By Solomons H.B. No. 740
75R2416 PAM-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to mechanics', contractors', and materialmen's liens;
1-3 providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 28.002, Property Code, is amended to read
1-6 as follows:
1-7 Sec. 28.002. Prompt Pay Required. (a) If an owner receives
1-8 a written payment request from a contractor for an amount that is
1-9 allowed to the contractor for properly performed work or suitably
1-10 stored materials, the owner shall pay the amount to the contractor,
1-11 less any statutory offsets, not later than the 45th day after the
1-12 date the owner receives the request.
1-13 (b) If a [A] contractor receives a written payment request
1-14 from a subcontractor for an amount that is allowed to the
1-15 subcontractor for properly performed work or suitably stored
1-16 materials, the contractor [who receives a payment under Subsection
1-17 (a) or otherwise from an owner in connection with a contract to
1-18 improve real property] shall pay the amount to the subcontractor,
1-19 less any statutory offsets, [each of its subcontractors the portion
1-20 of the owner's payment, including interest, if any, that is
1-21 attributable to work performed or materials suitably stored by that
1-22 subcontractor if payment for stored materials is provided for in
1-23 the contract, to the extent of that subcontractor's interest in the
1-24 owner's payment. The payment required by this subsection must be
2-1 made] not later than the 45th [seventh] day after the date the
2-2 contractor receives the subcontractor's request [owner's payment].
2-3 (c) If a [A] subcontractor who contracts with a secondary
2-4 subcontractor receives a written payment request from the secondary
2-5 subcontractor for an amount that is allowed to the secondary
2-6 subcontractor for properly performed work or suitably stored
2-7 materials, the initial subcontractor [who receives a payment under
2-8 Subsection (b) or otherwise from a contractor in connection with a
2-9 contract to improve real property] shall pay the amount to the
2-10 secondary subcontractor, less any statutory offsets, [each of its
2-11 subcontractors the portion of the payment, including interest, if
2-12 any, that is attributable to work performed or materials suitably
2-13 stored by that subcontractor if payment for stored materials is
2-14 provided for in the contract, to the extent of that subcontractor's
2-15 interest in the payment. The payment required by this subsection
2-16 must be made] not later than the 45th [seventh] day after the date
2-17 the initial subcontractor receives the secondary subcontractor's
2-18 request [contractor's payment].
2-19 (d) A contractor who violates Subsection (b) is liable to
2-20 the subcontractor for one and one-half times the amount of the
2-21 contract price for the subcontractor's labor and materials, plus
2-22 reasonable attorney's fees and court costs incurred by the
2-23 subcontractor in an effort to collect payment. A subcontractor who
2-24 violates Subsection (c) is liable to the secondary subcontractor
2-25 for one and one-half times the amount of the contract price for the
2-26 secondary subcontractor's labor and materials, plus reasonable
2-27 attorney's fees and court costs incurred by the secondary
3-1 subcontractor in an effort to collect payment.
3-2 (e) A provision in a contract between a contractor and a
3-3 subcontractor that requires the contractor to pay the subcontractor
3-4 only if the contractor is paid is unenforceable. A provision in a
3-5 contract between a subcontractor and a secondary subcontractor that
3-6 requires the initial subcontractor to pay the secondary
3-7 subcontractor only if the initial contractor is paid is
3-8 unenforceable.
3-9 SECTION 2. Chapter 28, Property Code, is amended by adding
3-10 Section 28.0021 to read as follows:
3-11 Sec. 28.0021. RELEASE REQUIRED. When a debt owed to a
3-12 subcontractor for labor or materials is paid or otherwise
3-13 satisfied, the subcontractor shall, not later than the 10th day
3-14 after the date the debt is satisfied, execute and deliver to the
3-15 person who satisfies the debt a written release of the indebtedness
3-16 to the extent of the indebtedness paid.
3-17 SECTION 3. Section 28.006(b), Property Code, is amended to
3-18 read as follows:
3-19 (b) A written contract between an owner and a contractor for
3-20 improvements to or construction of a single-family residence may
3-21 provide that the payment required under Section 28.002(a) be made
3-22 not later than a date that occurs before the 61st day after the
3-23 date the owner receives the payment request. An [Notwithstanding
3-24 Section 28.004(b), an] unpaid amount under contract subject to this
3-25 subsection that allows payment later than the date otherwise
3-26 required under Section 28.002(a) bears interest at the rate of 1
3-27 1/2 percent each month.
4-1 SECTION 4. Section 28.007(b), Property Code, is amended to
4-2 read as follows:
4-3 (b) Nothing in this statute shall be interpreted to change
4-4 the rights and obligations set forth in Chapter 53 or 62, Property
4-5 Code.
4-6 SECTION 5. The title to Chapter 53, Property Code, is
4-7 amended to read as follows:
4-8 CHAPTER 53. MECHANIC'S, CONTRACTOR'S OR MATERIALMAN'S LIEN
4-9 ON COMMERCIAL AND CERTAIN OTHER PROPERTY
4-10 SECTION 6. Subchapter A, Chapter 53, Property Code, is
4-11 amended by adding Section 53.0011 to read as follows:
4-12 Sec. 53.0011. APPLICABILITY. This chapter applies only to
4-13 real property that is not covered by Chapter 62.
4-14 SECTION 7. Section 53.021(a), Property Code, is amended to
4-15 read as follows:
4-16 (a) A person has a lien if:
4-17 (1) the person labors, specially fabricates material,
4-18 or furnishes labor or materials for construction or repair in this
4-19 state of:
4-20 (A) a [house,] building[,] or improvement;
4-21 (B) a levee or embankment to be erected for the
4-22 reclamation of overflow land along a river or creek; or
4-23 (C) a railroad; and
4-24 (2) the person labors, specially fabricates the
4-25 material, or furnishes the labor or materials under or by virtue of
4-26 a contract with the owner or the owner's agent, trustee, receiver,
4-27 contractor, or subcontractor.
5-1 SECTION 8. Sections 53.022(a), (c), and (d), Property Code,
5-2 are amended to read as follows:
5-3 (a) The lien extends to the [house,] building, fixtures, or
5-4 improvements, the land reclaimed from overflow, or the railroad and
5-5 all of its properties, and to each lot of land necessarily
5-6 connected or reclaimed.
5-7 (c) A lien against land in a city, town, or village extends
5-8 to each lot on which the [house,] building[,] or improvement is
5-9 situated or on which the labor was performed.
5-10 (d) A lien against land not in a city, town, or village
5-11 extends to not more than 50 acres on which the [house,] building[,]
5-12 or improvement is situated or on which the labor was performed.
5-13 SECTION 9. Section 53.026(a), Property Code, is amended to
5-14 read as follows:
5-15 (a) A person who labors, specially fabricates materials, or
5-16 furnishes labor or materials under a direct contractual
5-17 relationship with another person is considered to be in direct
5-18 contractual relationship with the owner and has a lien as an
5-19 original contractor, if:
5-20 (1) the owner contracted with the other person for the
5-21 construction or repair of a [house,] building[,] or improvements
5-22 and the owner can effectively control that person through ownership
5-23 of voting stock, interlocking directorships, or otherwise; or
5-24 (2) the owner contracted with the other person for the
5-25 construction or repair of a [house,] building[,] or improvements
5-26 and the contract was made without good faith intention of the
5-27 parties that the other person was to perform the contract.
