By:  Stiles                                           H.B. No. 1429
       73R6097 T
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the payment of subcontractors by a contractor after the
    1-3  receipt of a progress payment.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Chapter 35, Texas Business & Commerce Code, is
    1-6  amended by adding Section 35.55 to read as follows:
    1-7        Section 35.55  PAYMENT.
    1-8        (b)  An Owner shall pay to a Contractor no later than 30
    1-9  calendar days after receiving a pay request, the amount that is
   1-10  allowed to the Contractor for properly performed work or suitably
   1-11  stored materials less any statutory offsets.  Any Contractor or
   1-12  Subcontractor who receives payment for work done or materials
   1-13  supplied to improve real property shall pay to a Subcontractor not
   1-14  later than the 7th calendar day after receiving payment, the amount
   1-15  of the payment that is allowed to the Contractor on account of work
   1-16  performed by the Subcontractor to the extent of the Subcontractor's
   1-17  interest in that amount.
   1-18        (c)  If a good faith dispute exists concerning the amount
   1-19  owed in a payment, the party disputing its obligation to pay may
   1-20  not withhold more than 110 percent of the disputed amount from the
   1-21  payment owed.
   1-22        (d)  A party who violates this section is liable for the
   1-23  payment of interest of no less than one and one-half percent
   1-24  (1 1/2%) per month of the amount due from the day following the
    2-1  date the payment was due.  A party entitled to receive interest
    2-2  from a violating party shall pay interest of no less than one and
    2-3  one-half percent (1 1/2%) per month to its subcontractor on the
    2-4  amount due the subcontractor from the day following the date the
    2-5  payment was due from the violating party.
    2-6        (e)  In an action brought against a party who has not
    2-7  complied with this section, a claimant bringing such action can
    2-8  recover expenses, including reasonable and necessary attorney's
    2-9  fees and court costs.
   2-10        (f)  Nothing in this or any other statute shall be
   2-11  interpreted to void a Contractor's or Subcontractor's entitlement
   2-12  to payment for properly performed work or suitably stored
   2-13  materials.
   2-14        (g)  In this section:
   2-15        "Contractor" means a person who contracts with an owner to
   2-16  improve real property or perform construction services for an
   2-17  owner.
   2-18        "Improve" means to build, effect, alter, repair, or demolish
   2-19  any improvement upon, connected with, or on or beneath the surface
   2-20  of any real property, or to excavate, clear, grade, fill, or
   2-21  landscape any real property, or to construct driveways and
   2-22  roadways, or to furnish materials, including trees and shrubbery,
   2-23  for any of these purposes, or to perform any labor upon these
   2-24  improvements.
   2-25        "Improvement" means all or any part of any building,
   2-26  structure, erection, alteration, demolition, excavation, clearing,
   2-27  grading, filing, or landscaping, including trees and shrubbery,
    3-1  driveways, and roadways on real property.
    3-2        "Owner" means a person or entity who has an interest in the
    3-3  real property improved and for whom an improvement is made and who
    3-4  ordered the improvement to be made.
    3-5        "Real property" means the real estate that is improved,
    3-6  including lands, leaseholds, tenements, and hereditaments, and
    3-7  improvements placed on the real property.
    3-8        "Subcontractor" means any person who has contracted to
    3-9  furnish labor or material to, or has performed labor or supplied
   3-10  materials for, a contractor or another subcontractor in connection
   3-11  with a contract to improve real property.
   3-12        SECTION 2.  This act applies only to payment due after the
   3-13  effective date of this Act.
   3-14        SECTION 3.  This Act takes effect September 1, 1993.
   3-15        SECTION 4.  The importance of this legislation and the
   3-16  crowded condition of the calendars in both houses create an
   3-17  emergency and an imperative public necessity that the
   3-18  constitutional rule requiring bills to be read on three several
   3-19  days in each house be suspended, and this rule is hereby suspended.