By Stiles H.B. No. 1429
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to prompt payment to contractors and subcontractors in
1-3 connection with improvements to real property.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 4, Property Code, is amended by adding
1-6 Chapter 28 to read as follows:
1-7 CHAPTER 28. PROMPT PAYMENT TO CONTRACTORS AND SUBCONTRACTORS
1-8 Sec. 28.001. DEFINITIONS. In this chapter:
1-9 (1) "Contractor" means a person who contracts with an
1-10 owner to improve real property or perform construction services for
1-11 an owner.
1-12 (2) "Improve" means to:
1-13 (A) build, construct, effect, erect, alter,
1-14 repair, or demolish any improvement on, connected with, or beneath
1-15 the surface of real property;
1-16 (B) excavate, clear, grade, fill, or landscape
1-17 real property;
1-18 (C) construct a driveway or roadway;
1-19 (D) furnish any material, including trees or
1-20 shrubbery, for the purpose of taking any action described by
1-21 Subsections (A)-(C) of this subdivision; or
1-22 (E) perform any labor on or in connection with
1-23 an improvement.
1-24 (3) "Improvement" includes all or any part of:
2-1 (A) a building, structure, erection, alteration,
2-2 demolition, or excavation on, connected with, or beneath the
2-3 surface of real property; and
2-4 (B) the act of clearing, grading, filling, or
2-5 landscaping real property, including constructing a driveway or
2-6 roadway or furnishing trees or shrubbery.
2-7 (4) "Owner" means a person with an interest in real
2-8 property that is improved, for whom an improvement is made, and who
2-9 ordered the improvement to be made.
2-10 (5) "Real property" includes lands, leaseholds,
2-11 tenements, hereditaments, and improvements placed on the real
2-12 property.
2-13 (6) "Subcontractor" means a person who contracts to
2-14 furnish labor or material to, or has performed labor or supplied
2-15 materials for, a contractor or another subcontractor in connection
2-16 with a contract to improve real property.
2-17 Sec. 28.002. PROMPT PAYMENT REQUIRED. (a) If an owner
2-18 receives a written payment request from a contractor for an amount
2-19 that is allowed to the contractor for properly performed work or
2-20 suitably stored materials, the owner shall pay the amount to the
2-21 contractor, less any statutory offsets, not later than the 45th day
2-22 after the date the owner receives the request.
2-23 (b) A contractor who receives a payment under Subsection (a)
2-24 or otherwise from an owner in connection with a contract to improve
2-25 real property shall pay each of its subcontractors the portion of
2-26 the owner's payment, including interest, if any, that is
2-27 attributable to work performed or materials suitably stored by that
3-1 subcontractor if payment for stored materials is provided for in
3-2 the contract, to the extent of that subcontractor's interest in the
3-3 owner's payment. The payment required by this subsection must be
3-4 made not later than the seventh working day after the date the
3-5 contractor receives the owner's payment.
3-6 (c) A subcontractor who receives a payment under Subsection
3-7 (b) or otherwise from a contractor in connection with a contract to
3-8 improve real property shall pay each of its subcontractors the
3-9 portion of the payment, including interest, if any, that is
3-10 attributable to work performed or materials suitably stored by that
3-11 subcontractor if payment for stored materials is provided for in
3-12 the contract, to the extent of that subcontractor's interest in the
3-13 payment. The payment required by this subsection must be made not
3-14 later than the seventh day after the date the subcontractor
3-15 receives the contractor's payment.
3-16 Sec. 28.003. EXCEPTION FOR GOOD FAITH DISPUTE; WITHHOLDING.
3-17 If a good faith dispute exists concerning the amount owed for a
3-18 payment requested or required by this chapter, the owner,
3-19 contractor, or subcontractor disputing its obligation to pay or the
3-20 amount of payment may withhold from the payment owed not more than
3-21 110 percent of the difference between the amount the obligee claims
3-22 is due and the amount the obligor claims is due. A good faith
3-23 dispute includes a dispute regarding whether the work was performed
3-24 in a proper manner.
3-25 Sec. 28.004. INTEREST ON OVERDUE PAYMENT. (a) An unpaid
3-26 amount required under this chapter begins to accrue interest on the
3-27 day after the date on which the payment becomes due.
4-1 (b) An unpaid amount bears interest at the rate of one
4-2 percent each month.
4-3 (c) Interest on an unpaid amount stops accruing under this
4-4 section on the earliest of the following:
4-5 (1) the date of delivery;
4-6 (2) the date of mailing, if payment is mailed and
4-7 delivery occurs within three days after the date it was mailed; or
4-8 (3) the date a judgment is entered in an action
4-9 brought under this chapter.
4-10 Sec. 28.005. ACTION TO ENFORCE PAYMENT. (a) A person may
4-11 bring an action to enforce the person's rights under this chapter.
4-12 (b) In an action brought under this chapter, the court may
4-13 award costs and reasonable attorney's fees as the court determines
4-14 equitable and just.
4-15 Sec. 28.006. NO WAIVER. (a) Except as provided by
4-16 Subsection (b), an attempted waiver of a provision of this chapter
4-17 is void.
4-18 (b) A written contract between an owner and a contractor for
4-19 improvements to or construction of a single-family residence may
4-20 provide that the payment required under Section 28.002(a) be made
4-21 not later than a date that occurs before the 61st day after the
4-22 date the owner receives the payment request. Notwithstanding
4-23 Section 28.004(b), an unpaid amount under a contract subject to
4-24 this subsection that allows payment later than the date otherwise
4-25 required under Section 28.002(a) bears interest at the rate of
4-26 1-1/2 percent each month.
4-27 Sec. 28.007. LEGAL CONSTRUCTION. (a) This chapter may not
5-1 be interpreted to void a contractor's or subcontractor's
5-2 entitlement to payment for properly performed work or suitably
5-3 stored materials.
5-4 (b) This statute may not be interpreted to change the rights
5-5 and obligations set forth in Chapter 53, Property Code.
5-6 Sec. 28.008. EXCEPTION TO ENFORCEMENT. It shall be an
5-7 exception to enforcement of the provisions of this chapter that the
5-8 owner, contractor, or subcontractor has not received payment of
5-9 amounts due him concerning the work performed or the material
5-10 supplied.
5-11 SECTION 2. This Act applies only to a contract to improve
5-12 real property entered into on or after the effective date of this
5-13 Act.
5-14 SECTION 3. This Act takes effect September 1, 1993.
5-15 SECTION 4. The importance of this legislation and the
5-16 crowded condition of the calendars in both houses create an
5-17 emergency and an imperative public necessity that the
5-18 constitutional rule requiring bills to be read on three several
5-19 days in each house be suspended, and this rule is hereby suspended.