6-1 SECTION 10. Section 53.085, Property Code, is amended to
6-2 read as follows:
6-3 Sec. 53.085. Affidavit Required. (a) Any person who
6-4 furnishes labor or materials for the construction of improvements
6-5 on real property shall, [if requested and] as a condition of
6-6 payment for such labor or materials, provide to the receiving
6-7 [requesting] party, or its agent, an affidavit stating that such
6-8 person has paid each of his subcontractors, laborers, or
6-9 materialmen in full for all labor and materials provided to him for
6-10 the construction. In the event, however, that the person has not
6-11 paid each of his subcontractors, laborers, or materialmen in full,
6-12 the person shall state in the affidavit the amount owed and the
6-13 name and, if known, the address and telephone number of each
6-14 subcontractor, laborer, or materialman to whom such payment is
6-15 owed.
6-16 (b) The seller of any real property shall, [upon request by
6-17 the purchaser or its agent] prior to closing of the purchase of
6-18 such real property, provide to such purchaser or its agent, a
6-19 written affidavit stating that the seller has paid each of his
6-20 contractors, laborers, or materialmen in full for all labor and
6-21 materials provided to the seller for any construction of
6-22 improvements on the real property and that the seller is not
6-23 indebted to any person, firm, or corporation by reason of any such
6-24 construction. In the event that the seller has not paid each of
6-25 his contractors, laborers, or materialmen in full, the seller shall
6-26 state in the affidavit the amount owed and the name and, if known,
6-27 the address and telephone number of each contractor, laborer, or
7-1 materialman to whom such payment is owed.
7-2 (c) The affidavit required by this section must, at a
7-3 minimum, read substantially similar to the following:
7-4 (AWAITING FORM TO BE INSERTED)
7-5 (d) A person, including a seller, commits an offense if the
7-6 person intentionally, knowingly, or recklessly makes a false or
7-7 misleading statement in an affidavit under this section. An
7-8 offense under this section is a [Class A] misdemeanor. A person
7-9 adjudged guilty of an offense under this section shall be punished
7-10 by a fine not to exceed $4,000 and confinement in jail for a term
7-11 not to exceed one year. A person may not receive community
7-12 supervision for the offense.
7-13 SECTION 11. Section 53.105(a), Property Code, is amended to
7-14 read as follows:
7-15 (a) If the owner fails or refuses to comply with this
7-16 subchapter, the claimants complying with this chapter have a lien,
7-17 at least to the extent of the amount that should have been retained
7-18 from the original contract under which they are claiming, against
7-19 the [house,] building, structure, fixture, or improvement and all
7-20 of its properties and against the lot or lots of land necessarily
7-21 connected.
7-22 SECTION 12. Section 53.123(a), Property Code, is amended to
7-23 read as follows:
7-24 (a) Except as provided by this section, a mechanic's lien
7-25 attaches to the [house,] building, improvements, or railroad
7-26 property in preference to any prior lien, encumbrance, or mortgage
8-1 on the land on which it is located, and the person enforcing the
8-2 lien may have the [house,] building, improvement, or any piece of
8-3 the railroad property sold separately.
8-4 SECTION 13. Section 53.155, Property Code, is amended to
8-5 read as follows:
8-6 Sec. 53.155. Transfer of Property Sold. If the [house,]
8-7 building, improvement, or any piece of railroad property is sold
8-8 separately, the officer making the sale shall place the purchaser
8-9 in possession. The purchaser is entitled to a reasonable time
8-10 after the date of purchase within which to remove the purchased
8-11 property.
8-12 SECTION 14. Subtitle B, Title 5, Property Code, is amended
8-13 by adding Chapter 62 to read as follows:
8-14 CHAPTER 62. MECHANIC'S, CONTRACTOR'S, OR MATERIALMAN'S LIEN
8-15 ON RESIDENTIAL PROPERTY
8-16 SUBCHAPTER A. GENERAL PROVISIONS
8-17 Sec. 62.001. DEFINITIONS. In this chapter:
8-18 (1) "Contract price" means the cost to the owner for
8-19 any part of construction or repair performed under an original
8-20 contract.
8-21 (2) "Improvement" includes:
8-22 (A) abutting sidewalks and streets and utilities
8-23 in or on those sidewalks and streets;
8-24 (B) clearing, grubbing, draining, or fencing of
8-25 land;
8-26 (C) wells, cisterns, tanks, reservoirs, or
8-27 artificial lakes or pools made for supplying or storing water;
9-1 (D) pumps, siphons, and windmills or other
9-2 machinery or apparatuses used for raising water for stock, domestic
9-3 use, or irrigation; and
9-4 (E) planting orchard trees, grubbing out
9-5 orchards and replacing trees, and pruning of orchard trees.
9-6 (3) "Labor" means labor used in the direct prosecution
9-7 of the work.
9-8 (4) "Material" means all or part of:
9-9 (A) the material, machinery, fixtures, or tools
9-10 incorporated into the work, consumed in the direct prosecution of
9-11 the work, or ordered and delivered for incorporation or
9-12 consumption;
9-13 (B) rent at a reasonable rate and actual running
9-14 repairs at a reasonable cost for construction equipment used or
9-15 reasonably required and delivered for use in the direct prosecution
9-16 of the work at the site of the construction or repair; or
9-17 (C) power, water, fuel, and lubricants consumed
9-18 or ordered and delivered for consumption in the direct prosecution
9-19 of the work.
9-20 (5) "Mechanic's lien" means the lien provided by this
9-21 chapter.
9-22 (6) "Original contract" means an agreement to which an
9-23 owner is a party either directly or by implication of law.
9-24 (7) "Original contractor" means a person contracting
9-25 with an owner either directly or through the owner's agent.
9-26 (8) "Specially fabricated material" means material
9-27 fabricated for use as a component of the construction or repair so
10-1 as to be reasonably unsuitable for use elsewhere.
10-2 (9) "Subcontractor" means a person who has furnished
10-3 labor or materials to fulfill an obligation to an original
10-4 contractor or to a subcontractor to perform all or part of the work
10-5 required by an original contract.
10-6 (10) "Work" means any part of construction or repair
10-7 performed under an original contract.
10-8 Sec. 62.002. APPLICABILITY. This chapter applies only to
10-9 real property:
10-10 (1) on which exists or for which a contract is
10-11 executed to construct a structure that consists of not more than
10-12 four units intended as the principal place of residence for a
10-13 person or family; or
10-14 (2) that is a homestead as provided by Chapter 41.
10-15 Sec. 62.003. MORE THAN ONE ORIGINAL CONTRACTOR. On any work
10-16 there may be more than one original contractor for purposes of this
10-17 chapter.
10-18 (Sections 62.004-62.020 reserved for expansion
10-19 SUBCHAPTER B. REQUIRED DOCUMENTATION AND RESPONSIBILITIES
10-20 OF PARTIES
10-21 Sec. 62.021. DISCLOSURE STATEMENT REQUIRED FOR HOMESTEAD
10-22 PROPERTY. (a) If the property on which improvements are to be
10-23 constructed or repairs are to be made is homestead property, the
10-24 original contractor shall execute and deliver to the owner before
10-25 the work commences a disclosure statement described by this
10-26 section.
10-27 (b) The statement must disclose:
11-1 (1) the cost of the work to be performed;
11-2 (2) the contract price for the work if a sum certain
11-3 is agreed to by the parties;
11-4 (3) the percentage rate charged above the cost of the
11-5 work and the estimated final cost to the purchaser if the contract
11-6 provides for a price based on the cost of the work plus a certain
11-7 percentage; and
11-8 (4) the estimated date of completion of the work.
