74R9762 DLF-F
By Smithee H.B. No. 2635
Substitute the following for H.B. No. 2635:
By Smithee C.S.H.B. No. 2635
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain bonds executed by sureties.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1, Chapter 87, Acts of the 56th
1-5 Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
1-6 Insurance Code), is amended by amending Subsection (a) and by
1-7 adding Subsections (c) and (d) to read as follows:
1-8 (a) Whenever any bond, undertaking, recognizance or other
1-9 obligation is, by law or the charter, ordinances, rules and
1-10 regulations of a municipality, board, body, organization, court,
1-11 judge or public officer, required or permitted to be made, given,
1-12 tendered or filed, and whenever the performance of any act, duty or
1-13 obligation, or the refraining from any act, is required or
1-14 permitted to be guaranteed, such bond, undertaking, obligation,
1-15 recognizance or guarantee may be executed by a surety company duly
1-16 authorized to do business in this state; and, except as provided by
1-17 Subsection (b) or (c) of this section, such execution by such
1-18 company of such bond, undertaking, obligation, recognizance or
1-19 guarantee shall be in all respects a full and complete compliance
1-20 with every law, charter, rule or regulation that such bond,
1-21 undertaking, obligation, recognizance or guarantee shall be
1-22 executed by one surety or by one or more sureties, or that such
1-23 sureties shall be residents, or householders, or freeholders, or
2-1 either, or both, or possess any other qualification and all courts,
2-2 judges, heads of departments, boards, bodies, municipalities, and
2-3 public officers of every character shall accept and treat such
2-4 bond, undertaking, obligation, recognizance or guarantee when so
2-5 executed by such company, as conforming to, and fully and
2-6 completely complying with, every requirement of every such law,
2-7 charter, ordinance, rule or regulation.
2-8 Provided, however, that any municipality may require in any
2-9 specifications for work or supplies, on which sealed bids are
2-10 required, that any corporate surety tender shall designate, in a
2-11 manner satisfactory to it, an agent resident in the county of such
2-12 municipality to whom any requisite notices may be delivered and on
2-13 whom service of process may be had in matters arising out of such
2-14 suretyship.
2-15 (c) A bond for an amount that exceeds $100,000 that is made,
2-16 given, tendered, or filed under Subchapter H, I, or J, Chapter 53,
2-17 Property Code, or Chapter 2253, Government Code, may be executed
2-18 only by a surety company that is authorized and admitted to write
2-19 surety bonds in this state and is the holder of a certificate of
2-20 authority from the United States secretary of the treasury to
2-21 qualify as a surety on obligations permitted or required under
2-22 federal law.
2-23 (d) Subsection (c) of this section does not apply if the
2-24 amount of the bond in excess of $100,000 is reinsured by an entity
2-25 that is authorized and admitted in this state as a surety or
3-1 reinsurer and that is the holder of a certificate of authority from
3-2 the United States secretary of the treasury to qualify on
3-3 obligations permitted or required under federal law.
3-4 SECTION 2. Sections 53.172, 53.202, and 53.237, Property
3-5 Code, are amended to read as follows:
3-6 Sec. 53.172. Bond Requirements. The bond must:
3-7 (1) describe the property on which the liens are
3-8 claimed;
3-9 (2) refer to each lien claimed in a manner sufficient
3-10 to identify it;
3-11 (3) be in an amount that is double the amount of the
3-12 liens referred to in the bond unless the total amount claimed in
3-13 the liens exceeds $40,000, in which case the bond must be in an
3-14 amount that is the greater of 1 1/2 times the amount of the liens
3-15 or the sum of $40,000 and the amount of the liens;
3-16 (4) be payable to the parties claiming the liens;
3-17 (5) be executed by:
3-18 (A) the party filing the bond as principal; and
3-19 (B) a corporate surety authorized and admitted
3-20 to do business under the law in this state and licensed by this
3-21 state to execute the bond as surety, subject to Section 1(c),
3-22 Chapter 87, Acts of the 56th Legislature, Regular Session, 1959
3-23 (Article 7.19-1, Vernon's Texas Insurance Code); and
3-24 (6) be conditioned substantially that the principal
3-25 and sureties will pay to the named obligees or to their assignees
4-1 the amount that the named obligees would have been entitled to
4-2 recover if their claims had been proved to be valid and enforceable
4-3 liens on the property.
4-4 Sec. 53.202. Bond Requirements. The bond must:
4-5 (1) be in a penal sum at least equal to the total of
4-6 the original contract amount;
4-7 (2) be in favor of the owner;
4-8 (3) have the written approval of the owner endorsed on
4-9 it;
4-10 (4) be executed by:
4-11 (A) the original contractor as principal; and
4-12 (B) a corporate surety authorized and admitted
4-13 to do business in this state and licensed by this state to execute
4-14 bonds as surety, subject to Section 1(c), Chapter 87, Acts of the
4-15 56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's
4-16 Texas Insurance Code); and
4-17 (5) be conditioned on prompt payment for all labor,
4-18 subcontracts, materials, specially fabricated materials, and normal
4-19 and usual extras not exceeding 15 percent of the contract price.
4-20 Sec. 53.237. Bond Requirements. The bond must be:
4-21 (1) in an amount double the amount of the claims
4-22 filed;
4-23 (2) payable to the claimants;
4-24 (3) executed by:
4-25 (A) the party filing the bond as principal; and
5-1 (B) a corporate surety authorized, admitted to
5-2 do business, and licensed by the law of this state to execute the
5-3 bond as surety, subject to Section 1(c), Chapter 87, Acts of the
5-4 56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's
5-5 Texas Insurance Code); and
5-6 (4) conditioned that:
5-7 (A) the principal and surety will pay to the
5-8 obligees named or to their assignees the amount of the claims or
5-9 the portions of the claims proved to be liens under this
5-10 subchapter; and
5-11 (B) the principal and surety will pay all court
5-12 costs adjudged against the principal in actions brought by a
5-13 claimant on the bond.
5-14 SECTION 3. Section 2253.001(4), Government Code, is amended
5-15 to read as follows:
5-16 (4) "Public work contract" means a contract for
5-17 constructing, altering, or repairing a public building or carrying
5-18 out or completing any public work. The term includes a contract
5-19 for constructing, altering, or repairing a public building or
5-20 carrying out or completing any public work in which an insurance
5-21 company is fulfilling its obligation under a contract of insurance
5-22 by arranging for the replacement of a loss rather than making a
5-23 cash payment directly to the governmental entity. The term does
5-24 not include a contract with a surety company complying with an
5-25 obligation under a bond.
6-1 SECTION 4. This Act takes effect September 1, 1995, and
6-2 applies only to a bond made, given, tendered, or filed on or after
6-3 that date. A bond made, given, tendered, or filed before the
6-4 effective date of this Act is governed by the law as it existed
6-5 immediately before the effective date of this Act, and that law is
6-6 continued in effect for that purpose.
6-7 SECTION 5. The importance of this legislation and the
6-8 crowded condition of the calendars in both houses create an
6-9 emergency and an imperative public necessity that the
6-10 constitutional rule requiring bills to be read on three several
6-11 days in each house be suspended, and this rule is hereby suspended.