By:  Wentworth                                        S.B. No. 1274
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to certain procedures involving retainage payments to real
 1-2     property construction subcontractors.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter A, Chapter 53, Property Code, is
 1-5     amended by adding Section 53.004 to read as follows:
 1-6           Sec. 53.004.  RETAINAGE.  (a)  Any retainage withheld accrues
 1-7     interest at two points below the prime rate payable to the person
 1-8     entitled to receive the retained funds.  Any retainage withheld
 1-9     after the 45th day after the date work is completed, as defined by
1-10     Section 53.106, accrues interest at 1-1/2 percent each month
1-11     payable to the person entitled to receive the retained funds.  In
1-12     this subsection, "prime rate" means the interest rate prevailing in
1-13     the market as published by reputable public sources on the date the
1-14     work commences.
1-15           (b)  Interest on retained funds stops accruing under this
1-16     section on the earlier of:
1-17                 (1)  the date the funds are delivered;
1-18                 (2)  the date the funds are mailed, if the funds are
1-19     delivered not later than the third day after the date the funds are
1-20     mailed; or
1-21                 (3)  the date a judgment is entered in an action
1-22     brought to recover the retained funds.
1-23           SECTION 2.  (a)  This Act takes effect September 1, 1999.
1-24           (b)  The changes in law made by this Act apply only to
 2-1     matters relating to or claims arising under an original contract,
 2-2     as that term is defined by Section 53.001, Property Code, that is
 2-3     executed on or after September 1, 1999.  Matters relating to or
 2-4     claims arising under an original contract that was executed before
 2-5     September 1, 1999, are governed by the law as it existed on the
 2-6     date the original contract was executed, and the former law is
 2-7     continued in effect for that purpose.
 2-8           SECTION 3.  The importance of this legislation and the
 2-9     crowded condition of the calendars in both houses create an
2-10     emergency and an imperative public necessity that the
2-11     constitutional rule requiring bills to be read on three several
2-12     days in each house be suspended, and this rule is hereby suspended.