11-9 (c) The original contractor shall attach to the disclosure
11-10 statement a list that identifies by name, address, and telephone
11-11 number each subcontractor and supplier the contractor intends to
11-12 use in the work to be performed. The contractor shall provide the
11-13 owner with an updated list of subcontractors and suppliers not
11-14 later than the 15th day after the date a subcontractor or supplier
11-15 is added or deleted.
11-16 (d) The statement must contain the following notice
11-17 conspicuously printed, stamped, or typed in a size equal to
11-18 10-point boldface or the computer equivalent, at the top of each
11-19 page of the list of subcontractors and suppliers:
11-20 NOTICE: THIS LIST OF SUBCONTRACTORS AND SUPPLIERS MAY NOT BE A
11-21 FINAL LISTING. THE CONTRACTOR IS REQUIRED BY LAW TO SUPPLY UPDATED
11-22 INFORMATION, AS THE INFORMATION BECOMES AVAILABLE, FOR EACH
11-23 SUBCONTRACTOR OR SUPPLIER USED IN THE WORK PERFORMED ON YOUR
11-24 RESIDENCE. UPON PAYMENT TO EACH SUBCONTRACTOR OR SUPPLIER, YOU ARE
11-25 ENTITLED TO RECEIVE A WAIVER OF LIEN.
11-26 Sec. 62.022. PROVISIONS RELATED TO CLOSING OF LOAN FOR
11-27 CONSTRUCTION OF IMPROVEMENTS. (a) If the owner is obtaining
12-1 third-party financing for the construction of improvements, the
12-2 lender shall deliver to the owner all documentation relating to the
12-3 closing of the loan not less than 24 hours before the time of the
12-4 closing. This provision may not be waived by the owner. If the
12-5 lender fails to comply with this section, the owner may contest the
12-6 validity of any document delivered in violation of this section.
12-7 (b) If an owner obtains interim financing during the
12-8 construction of the improvement, the lender shall verify that the
12-9 owner has filed a notice of completion as provided by Sections
12-10 62.083 and 62.084 before the lender may fund the permanent loan.
12-11 Sec. 62.023. PAYMENT MONITORING REQUIRED. (a) The original
12-12 contractor shall provide to the owner, if the construction of the
12-13 improvements is owner-financed, or to the lender, if the
12-14 construction of the improvements is financed by a third party, a
12-15 periodic statement of funds disbursed.
12-16 (b) If the construction of the improvements is financed by a
12-17 third party, the lender shall provide to the owner a periodic
12-18 statement of funds disbursed.
12-19 (c) The disbursement statements required by this section
12-20 must be provided at least once a month during the construction
12-21 period.
12-22 (d) A person commits an offense if the person intentionally,
12-23 knowingly, or recklessly provides false or misleading information
12-24 in a disbursement statement required under this section. An
12-25 offense under this section is a misdemeanor. A person adjudged
12-26 guilty of an offense under this section shall be punished by a fine
12-27 not to exceed $4,000 and confinement in jail for a term not to
13-1 exceed one year. A person may not receive community supervision
13-2 for the offense.
13-3 Sec. 62.024. FINAL BILLS PAID AFFIDAVIT REQUIRED. (a) As a
13-4 condition of final payment under the original contract, the
13-5 original contractor shall, at the time the final payment is
13-6 tendered, execute and deliver to the owner, or the owner's agent,
13-7 an affidavit stating that the original contractor has paid each
13-8 person in full for all labor and materials used in the construction
13-9 of improvements on the real property. If the original contractor
13-10 has not paid each person in full, the original contractor shall
13-11 state in the affidavit the amount owed and the name and, if known,
13-12 the address and telephone number of each person to whom a payment
13-13 is owed.
13-14 (b) The seller of any real property shall, at the closing of
13-15 the purchase of the real property, execute and deliver to the
13-16 purchaser, or the purchaser's agent, an affidavit stating that the
13-17 seller has paid each person in full for all labor and materials
13-18 used in the construction of improvements on the real property and
13-19 that the seller is not indebted to any person by reason of any
13-20 construction. In the event that the seller has not paid each
13-21 person in full, the seller shall state in the affidavit the amount
13-22 owed and the name and, if known, the address and telephone number
13-23 of each person to whom a payment is owed.
13-24 (c) A person commits an offense if the person intentionally,
13-25 knowingly, or recklessly makes a false or misleading statement in
13-26 an affidavit under this section. An offense under this section is
13-27 a misdemeanor. A person adjudged guilty of an offense under this
14-1 section shall be punished by a fine not to exceed $4,000 and
14-2 confinement in jail for a term not to exceed one year. A person
14-3 may not receive community supervision for the offense.
14-4 (d) The affidavit required by this section must, at a
14-5 minimum, read substantially similar to the following:
14-6 (AWAITING FORM TO BE INSERTED)
14-7 (Sections 62.025-62.050 reserved for expansion
14-8 SUBCHAPTER C. PERSONS ENTITLED TO LIEN; SUBJECT PROPERTY
14-9 Sec. 62.051. PERSONS ENTITLED TO LIEN. (a) A person has a
14-10 lien if:
14-11 (1) the person labors, specially fabricates material,
14-12 or furnishes labor or materials for construction or repair in this
14-13 state of a house, building, or improvement; and
14-14 (2) the person labors, specially fabricates the
14-15 material, or furnishes the labor or materials under or by virtue of
14-16 a contract with the owner or the owner's agent, trustee, receiver,
14-17 contractor, or subcontractor.
14-18 (b) A person who specially fabricates material has a lien
14-19 even if the material is not delivered.
14-20 (c) An architect, engineer, or surveyor who prepares a plan
14-21 or plat under or by virtue of a written contract with the owner or
14-22 the owner's agent, trustee, or receiver in connection with the
14-23 actual or proposed design, construction, or repair of improvements
14-24 on real property or the location of the boundaries of real property
14-25 has a lien on the property.
14-26 Sec. 62.052. PROPERTY TO WHICH LIEN EXTENDS. (a) The lien
15-1 extends to the house, building, fixtures, or improvements and to
15-2 each lot of land necessarily connected or reclaimed.
15-3 (b) The lien does not extend to abutting sidewalks, streets,
15-4 and utilities that are public property.
15-5 (c) A lien against land in a city, town, or village extends
15-6 to each lot on which the house, building, or improvement is
15-7 situated or on which the labor was performed.
15-8 (d) A lien against land not in a city, town, or village
15-9 extends to not more than 50 acres on which the house, building, or
15-10 improvement is situated or on which the labor was performed.
15-11 Sec. 62.053. PAYMENT SECURED BY LIEN. The lien secures
15-12 payment for:
15-13 (1) the labor done or material furnished to the land
15-14 for the construction or repair;
15-15 (2) the specially fabricated material, even if the
15-16 material has not been delivered or incorporated into the
15-17 construction or repair, less its fair salvage value; or
15-18 (3) the preparation of a plan or plat by an architect,
15-19 engineer, or surveyor in accordance with Section 62.051(c).
15-20 Sec. 62.054. LIMITATION ON SUBCONTRACTOR'S LIEN. The amount
15-21 of a lien claimed by a subcontractor may not exceed:
15-22 (1) an amount equal to the proportion of the total
15-23 subcontract price that the sum of the labor performed, materials
15-24 furnished, materials specially fabricated, reasonable overhead
15-25 costs incurred, and proportionate profit margin bears to the total
15-26 subcontract price; minus
15-27 (2) the sum of previous payments received by the
16-1 claimant on the subcontract.
