Amend HB 1522 by striking all below the enacting clause and
substituting the following:
SECTION 1. Section 28.002, Property Code, is amended to read
as follows:
Sec. 28.002. PROMPT PAY REQUIRED. (a) If an owner or a
person authorized to act on behalf of the owner receives a written
payment request from a contractor for an amount that is allowed to
the contractor under the contract for properly performed work or
suitably stored or specially fabricated materials, the owner shall
pay the amount to the contractor, less any amount withheld as
authorized by statute <statutory offsets>, not later than the 35th
<45th> day after the date the owner receives the request.
(b) A contractor who receives a payment under Subsection (a)
or otherwise from an owner in connection with a contract to improve
real property shall pay each of its subcontractors the portion of
the owner's payment, including interest, if any, that is
attributable to work properly performed or materials suitably
stored or specially fabricated as provided under the contract by
that subcontractor <if payment for stored materials is provided
for in the contract>, to the extent of that subcontractor's
interest in the owner's payment. The payment required by this
subsection must be made not later than the seventh day after the
date the contractor receives the owner's payment.
(c) A subcontractor who receives a payment under Subsection
(b) or otherwise from a contractor in connection with a contract
to improve real property shall pay each of its subcontractors the
portion of the payment, including interest, if any, that is
attributable to work properly performed or materials suitably
stored or specially fabricated as provided under the contract by
that subcontractor <if payment for stored materials is provided
for in the contract>, to the extent of that subcontractor's
interest in the payment. The payment required by this subsection
must be made not later than the seventh day after the date the
subcontractor receives the contractor's payment.
SECTION 2. Section 28.003, Property Code, is amended to read
as follows:
Sec. 28.003. EXCEPTION FOR GOOD FAITH DISPUTE; WITHHOLDING.
(a) If a good faith dispute exists concerning the amount owed for
a payment requested or required by this chapter under a contract
for construction of or improvements to a detached single-family
residence, duplex, triplex, or quadruplex, the owner, contractor,
or subcontractor that is disputing its obligation to pay or the
amount of payment may withhold from the payment owed not more than
110 percent of the difference between the amount the obligee claims
is due and the amount the obligor claims is due. A good faith
dispute includes a dispute regarding whether the work was performed
in a proper manner.
(b) If a good faith dispute exists concerning the amount
owed for a payment requested or required by this chapter under a
contract for construction of or improvements to real property,
excluding a detached single-family residence, duplex, triplex, or
quadruplex, the owner, contractor, or subcontractor that is
disputing its obligation to pay or the amount of payment may
withhold from the payment owed not more than 100 percent of the
difference between the amount the obligee claims is due and the
amount the obligor claims is due. A good faith dispute includes a
dispute regarding whether the work was performed in a proper
manner.
SECTION 3. Section 28.008, Property Code, is amended to read
as follows:
Sec. 28.008. EXCEPTION FOR FAILURE OF LENDER TO DISBURSE
FUNDS. The date of payment required of the owner pursuant to
Section 28.002(a) shall change from the 35th <45th> day after the
date the owner receives the payment request to the fifth <5th> day
after the date the owner receives loan proceeds, in the event that:
(1) the owner has obtained a loan intended to pay for
all or part of a contract to improve real property;
(2) the owner has timely and properly requested
disbursement of proceeds from that loan; and
(3) the lender is legally obligated to disburse such
proceeds to the owner, but has failed to do so within 35 <45> days
after the date the owner received the contractor's payment request.
SECTION 4. Chapter 28, Property Code, is amended by adding
Sections 28.009 and 28.010 to read as follows:
Sec. 28.009. RIGHT TO SUSPEND WORK. (a) If an owner fails
to pay the contractor the undisputed amount within the time limits
provided by this chapter, the contractor or any subcontractor may
suspend contractually required performance the 10th day after the
date the contractor or subcontractor gives the owner and the
owner's lender written notice:
(1) informing the owner and lender that payment has
not been received; and
(2) stating the intent of the contractor or
subcontractor to suspend performance for nonpayment.
