1-1 By: Stiles (Senate Sponsor - Harris of Tarrant) H.B. No. 1429
1-2 (In the Senate - Received from the House May 12, 1993;
1-3 May 13, 1993, read first time and referred to Committee on
1-4 Jurisprudence; May 18, 1993, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 4, Nays 0;
1-6 May 18, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Henderson x
1-10 Harris of Tarrant x
1-11 Brown x
1-12 Harris of Dallas x
1-13 Luna x
1-14 Parker x
1-15 West x
1-16 COMMITTEE SUBSTITUTE FOR H.B. No. 1429 By: Harris of Tarrant
1-17 A BILL TO BE ENTITLED
1-18 AN ACT
1-19 relating to prompt payment to contractors and subcontractors in
1-20 connection with improvements to real property.
1-21 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-22 SECTION 1. Title 4, Property Code, is amended by adding
1-23 Chapter 28 to read as follows:
1-24 Chapter 28. PROMPT PAYMENT TO CONTRACTORS AND SUBCONTRACTORS
1-25 Sec. 28.001. DEFINITIONS. In this chapter:
1-26 (1) "Contractor" means a person who contracts with an
1-27 owner to improve real property or perform construction services for
1-28 an owner.
1-29 (2) "Improve" means to:
1-30 (A) build, construct, effect, erect, alter,
1-31 repair, or demolish any improvement on, connected with, or beneath
1-32 the surface of real property;
1-33 (B) excavate, clear, grade, fill, or landscape
1-34 real property;
1-35 (C) construct a driveway or roadway;
1-36 (D) furnish any material, including trees or
1-37 shrubbery, for the purpose of taking any action described by
1-38 Subsections (a) - (c) of this subdivision; or
1-39 (E) perform any labor on or in connection with
1-40 an improvement.
1-41 (3) "Improvement" includes all or any part of:
1-42 (A) a building, structure, erection, alteration,
1-43 demolition, or excavation on, connected with, or beneath the
1-44 surface of real property; and
1-45 (B) the act of clearing, grading, filling, or
1-46 landscaping real property, including constructing a driveway or
1-47 roadway or furnishing trees or shrubbery.
1-48 (4) "Owner" means a person or entity with an interest
1-49 in real property that is improved, for whom an improvement is made,
1-50 and who ordered the improvement to be made.
1-51 (5) "Real property" includes lands, leaseholds,
1-52 tenements, hereditaments, and improvements placed on the real
1-53 property.
1-54 (6) "Subcontractor" means a person who contracts to
1-55 furnish labor or material to, or has performed labor or supplied
1-56 materials for, a contractor or another subcontractor in connection
1-57 with a contract to improve real property.
1-58 Sec. 28.002. PROMPT PAY REQUIRED. (a) If an owner receives
1-59 a written payment request from a contractor for an amount that is
1-60 allowed to the contractor for properly performed work or suitably
1-61 stored materials, the owner shall pay the amount to the contractor,
1-62 less any statutory offsets, not later than the 45th day after the
1-63 owner receives the request.
1-64 (b) A contractor who receives a payment under Subsection (a)
1-65 or otherwise from an owner in connection with a contract to improve
1-66 real property shall pay each of its subcontractors the portion of
1-67 the owner's payment, including interest, if any, that is
1-68 attributable to work performed or materials suitably stored by that
2-1 subcontractor if payment for stored materials is provided for in
2-2 the contract, to the extent of that subcontractor's interest in the
2-3 owner's payment. The payment required by this subsection must be
2-4 made not later than the seventh day after the date the contractor
2-5 receives the owner's payment.
2-6 (c) A subcontractor who receives a payment under Subsection
2-7 (b) or otherwise from a contractor in connection with a contract to
2-8 improve real property shall pay each of its subcontractors the
2-9 portion of the payment, including interest, if any, that is
2-10 attributable to work performed or materials suitably stored by that
2-11 subcontractor if payment for stored materials is provided for in
2-12 the contract, to the extent of that subcontractor's interest in the
2-13 payment. The payment required by this subsection must be made not
2-14 later than the seventh day after the date the subcontractor
2-15 receives the contractor's payment.
2-16 Sec. 28.003. EXCEPTION FOR GOOD FAITH DISPUTE;
2-17 WITHHOLDING. If a good faith dispute exists concerning the amount
2-18 owned for a payment requested or required by this chapter, the
2-19 owner, contractor, or subcontractor disputing its obligation to pay
2-20 or the amount of payment may withhold from the payment owed not
2-21 more than 110 percent of the difference between the amount the
2-22 obligee claims is due and the amount the obligor claims is due. A
2-23 good faith dispute includes a dispute regarding whether the work
2-24 was performed in a proper manner.