16-2 Sec. 62.055. SHAM CONTRACT. (a) A person who labors,
16-3 specially fabricates materials, or furnishes labor or materials
16-4 under a direct contractual relationship with another person is
16-5 considered to be in direct contractual relationship with the owner
16-6 and has a lien as an original contractor, if:
16-7 (1) the owner contracted with the other person for the
16-8 construction or repair of a house, building, or improvement and the
16-9 owner can effectively control that person through ownership of
16-10 voting stock, interlocking directorships, or otherwise; or
16-11 (2) the owner contracted with the other person for the
16-12 construction or repair of a house, building, or improvement and the
16-13 contract was made without good faith intention of the parties that
16-14 the other person was to perform the contract.
16-15 (b) In this section, "owner" does not include a person who
16-16 has or claims a security interest only.
16-17 (Sections 62.056-62.080 reserved for expansion
16-18 SUBCHAPTER D. PROCEDURE FOR PERFECTING LIEN
16-19 Sec. 62.081. NECESSARY PROCEDURES. To perfect the lien, a
16-20 person must comply with this subchapter.
16-21 Sec. 62.082. FILING OF APPLICATION. (a) A person claiming
16-22 a lien in an amount of $5,000 or less must file an application for
16-23 lien in the justice court in the precinct in which the property is
16-24 located not later than the 60th day after the date of completion.
16-25 (b) A person claiming a lien in an amount of more than
16-26 $5,000 must file an application for lien with the county clerk of
16-27 the county in which the property is located not later than the 60th
17-1 day after the date of completion.
17-2 (c) The clerk of the court or the person fulfilling the
17-3 duties of the clerk of the court shall record the application in
17-4 records kept for that purpose and shall index and cross-index the
17-5 application in the names of the lien claimant, the original
17-6 contractor, and the owner.
17-7 Sec. 62.083. DATE OF COMPLETION. (a) For purposes of
17-8 Section 62.082, the date of completion is the first day after the
17-9 date that the owner, original contractor, or subcontractor:
17-10 (1) publishes a notice of completion stating that the
17-11 improvement has been completed or has been abandoned; and
17-12 (2) files with the county clerk of the county in which
17-13 the property is located:
17-14 (A) an affidavit verifying the publication of
17-15 the notice of completion; and
17-16 (B) a copy of the notice of completion.
17-17 (b) The notice of completion must be published once in a
17-18 newspaper of general circulation in the county in which the
17-19 property is located.
17-20 (c) The original contractor for the improvement may publish
17-21 the notice and file the affidavit only if:
17-22 (1) the contractor has requested in writing that the
17-23 owner publish the notice and file the affidavit; and
17-24 (2) the owner has failed to publish the notice and
17-25 file the affidavit within five days after the date the owner
17-26 received the written request.
17-27 (d) A subcontractor for the improvement may publish the
18-1 notice and file the affidavit only if:
18-2 (1) the subcontractor has requested in writing that
18-3 the original contractor publish the notice and file the affidavit
18-4 or request the owner to publish the notice and file the affidavit;
18-5 and
18-6 (2) the original contractor has failed to publish the
18-7 notice and file the affidavit or request the owner to publish the
18-8 notice and file the affidavit within five days after the date the
18-9 contractor received the written request.
18-10 (e) If a notice of completion is not published and filed
18-11 before the first anniversary of the date on which the improvement
18-12 is actually completed or abandoned, the date of completion for the
18-13 improvement is considered to be the first anniversary of the date
18-14 on which the improvement was completed or abandoned.
18-15 Sec. 62.084. NOTICE OF COMPLETION. (a) The notice of
18-16 completion must contain:
18-17 (1) the name and address of the owner;
18-18 (2) the name and address of the original contractor;
18-19 (3) a description, legally sufficient for
18-20 identification, of the real property on which the improvements are
18-21 located;
18-22 (4) a description of the improvements furnished under
18-23 the contract; and
18-24 (5) a statement that the improvements under the
18-25 original contract have been completed.
18-26 (b) The notice of completion is effective only if the
18-27 improvement has been substantially completed or the improvement has
19-1 been abandoned before the notice is published.
19-2 (c) The notice of completion is not an admission by the
19-3 owner or the original contractor that the improvement has been
19-4 satisfactorily completed.
19-5 (d) The county clerk shall record the notice of completion
19-6 in records kept for that purpose. Failure of the county clerk to
19-7 properly record the notice does not invalidate the notice.
19-8 Sec. 62.085. CONTENTS OF APPLICATION. (a) The application
19-9 must be signed by the person claiming the lien or by another person
19-10 on the claimant's behalf and must contain substantially:
19-11 (1) a sworn statement of the claim, including the
19-12 amount;
19-13 (2) the name of the owner or reputed owner;
19-14 (3) the name of any person with an interest in the
19-15 property;
19-16 (4) a general statement of the kind of work done and
19-17 materials furnished by the claimant;
19-18 (5) the name of the person by whom the claimant was
19-19 employed or to whom the claimant furnished the materials or labor;
19-20 (6) the name of the original contractor;
19-21 (7) a description, legally sufficient for
19-22 identification, of the property sought to be charged with the lien;
19-23 and
19-24 (8) the claimant's business address.
19-25 (b) The claimant may attach to the application a copy of any
19-26 applicable written agreement or contract.
19-27 (c) The application is not required to set forth individual
20-1 items of work done or material furnished or specially fabricated.
20-2 The application may use any abbreviations or symbols customary in
20-3 the trade.
20-4 Sec. 62.086. SERVICE OF NOTICE OF FILED APPLICATION. (a) A
20-5 copy of the application for lien shall be served in the manner
20-6 prescribed by law for the service of summons on:
20-7 (1) the owner of the property;
20-8 (2) each person who contracted for the improvements to
20-9 the property; and
20-10 (3) any person with a recorded interest in the
20-11 property.
20-12 (b) If a person entitled to notice cannot be served, notice
20-13 may be given to that person by posting notice on the improvement.
20-14 (c) The application is returnable not less than three or
20-15 more than 10 days after service.
20-16 Sec. 62.087. MEDIATION. (a) If an application for lien is
20-17 filed for an amount of $5,000 or less, the court may require the
20-18 parties to mediate the dispute.
20-19 (b) If the application for lien is filed for an amount of
20-20 more than $5,000, the court shall require the parties to mediate
20-21 the dispute before proceeding under this subchapter.
20-22 Sec. 62.088. HEARING. (a) After the application is
20-23 returned, the court shall set a hearing date to determine whether
20-24 probable cause exists to permit the lien to attach to the property.
20-25 (b) Any person who is required to receive notice is
20-26 permitted to offer testimony and documentary evidence on the issue
20-27 of whether probable cause exists to permit the lien to attach to
21-1 the property.
21-2 (c) If a person who contracted for the improvement from
21-3 which the requested lien arises claims a set-off against the
21-4 claimant or if any person who is required to receive notice
21-5 disputes the amount of the requested lien, the court shall receive
21-6 all evidence offered by that person.
21-7 Sec. 62.089. ORDER DIRECTING LIEN TO ATTACH. (a) The court
21-8 shall enter an order directing the lien to attach only if the court
21-9 determines that there is probable cause that the claim for the lien
21-10 is valid.
