |
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site or off-site; and |
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(B) is covered by a manufacturer's warranty: |
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(i) under a contract with the governmental |
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entity; or |
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(ii) assigned to the governmental entity by |
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the prime contractor. |
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(e-1) Subsection (e)(3) does not apply to funds for the |
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value of the installation of the specially fabricated material by a |
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subcontractor. |
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SECTION 2. Section 53.101, Property Code, is amended by |
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amending Subsection (a) and adding Subsections (a-1) and (a-2) to |
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read as follows: |
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(a) Except as provided by Subsection (a-1), during [During] |
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the progress of work under an original contract for which a |
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mechanic's lien may be claimed and for 30 days after the work under |
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the contract is completed, the owner shall reserve: |
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(1) 10 percent of the contract price of the work to the |
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owner; or |
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(2) 10 percent of the value of the work, measured by |
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the proportion that the work done bears to the work to be done, |
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using the contract price or, if there is no contract price, using |
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the reasonable value of the completed work. |
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(a-1) An owner is not required to reserve under this section |
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and may not retain under a contract funds for specially fabricated |
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material that: |
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(1) has been delivered by a subcontractor and accepted |
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by the owner or a contractor or subcontractor at the site or |
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off-site; and |
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(2) is covered by a manufacturer's warranty under a |
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contract with the owner or a contractor or subcontractor. |
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(a-2) Subsection (a-1) does not apply to funds for the value |
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of the installation of specially fabricated material by a |
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subcontractor. |
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SECTION 3. The changes in law made by this Act apply only to |
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an original contract that is entered into on or after the effective |
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date of this Act. An original contract entered into before the |
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effective date of this Act is governed by the law as it existed |
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immediately before the effective date of this Act, and the former |
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law is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2025. |