(b) For purposes of Subsection (a), the contractor or
subcontractor must give the owner's lender the written notice only
if:
(1) the owner has obtained a loan intended to pay for
all or part of the construction project;
(2) the lender has remitted funds, including
acquisition funds, for construction purposes;
(3) the loan obtained:
(A) is evidenced by a promissory note secured by
a deed of trust recorded in the real property records of the county
in which the real property that is the subject of the contract is
located; and
(B) is not only for the acquisition of personal
property or secured only by a security instrument;
(4) the owner or lender, at the lender's option:
(A) securely posts not later than the 10th day
after the date construction commences a sign on the project site in
a prominent place accessible to each contractor, subcontractor,
and supplier that states the lender's name, address, and the person
to whom any notice should be sent; and
(B) maintains the sign during the pendency of
the construction project;
(5) not later than the 10th day after the date
construction commences, the owner or lender, at the lender's
option, provides a written copy of the notice prescribed by
Subdivision (4) to the contractor and any subcontractor or
supplier identified by the contractor by depositing the notice
properly addressed in the United State mail, first class, postage
paid; and
(6) not later than the 10th day after the date a
subcontractor or supplier performing labor or furnishing materials
or equipment for the construction project, the owner, contractor,
or subcontractor provides a written copy of the notice prescribed
by Subdivision (4) to the subcontractor or supplier.
(c) A contractor or subcontractor who suspends performance
as provided by this section is not:
(1) required to supply further labor, services, or
materials until the person is paid the amount provided by this
chapter, plus costs for demobilization and remobilization; or
(2) responsible for damages resulting from suspending
work if the contractor or subcontractor has not been notified in
writing before suspending performance that payment has been made or
that a good faith dispute for payment exists.
(d) A notification that a good faith dispute for payment
exists provided under Subsection (c) must include a list of
specific reasons for nonpayment. If a reason specified includes
labor, services, or materials provided by a subcontractor that are
not provided in compliance with the contract, the subcontractor is
entitled to a reasonable opportunity to:
(1) cure the listed items; or
(2) offer a reasonable amount to compensate for listed
items that cannot be promptly cured.
(e) This section does not apply to:
(1) a contract for the construction of or improvements
to a detached single-family residence, duplex, triplex, or
quadruplex; or
(2) a contract to improve real property for a
governmental entity.
(f) The rights and remedies provided by this section are in
addition to rights and remedies provided by this chapter or other
law.
Sec. 28.010. EXEMPTION FOR MINERAL DEVELOPMENT AND OILFIELD
SERVICES. (a) This chapter does not apply to any agreement:
(1) to explore, produce, or develop oil, natural gas,
natural gas liquids, synthetic gas, sulphur, ore, or other mineral
substances, including any lease or royalty agreement, joint
interest agreement, production or production-related agreement,
operating agreement, farmout agreement, area of mutual interest
agreement, or other related agreement;
(2) for any well or mine services; or
(3) to purchase, sell, gather, store, or transport
oil, natural gas, natural gas liquids, synthetic gas, or other
hydrocarbon substances by pipeline or by a fixed, associated
facility.
(b) In this section:
(1) "Agreement" includes a written or oral agreement
or understanding:
(A) to provide work or services, including any
contruction, operating, repair, or maintenance services; or
(B) to perform a part of the services covered by
Paragraph (A) or an act collateral to those services, including
furnishing or renting equipment, incidental transportation, or
other goods and services furnished in connection with those
services.
(2) "Well or mine services" includes:
(A) drilling, deepening, reworking, repairing,
improving, testing, treating, perforating, acidizing, logging,
conditioning, purchasing, gathering, storing, or transporting oil
or natural gas, brine water, fresh water, produced water,
condensate, petroleum products, or other liquid commodities, or
otherwise rendering services in connection with a well drilled to
produce or dispose of oil, gas, or other minerals or water; and
(B) designing, excavating, constructing,
improving, or otherwise rendering services in connection with an
oil, gas, or other mineral production platform or facility, mine
shaft, drift, or other structure intended directly for use in
exploring for or producing a mineral.
SECTION 5. (a) This Act takes effect September 1, 1999.
(b) The changes in law made by this Act apply only to a
contract or agreement involving work performed on real property by
a contractor or subcontractor that is entered into on or after the
effective date of this Act. A contract or agreement entered into
before the effective date of this Act is governed by the law in
effect when the contract was entered into, and the former law is
continued in effect for that purpose.
SECTION 6. The importance of this legislation and the crowded
condition of the calendars in both houses create an emergency and
an imperative public necessity that the constitutional rule
requiring bills to be read on three several days in each house be
suspended, and this rule is hereby suspended.