21-11 (b) An order issued under this section is valid only if the
21-12 application and notice were served on and the opportunity to appear
21-13 was provided to:
21-14 (1) the party contracting for the improvement;
21-15 (2) the original contractor; and
21-16 (3) the owner of the property.
21-17 (c) The court may not issue an order directing the lien to
21-18 attach to an owner's property if the owner presents evidence in the
21-19 form of disbursement statements provided under Section 62.023 and
21-20 the affidavit required under Section 62.024 that represents to the
21-21 owner that the lien claimant was paid.
21-22 (d) The order shall be filed with the county clerk in the
21-23 county in which the property is located.
21-24 Sec. 62.090. HOMESTEAD. (a) To fix a lien on a homestead,
21-25 the person who is to furnish material or perform labor and the
21-26 owner must execute a written contract setting forth the terms of
21-27 the agreement.
22-1 (b) The contract must be executed before the material is
22-2 furnished or the labor is performed.
22-3 (c) If the owner is married, the contract must be signed by
22-4 both spouses.
22-5 (d) The contract must be filed with the county clerk of the
22-6 county in which the homestead is located, who shall record it in
22-7 records kept for that purpose.
22-8 (e) If the contract is made and recorded by an original
22-9 contractor, the contract inures to the benefit of all persons who
22-10 labor or furnish material for the original contractor.
22-11 (f) An application for lien filed under this subchapter that
22-12 relates to a homestead must contain the following notice
22-13 conspicuously printed, stamped, or typed in a size equal to at
22-14 least 10-point boldface or computer equivalent, at the top of the
22-15 page:
22-16 "NOTICE: THIS IS NOT A LIEN. THIS IS ONLY AN APPLICATION
22-17 FOR A LIEN."
22-18 (g) For the lien on a homestead to be valid, the notice
22-19 required to be given to the owner under Section 62.086 must include
22-20 or have attached the following statement:
22-21 "If a subcontractor or supplier who furnishes materials or
22-22 performs labor for construction of improvements on your property is
22-23 not paid, your property may be subject to a lien for the unpaid
22-24 amount if after receiving notice of the application for lien, you
22-25 fail to withhold any remaining payment to your contractor that is
22-26 sufficient to cover the unpaid claim until the dispute is
22-27 resolved."
23-1 (Sections 62.091-62.110 reserved for expansion
23-2 SUBCHAPTER E. FUNDS WITHHELD BY OWNER FOLLOWING ORDER
23-3 Sec. 62.111. AUTHORITY TO WITHHOLD FUNDS FOR BENEFIT OF
23-4 CLAIMANTS. (a) The owner may withhold from payments to the
23-5 original contractor an amount necessary to pay the claim for which
23-6 a lien is ordered under Subchapter D.
23-7 (b) The owner may withhold the funds immediately on receipt
23-8 of notice of the order.
23-9 Sec. 62.112. TIME FOR WHICH FUNDS ARE WITHHELD. Unless the
23-10 claim is settled, discharged, indemnified against under Subchapter
23-11 H or I, or determined to be invalid by a final judgment of a court,
23-12 the owner shall retain the funds withheld until the lien claim has
23-13 been satisfied or released.
23-14 Sec. 62.113. PAYMENT TO CLAIMANT ON DEMAND. (a) The
23-15 claimant may make written demand for payment of the claim to an
23-16 owner authorized to withhold funds under this subchapter. The
23-17 demand must give notice to the owner that all or part of the claim
23-18 is past due according to the agreement between the parties.
23-19 (b) The claimant must send a copy of the demand to the
23-20 original contractor. The original contractor may give the owner
23-21 written notice that the contractor intends to dispute the claim.
23-22 The original contractor must give the notice not later than the
23-23 30th day after the date the contractor receives the copy of the
23-24 demand. If the original contractor does not give the owner timely
23-25 notice, the contractor is considered to have assented to the demand
23-26 and the owner shall pay the claim.
23-27 (c) The claimant's demand may accompany the original notice
24-1 of a past-due claim and may be stamped or written in legible form
24-2 on the face of the notice.
24-3 Sec. 62.114. OWNER'S LIABILITY. (a) The owner is not
24-4 liable for any amount paid to the original contractor before the
24-5 owner is authorized to withhold funds under this subchapter.
24-6 (b) The owner is liable and the owner's property is subject
24-7 to a claim for any money paid to the original contractor after the
24-8 owner was authorized to withhold funds under this subchapter.
24-9 (Sections 62.115-62.140 reserved for expansion
24-10 SUBCHAPTER F. PRIORITIES AND PREFERENCES
24-11 Sec. 62.141. PREFERENCE OVER OTHER CREDITORS. All
24-12 subcontractors, laborers, and materialmen who have a mechanic's
24-13 lien have preference over other creditors of the original
24-14 contractor.
24-15 Sec. 62.142. EQUALITY OF MECHANIC'S LIENS. (a) Perfected
24-16 mechanic's liens are on equal footing without reference to the date
24-17 of the order directing the lien.
24-18 (b) If the proceeds of a foreclosure sale of property are
24-19 insufficient to discharge all mechanic's liens against the
24-20 property, the proceeds shall be paid pro rata on the perfected
24-21 mechanic's liens on which suit is brought.
24-22 (c) This chapter does not affect the contract between the
24-23 owner and the original contractor as to the amount, manner, or time
24-24 of payment of the contract price.
24-25 Sec. 62.143. PRIORITY OF MECHANIC'S LIEN OVER OTHER LIENS.
24-26 (a) Except as provided by this section, a mechanic's lien attaches
24-27 to the house, building, or improvement in preference to any prior
25-1 lien, encumbrance, or mortgage on the land on which it is located,
25-2 and the person enforcing the lien may have the house, building, or
25-3 improvement sold separately.
25-4 (b) The mechanic's lien does not affect any lien,
25-5 encumbrance, or mortgage on the land or improvement at the time of
25-6 the inception of the mechanic's lien, and the holder of the lien,
25-7 encumbrance, or mortgage need not be made a party to a suit to
25-8 foreclose the mechanic's lien.
25-9 Sec. 62.144. INCEPTION OF MECHANIC'S LIEN. (a) For
25-10 purposes of Section 62.143, the time of inception of a mechanic's
25-11 lien is the commencement of construction of improvements or
25-12 delivery of materials to the land on which the improvements are to
25-13 be located and on which the materials are to be used.
25-14 (b) The construction or materials under Subsection (a) must
25-15 be visible from inspection of the land on which the improvements
25-16 are being made.
25-17 (c) An owner and original contractor may jointly file an
25-18 affidavit of commencement with the county clerk of the county in
25-19 which the land is located not later than the 30th day after the
25-20 date of actual commencement of construction of the improvements or
25-21 delivery of materials to the land. The affidavit must contain:
25-22 (1) the name and address of the owner;
25-23 (2) the name and address of each original contractor
25-24 that is known at the time to the owner and that is furnishing
25-25 labor, service, or materials for the construction of the
25-26 improvements;
25-27 (3) a description, legally sufficient for
26-1 identification, of the property being improved;
26-2 (4) the date the work actually commenced; and
26-3 (5) a general description of the improvement.
26-4 (d) An affidavit filed in compliance with this section is
26-5 prima facie evidence of the date of the commencement of the
26-6 improvement described in the affidavit. The time of inception of a
26-7 mechanic's lien arising from work described in an affidavit of
26-8 commencement is the date of commencement of the work stated in the
26-9 affidavit.