2-25 Sec. 28.004. INTEREST ON OVERDUE PAYMENT. (a) An unpaid
2-26 amount required under this chapter begins to accrue interest on the
2-27 day after the date on which the payment becomes due.
2-28 (b) An unpaid amount bears interest at the rate of 1-1/2
2-29 percent each month.
2-30 (c) Interest on an unpaid amount stops accruing under this
2-31 section on the earlier of:
2-32 (1) the date of delivery;
2-33 (2) the date of mailing, if payment is mailed and
2-34 delivery occurs within three days; or
2-35 (3) the date a judgment is entered in an action
2-36 brought under this chapter.
2-37 Sec. 28.005. ACTION TO ENFORCE PAYMENT. (a) A person may
2-38 bring an action to enforce the person's rights under this chapter.
2-39 (b) In an action brought under this chapter, the court may
2-40 award costs and reasonable attorney's fees as the court determines
2-41 equitable and just.
2-42 Sec. 28.006. NO WAIVER. An attempted waiver of a provision
2-43 of this chapter is void.
2-44 Sec. 28.007. LEGAL CONSTRUCTION. (a) This chapter may not
2-45 be interpreted to void a contractor's or subcontractor's
2-46 entitlement to payment for properly performed work or suitably
2-47 stored materials.
2-48 (b) Nothing in this statute shall be interpreted to change
2-49 the rights and obligations set forth in Chapter 53, Property Code.
2-50 Sec. 28.008. EXCEPTION FOR FAILURE OR LENDER TO DISBURSE
2-51 FUNDS. The date of payment required of the owner pursuant to
2-52 Sec. 28.002(a) shall change from the 45th day after the date the
2-53 owner receives the payment request to the 5th day after the owner
2-54 receives loan proceeds, in the event that:
2-55 (a) the owner has obtained a loan intended to pay for all or
2-56 part of a contract to improve real property;
2-57 (b) the owner has timely and properly requested disbursement
2-58 of proceeds from that loan; and
2-59 (c) the lender is legally obligated to disburse such
2-60 proceeds to the owner, but has failed to do so within 45 days after
2-61 the date the owner received the contractor's payment request.
2-62 SECTION 2. This Act applies only to a contract to improve
2-63 real property entered into on or after the effective date of this
2-64 Act.
2-65 SECTION 3. This Act takes effect September 1, 1993.
2-66 SECTION 4. The importance of this legislation and the
2-67 crowded condition of the calendars in both houses create an
2-68 emergency and an imperative public necessity that the
2-69 constitutional rule requiring bills to be read on three several
2-70 days in each house is suspended, and this rule is hereby suspended.
3-1 * * * * *
3-2 Austin,
3-3 Texas
3-4 May 18, 1993
3-5 Hon. Bob Bullock
3-6 President of the Senate
3-7 Sir:
3-8 We, your Committee on Jurisprudence to which was referred H.B. No.
3-9 1429, have had the same under consideration, and I am instructed to
3-10 report it back to the Senate with the recommendation that it do not
3-11 pass, but that the Committee Substitute adopted in lieu thereof do
3-12 pass and be printed.
3-13 Henderson,
3-14 Chairman
3-15 * * * * *
3-16 WITNESSES
3-17 FOR AGAINST ON
3-18 ___________________________________________________________________
3-19 Name: John Amonette x
3-20 Representing: Austin Sheet Metal Assoc.
3-21 City: Austin
3-22 -------------------------------------------------------------------
3-23 Name: Jerry Nevlud x
3-24 Representing: American Subcontractor's Assn
3-25 City: Austin
3-26 -------------------------------------------------------------------
3-27 Name: Rick Birkman x
3-28 Representing: Roofing Contractor Assoc. of T
3-29 City: Austin
3-30 -------------------------------------------------------------------
3-31 Name: Karen Rush Hill x
3-32 Representing: Assoc, Bldrs & Contractors
3-33 City: Austin
3-34 -------------------------------------------------------------------
3-35 Name: Deborah K. Jackson x
3-36 Representing: Tx Fifth Wall Roofing & ASA
3-37 City: Austin
3-38 -------------------------------------------------------------------
3-39 Name: Jerrold J. Kelly x
3-40 Representing: Tips Iron & Steel Co.
3-41 City: Austin
3-42 -------------------------------------------------------------------
3-43 Name: J. J. Kelly x
3-44 Representing: Jett Enterprises
3-45 City: Austin
3-46 -------------------------------------------------------------------