By Wohlgemuth H.B. No. 2869
75R7191 DLF-F
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 Subsection (c) 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
1-24 either, or both, or possess any other qualification and all courts,
2-1 judges, heads of departments, boards, bodies, municipalities, and
2-2 public officers of every character shall accept and treat such
2-3 bond, undertaking, obligation, recognizance or guarantee when so
2-4 executed by such company, as conforming to, and fully and
2-5 completely complying with, every requirement of every such law,
2-6 charter, ordinance, rule or regulation.
2-7 Provided, however, that any municipality may require in any
2-8 specifications for work or supplies, on which sealed bids are
2-9 required, that any corporate surety tender shall designate, in a
2-10 manner satisfactory to it, an agent resident in the county of such
2-11 municipality to whom any requisite notices may be delivered and on
2-12 whom service of process may be had in matters arising out of such
2-13 suretyship.
2-14 (c) A bond that is made, given, tendered, or filed under
2-15 Subchapter H, I, or J, Chapter 53, Property Code, or Chapter 2253,
2-16 Government Code, may be executed only by a surety company that is
2-17 the holder of a certificate of authority from the United States
2-18 secretary of the treasury to qualify as a surety on obligations
2-19 permitted or required under federal law.
2-20 SECTION 2. Sections 53.172, 53.202, and 53.237, Property
2-21 Code, are amended to read as follows:
2-22 Sec. 53.172. Bond Requirements. The bond must:
2-23 (1) describe the property on which the liens are
2-24 claimed;
2-25 (2) refer to each lien claimed in a manner sufficient
2-26 to identify it;
2-27 (3) be in an amount that is double the amount of the
3-1 liens referred to in the bond unless the total amount claimed in
3-2 the liens exceeds $40,000, in which case the bond must be in an
3-3 amount that is the greater of 1 1/2 times the amount of the liens
3-4 or the sum of $40,000 and the amount of the liens;
3-5 (4) be payable to the parties claiming the liens;
3-6 (5) be executed by:
3-7 (A) the party filing the bond as principal; and
3-8 (B) a corporate surety authorized and admitted
3-9 to do business under the law in this state and licensed by this
3-10 state to execute the bond as surety, subject to Section 1(c),
3-11 Chapter 87, Acts of the 56th Legislature, Regular Session, 1959
3-12 (Article 7.19-1, Vernon's Texas Insurance Code); and
3-13 (6) be conditioned substantially that the principal
3-14 and sureties will pay to the named obligees or to their assignees
3-15 the amount that the named obligees would have been entitled to
3-16 recover if their claims had been proved to be valid and enforceable
3-17 liens on the property.
3-18 Sec. 53.202. Bond Requirements. The bond must:
3-19 (1) be in a penal sum at least equal to the total of
3-20 the original contract amount;
3-21 (2) be in favor of the owner;
3-22 (3) have the written approval of the owner endorsed on
3-23 it;
3-24 (4) be executed by:
3-25 (A) the original contractor as principal; and
3-26 (B) a corporate surety authorized and admitted
3-27 to do business in this state and licensed by this state to execute
4-1 bonds as surety, subject to Section 1(c), Chapter 87, Acts of the
4-2 56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's
4-3 Texas Insurance Code); and
4-4 (5) be conditioned on prompt payment for all labor,
4-5 subcontracts, materials, specially fabricated materials, and normal
4-6 and usual extras not exceeding 15 percent of the contract price.
4-7 Sec. 53.237. Bond Requirements. The bond must be:
4-8 (1) in an amount double the amount of the claims
4-9 filed;
4-10 (2) payable to the claimants;
4-11 (3) executed by:
4-12 (A) the party filing the bond as principal; and
4-13 (B) a corporate surety authorized, admitted to
4-14 do business, and licensed by the law of this state to execute the
4-15 bond as surety, subject to Section 1(c), Chapter 87, Acts of the
4-16 56th Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's
4-17 Texas Insurance Code); and
4-18 (4) conditioned that:
4-19 (A) the principal and surety will pay to the
4-20 obligees named or to their assignees the amount of the claims or
4-21 the portions of the claims proved to be liens under this
4-22 subchapter; and
4-23 (B) the principal and surety will pay all court
4-24 costs adjudged against the principal in actions brought by a
4-25 claimant on the bond.
4-26 SECTION 3. Section 2253.001(4), Government Code, is amended
4-27 to read as follows:
5-1 (4) "Public work contract" means a contract for
5-2 constructing, altering, or repairing a public building or carrying
5-3 out or completing any public work. The term includes a contract
5-4 for constructing, altering, or repairing a public building or
5-5 carrying out or completing any public work in which an insurance
5-6 company is fulfilling its obligation under a contract of insurance
5-7 by arranging for the replacement of a loss rather than making a
5-8 cash payment directly to the governmental entity.
5-9 SECTION 4. This Act takes effect September 1, 1997, and
5-10 applies only to a bond made, given, tendered, or filed on or after
5-11 that date. A bond made, given, tendered, or filed before the
5-12 effective date of this Act is governed by the law as it existed
5-13 immediately before the effective date of this Act, and that law is
5-14 continued in effect for that purpose.
5-15 SECTION 5. 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.