26-10 (Sections 62.145-62.170 reserved for expansion
26-11 SUBCHAPTER G. RELEASE AND FORECLOSURE; ACTION ON CLAIM
26-12 Sec. 62.171. ENFORCEMENT OF REMEDIES AGAINST MONEY DUE
26-13 ORIGINAL CONTRACTOR OR SUBCONTRACTOR. (a) A creditor of an
26-14 original contractor may not collect, enforce a security interest
26-15 against, garnish, or levy execution on the money due the original
26-16 contractor or the contractor's surety from the owner, and a
26-17 creditor of a subcontractor may not collect, enforce a security
26-18 interest against, garnish, or levy execution on the money due the
26-19 subcontractor, to the prejudice of the subcontractors, mechanics,
26-20 laborers, materialmen, or their sureties.
26-21 (b) A surety issuing a payment bond or performance bond in
26-22 connection with the improvements has a priority claim over other
26-23 creditors of its principal to contract funds to the extent of any
26-24 loss it suffers or incurs. That priority does not excuse the
26-25 surety from paying any obligations that it may have under its
26-26 payment bonds.
26-27 Sec. 62.172. RELEASE OF CLAIM OR LIEN. (a) When a debt for
27-1 labor or materials is satisfied or paid by collected funds, the
27-2 person who furnished the labor or materials shall, not later than
27-3 the 10th day after the date of receipt of a written request,
27-4 furnish to the requesting person a release of the indebtedness and
27-5 any lien claimed, to the extent of the indebtedness paid. An
27-6 owner, the original contractor, or any person making the payment
27-7 may request the release.
27-8 (b) A release of lien must be in a form that would permit it
27-9 to be filed of record.
27-10 Sec. 62.173. DEFENSE OF ACTIONS. If a court orders a lien
27-11 against the owner or the owner's property, the owner is entitled to
27-12 deduct the amount of the judgment and costs from any amount due the
27-13 original contractor. If the owner has settled with the original
27-14 contractor in full, the owner is entitled to recover from the
27-15 original contractor any amount paid for which the original
27-16 contractor was originally liable.
27-17 Sec. 62.174. FORECLOSURE. A mechanic's lien may be
27-18 foreclosed only on judgment of a court foreclosing the lien and
27-19 ordering the sale of the property subject to the lien.
27-20 Sec. 62.175. TRANSFER OF PROPERTY SOLD. If the house,
27-21 building, or improvement is sold separately, the officer making the
27-22 sale shall place the purchaser in possession. The purchaser is
27-23 entitled to a reasonable time after the date of purchase within
27-24 which to remove the purchased property.
27-25 Sec. 62.176. COSTS AND ATTORNEY'S FEES. In any proceeding
27-26 to foreclose a lien or to enforce a claim against a bond issued
27-27 under Subchapter H or I or in any proceeding to declare that any
28-1 lien or claim is invalid or unenforceable in whole or in part, the
28-2 court may award costs and reasonable attorney's fees as are
28-3 equitable and just.
28-4 Sec. 62.177. DISCHARGE OF LIEN. A mechanic's lien or
28-5 application for lien filed under Section 62.082 may be discharged
28-6 of record by:
28-7 (1) recording a lien release signed by the claimant
28-8 under Section 62.172;
28-9 (2) failing to institute suit to foreclose the lien in
28-10 the county in which the property is located within the period
28-11 prescribed by Section 62.178, 62.205, or 62.238;
28-12 (3) recording the original or certified copy of a
28-13 final judgment or decree of a court providing for the discharge;
28-14 (4) filing the bond, notice, and return in compliance
28-15 with Subchapter H; or
28-16 (5) filing the bond in compliance with Subchapter I.
28-17 Sec. 62.178. PERIOD FOR BRINGING SUIT TO FORECLOSE LIEN.
28-18 Suit must be brought to foreclose the lien not later than the 90th
28-19 day after the date the order directing the lien to attach is
28-20 issued.
28-21 Sec. 62.179. OBLIGATION TO FURNISH INFORMATION. (a) An
28-22 owner, on written request, shall furnish the following information
28-23 within a reasonable time, but not later than the 10th day after the
28-24 date the request is received, to any person furnishing labor or
28-25 materials for the project:
28-26 (1) a description of the real property being improved
28-27 legally sufficient to identify it;
29-1 (2) whether there is a surety bond and if so, the name
29-2 and last known address of the surety and a copy of the bond; and
29-3 (3) whether there are any prior recorded liens or
29-4 security interests on the real property being improved and if so,
29-5 the name and address of the person having the lien or security
29-6 interest.
29-7 (b) An original contractor, on written request by a person
29-8 who furnished work under the original contract, shall furnish to
29-9 the person the following information within a reasonable time, but
29-10 not later than the 10th day after the date the request is received:
29-11 (1) the name and last known address of the person to
29-12 whom the original contractor furnished labor or materials for the
29-13 construction project; and
29-14 (2) whether the original contractor has furnished or
29-15 has been furnished a payment bond for any of the work on the
29-16 construction project and if so, the name and last known address of
29-17 the surety and a copy of the bond.
29-18 (c) A subcontractor, on written request by an owner of the
29-19 property being improved, the original contractor, a surety on a
29-20 bond covering the original contract, or any person furnishing work
29-21 under the subcontract, shall furnish to the person the following
29-22 information within a reasonable time, but not later than the 10th
29-23 day after the date the request is received:
29-24 (1) the name and last known address of each person
29-25 from whom the subcontractor purchased labor or materials for the
29-26 construction project, other than those materials that were
29-27 furnished to the project from the subcontractor's inventory;
30-1 (2) the name and last known address of each person to
30-2 whom the subcontractor furnished labor or materials for the
30-3 construction project; and
30-4 (3) whether the subcontractor has furnished or has
30-5 been furnished a payment bond for any of the work on the
30-6 construction project and if so, the name and last known address of
30-7 the surety and a copy of the bond.
30-8 (d) Not later than the 30th day after the date a written
30-9 request is received from the owner, the contractor under whom a
30-10 claim of lien or under whom a bond is made, or a surety on a bond
30-11 on which a claim is made, a claimant for a lien or under a bond
30-12 shall furnish to the requesting person a copy of any applicable
30-13 written agreement, purchase order, or contract and any billing,
30-14 statement, or payment request of the claimant reflecting the amount
30-15 claimed and the work performed by the claimant for which the claim
30-16 is made. If requested, the claimant shall provide the estimated
30-17 amount due for each calendar month in which the claimant has
30-18 performed labor or furnished materials.
30-19 (e) If a person from whom information is requested does not
30-20 have a direct contractual relationship on the project with the
30-21 person requesting the information, the person from whom information
30-22 is requested, other than a claimant requested to furnish
30-23 information under Subsection (d), may require payment of the actual
30-24 costs, not to exceed $25, in furnishing the requested information.
30-25 (f) A person, other than a claimant requested to furnish
30-26 information under Subsection (d), who fails to furnish information
30-27 as required by this section is liable to the requesting person for
31-1 that person's reasonable and necessary costs incurred in procuring
31-2 the requested information.
31-3 (Sections 62.180-62.200 reserved for expansion
31-4 SUBCHAPTER H. BOND TO INDEMNIFY AGAINST LIEN
31-5 Sec. 62.201. BOND. (a) If a lien, other than a lien
31-6 granted by the owner in a written contract, is fixed or is
31-7 attempted to be fixed by a recorded instrument under this chapter,
31-8 any person may file a bond to indemnify against the lien.
31-9 (b) The bond shall be filed with the county clerk of the
31-10 county in which the property subject to the lien is located.
31-11 Sec. 62.202. BOND REQUIREMENTS. The bond must:
31-12 (1) describe the property on which the liens are
31-13 claimed;
31-14 (2) refer to each lien claimed in a manner sufficient
31-15 to identify it;
31-16 (3) be in an amount that is double the amount of the
31-17 liens referred to in the bond unless the total amount claimed in
31-18 the liens exceeds $40,000, in which case the bond must be in an
31-19 amount that is the greater of one and one-half times the amount of
31-20 the liens or the sum of $40,000 and the amount of the liens;
31-21 (4) be payable to the parties claiming the liens;
31-22 (5) be executed by:
31-23 (A) the party filing the bond as principal; and
31-24 (B) a corporate surety authorized and admitted
31-25 to do business under the law in this state and licensed by this
31-26 state to execute the bond as surety; and
31-27 (6) be conditioned substantially that the principal
32-1 and sureties will pay to the named obligees or to their assignees
32-2 the amount that the named obligees would have been entitled to
32-3 recover if their claims had been proved to be valid and enforceable
32-4 liens on the property.
32-5 Sec. 62.203. NOTICE OF BOND. (a) After the bond is filed,
32-6 the county clerk shall issue notice of the bond to all named
32-7 obligees.
32-8 (b) A copy of the bond must be attached to the notice.
32-9 (c) The notice may be served on each obligee by having a
32-10 copy delivered to the obligee by any means authorized for the
32-11 service of an original petition under the Texas Rules of Civil
32-12 Procedure.
32-13 (d) The original notice shall be returned to the office of
32-14 the county clerk, and the person making service of copies shall
32-15 make an oath on the back of the copies showing on whom and on what
32-16 date the copies were served.
32-17 Sec. 62.204. RECORDING OF BOND AND NOTICE. (a) The county
32-18 clerk shall record the bond, notice, and return in the real
32-19 property records.
32-20 (b) In acquiring an interest in or insuring title to real
32-21 property, a purchaser, insurer of title, or lender may rely on and
32-22 is absolutely protected by the record of the bond, notice, and
32-23 return to the same extent as if the lien claimant had filed a
32-24 release of lien in the real property records.
32-25 Sec. 62.205. ACTION ON BOND. (a) A party making or holding
32-26 a lien claim may not sue on the bond later than one year after the
32-27 date on which the notice is served or after the date on which the
33-1 underlying lien claim becomes unenforceable under Section 62.178.
33-2 (b) The bond is not exhausted by one action against it.
33-3 Each named obligee or assignee of an obligee may maintain a
33-4 separate suit on the bond in any court of jurisdiction.
33-5 (Sections 62.206-62.230 reserved for expansion
33-6 SUBCHAPTER I. BOND TO PAY LIENS OR CLAIMS
33-7 Sec. 62.231. BOND. (a) An original contractor who has a
33-8 written contract with the owner may furnish a bond for the benefit
33-9 of claimants.
33-10 (b) If a valid bond is filed, a claimant may not file suit
33-11 against the owner or the owner's property and the owner is relieved
33-12 of obligations under Subchapter E.
33-13 Sec. 62.232. BOND REQUIREMENTS. The bond must:
33-14 (1) be in a penal sum at least equal to the total of
33-15 the original contract amount;
33-16 (2) be in favor of the owner;
33-17 (3) have the written approval of the owner endorsed on
33-18 it;
33-19 (4) be executed by:
33-20 (A) the original contractor as principal; and
33-21 (B) a corporate surety authorized and admitted
33-22 to do business in this state and licensed by this state to execute
33-23 bonds as surety; and
33-24 (5) be conditioned on prompt payment for all labor,
33-25 subcontracts, materials, specially fabricated materials, and normal
33-26 and usual extras not exceeding 15 percent of the contract price.
33-27 Sec. 62.233. RECORDING OF BOND AND CONTRACT. (a) The bond
34-1 and the contract between the original contractor and the owner
34-2 shall be filed with the county clerk of the county in which is
34-3 located all or part of the owner's property on which the
34-4 construction or repair is being performed or is to be performed. A
34-5 memorandum of the contract or a copy of the contract may be
34-6 substituted for the original.
34-7 (b) The plans, specifications, and general conditions of the
34-8 contract are not required to be filed.
34-9 (c) The county clerk shall record the bond and place the
34-10 contract on file in the clerk's office and shall index and
34-11 cross-index both in the names of the original contractor and the
34-12 owner in records kept for that purpose.
34-13 (d) On request and payment of a reasonable fee, the county
34-14 clerk shall furnish a copy of the bond and contract to any person.
34-15 (e) In any court of this state or in the United States, a
34-16 copy of the bond and contract certified by the county clerk
34-17 constitutes prima facie evidence of the contents, execution,
34-18 delivery, and filing of the originals.
34-19 Sec. 62.234. RELIANCE ON RECORD. A purchaser, lender, or
34-20 other person acquiring an interest in the owner's property or an
34-21 insurer of title is entitled to rely on the record of the bond and
34-22 contract as constituting payment of all claims and liens for labor,
34-23 subcontracts, materials, or specially fabricated materials incurred
34-24 by the original contractor as if the purchaser, lender, or other
34-25 person acquiring an interest in the owner's property or an insurer
34-26 of title were the owner who approved, accepted, and endorsed the
34-27 bond and as if each person furnishing labor or materials for the
35-1 work performed under the original contract, other than the original
35-2 contractor, had filed a complete release and relinquishment of lien
35-3 of record.
35-4 Sec. 62.235. ENFORCEABLE CLAIMS. (a) The bond protects all
35-5 persons with a claim that is:
35-6 (1) perfected in the manner prescribed for fixing a
35-7 lien under Subchapter D; or
35-8 (2) perfected in the manner prescribed by Section
35-9 62.236.
35-10 (b) A claim or the rights to a claim under the bond may be
35-11 assigned.
35-12 Sec. 62.236. PERFECTION OF CLAIM. (a) To perfect a claim
35-13 against a bond in a manner other than that prescribed by Subchapter
35-14 D for fixing a lien, a person must provide written notice to the
35-15 original contractor and the surety not later than the 15th day
35-16 after the date the person submits a written request under Section
35-17 28.002.
35-18 (b) The notice must be sent by registered or certified mail
35-19 and must be addressed to the original contractor or surety, as
35-20 applicable, at the last known business or residence address.
35-21 (c) A copy of the statement or billing in the usual and
35-22 customary form is sufficient as notice under this section.
35-23 Sec. 62.237. OWNER'S NOTICE OF CLAIM TO SURETY. (a) If the
35-24 owner receives a notice under Section 62.086 or a lien is fixed
35-25 under Subchapter D, the owner shall mail to the surety on the bond
35-26 a copy of all notices received.
35-27 (b) Failure of the owner to send copies of notices to the
36-1 surety does not relieve the surety of any liability under the bond
36-2 if the claimant has complied with the requirements of this
36-3 subchapter, nor does that failure impose any liability on the
36-4 owner.
36-5 Sec. 62.238. ACTION ON BOND. (a) A claimant may sue the
36-6 principal and surety on the bond either jointly or severally, if
36-7 his claim remains unpaid for 60 days after the claimant perfects
36-8 the claim.
36-9 (b) The claimant may sue for the amount of the claim and
36-10 court costs.
36-11 (c) The suit must be brought in the county in which the
36-12 property being improved is located.
36-13 (d) If the bond is recorded at the time the lien is filed,
36-14 the claimant must sue on the bond within one year following
36-15 perfection of his claim. If the bond is not recorded at the time
36-16 the lien is filed, the claimant must sue on the bond within two
36-17 years following perfection of his claim.
36-18 Sec. 62.239. CLAIMS IN EXCESS OF BOND AMOUNT. If valid
36-19 claims against the bond exceed the penal sum of the bond, each
36-20 claimant is entitled to a pro rata share of the penal sum.
36-21 Sec. 62.240. ATTEMPTED COMPLIANCE. (a) A bond shall be
36-22 construed to comply with this subchapter, and the rights and
36-23 remedies on the bond are enforceable in the same manner as on other
36-24 bonds under this subchapter, if the bond:
36-25 (1) is furnished and filed in attempted compliance
36-26 with this subchapter; or
36-27 (2) evidences by its terms intent to comply with this
37-1 subchapter.
37-2 (b) Any provision in any payment bond furnished or filed in
37-3 attempted compliance with this subchapter that expands or restricts
37-4 the rights or liabilities provided under this chapter shall be
37-5 disregarded, and the provisions of this subchapter shall be read
37-6 into that bond.
37-7 SECTION 15. Section 162.001, Property Code, is amended by
37-8 adding Subsection (c) to read as follows:
37-9 (c) If a contractor and property owner have entered into a
37-10 written construction contract for the improvement of specific real
37-11 property in this state before the commencement of construction of
37-12 the improvement and the contract provides for the payment by the
37-13 owner of the costs of construction and a reasonable fee specified
37-14 in the contract payable to the contractor, the fee paid to the
37-15 contractor is not considered trust funds.
37-16 SECTION 16. Section 162.003, Property Code, is amended to
37-17 read as follows:
37-18 Sec. 162.003. BENEFICIARIES OF TRUST FUNDS. An artisan
37-19 [artist], laborer, mechanic, contractor, subcontractor, or
37-20 materialman who labors or who furnishes labor or material for the
37-21 construction or repair of an improvement on specific real property
37-22 in this state is a beneficiary of any trust funds paid or received
37-23 in connection with the improvement.
37-24 SECTION 17. Section 162.005, Property Code, is amended to
37-25 read as follows:
37-26 Sec. 162.005. DEFINITIONS. In this chapter:
37-27 (1) A trustee acts with "intent to defraud" when the
38-1 trustee:
38-2 (A) [he] retains, uses, disburses, or diverts
38-3 trust funds with the intent to deprive the beneficiaries of the
38-4 trust funds;
38-5 (B) retains, uses, disburses, or diverts trust
38-6 funds and fails to establish or maintain a construction account as
38-7 required by Section 162.006 or fails to establish or maintain an
38-8 account record for the construction account as required by Section
38-9 162.007; or
38-10 (C) uses, disburses, or diverts trust funds that
38-11 were paid to the trustee in reliance on an affidavit furnished by
38-12 the trustee under Section 53.085 or 62.024 if the affidavit
38-13 contains false information relating to the trustee's payment of
38-14 current or past due obligations.
38-15 (2) "Current or past due obligations" are those
38-16 obligations incurred or owed by the trustee for labor or materials
38-17 furnished in the direct prosecution of the work under the
38-18 construction contract prior to the receipt of the trust funds and
38-19 which are due and payable by the trustee no later than 30 days
38-20 following receipt of the trust funds.
38-21 (3) "Direct cost" means a cost included under a
38-22 construction contract that is specific to the construction of the
38-23 improvement that is the subject of the contract.
38-24 (4) "Indirect cost" means a cost included under a
38-25 construction contract that is not specific to the construction of
38-26 the improvement that is the subject of the contract.
38-27 (5) "Financial institution" means a bank, trust
39-1 company, insurance company, credit union, savings and loan
39-2 association, investment trust, investment company, or any other
39-3 organization held out to the public as a place for deposit of funds
39-4 or medium of savings or collective investment.
39-5 (6) "Construction account" means an account in a
39-6 financial institution into which only trust funds and funds
39-7 deposited by the contractor that are necessary to pay charges
39-8 imposed on the account by the financial institution may be
39-9 maintained.
39-10 SECTION 18. Subchapter A, Chapter 162, Property Code, is
39-11 amended by adding Sections 162.006 and 162.007 to read as follows:
39-12 Sec. 162.006. CONSTRUCTION ACCOUNT REQUIRED IN CERTAIN
39-13 CIRCUMSTANCES. (a) A contractor who agrees with a property owner
39-14 to construct improvements to a residential homestead for an amount
39-15 exceeding $5,000 shall deposit the trust funds received from the
39-16 owner in a construction account in a financial institution.
39-17 (b) The periodic statement received from the financial
39-18 institution must refer to the account as a "construction account"
39-19 to satisfy the requirements of this section.
39-20 Sec. 162.007. MANAGEMENT OF CONSTRUCTION ACCOUNTS. (a) A
39-21 contractor required to maintain a construction account under this
39-22 subchapter shall maintain an account record for the construction
39-23 account that provides information relating to:
39-24 (1) the source and amount of the funds in the account
39-25 and the date the funds were deposited;
39-26 (2) the date and amount of each disbursement from the
39-27 account and the person to whom the funds were disbursed; and
40-1 (3) the current balance of the account.
40-2 (b) The contractor shall maintain an account record for each
40-3 construction project that specifies the direct costs and indirect
40-4 costs charged to the owner.
40-5 (c) The contractor shall retain all invoices and other
40-6 supporting documentation received relating to funds that were
40-7 disbursed from the construction account.
40-8 (d) The contractor shall ensure that all deposit and
40-9 disbursement documentation includes the construction account number
40-10 or information that provides a direct connection between the
40-11 documentation and the account.
40-12 (e) The contractor may not destroy information required to
40-13 be maintained under this section before the first anniversary of
40-14 the date the improvement that is the subject of the contract is
40-15 completed.
40-16 SECTION 19. Section 162.032, Property Code, is amended by
40-17 adding Subsection (c) to read as follows:
40-18 (c) A trustee who fails to establish or maintain a
40-19 construction account in violation of Section 162.006 or fails to
40-20 establish or maintain an account record for the construction
40-21 account in violation of Section 162.007 commits a Class A
40-22 misdemeanor.
40-23 SECTION 20. Section 53.059, Property Code, is repealed.
40-24 SECTION 21. (a) This Act takes effect September 1, 1997.
40-25 (b) The changes in law made by this Act apply only to a
40-26 construction contract entered into on or after September 1, 1997,
40-27 and funds received under a construction contract entered into on or
41-1 after September 1, 1997. A construction contract entered into
41-2 before September 1, 1997, or funds received under a construction
41-3 contract entered into before September 1, 1997, are governed by the
41-4 law as it existed immediately before September 1, 1997, and that
41-5 law is continued in effect for this purpose.
41-6 SECTION 22. The importance of this legislation and the
41-7 crowded condition of the calendars in both houses create an
41-8 emergency and an imperative public necessity that the
41-9 constitutional rule requiring bills to be read on three several
41-10 days in each house be suspended, and this rule is hereby suspended.