By Wentworth                                          S.B. No. 1274
         76R8788 PAM-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certain procedures involving retainage payments to real
 1-3     property construction subcontractors.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter A, Chapter 53, Property Code, is
 1-6     amended by adding Section 53.004 to read as follows:
 1-7           Sec. 53.004. RETAINAGE.  (a)  A person contracting with a
 1-8     subcontractor to perform labor or furnish labor, materials, or
 1-9     specially fabricated materials under or by virtue of a contract
1-10     with the owner or the owner's agent, trustee, receiver, contractor,
1-11     or subcontractor may not require the subcontractor to execute an
1-12     agreement providing for retainage in a percentage greater than the
1-13     retainage percentage in the original contract.
1-14           (b)  Any retainage withheld as provided by this chapter
1-15     accrues interest at six percent each year payable to the person
1-16     entitled to receive the retained funds.
1-17           SECTION 2.  Section 53.081(c), Property Code, is amended to
1-18     read as follows:
1-19           (c)  If notice is sent under Section 53.057 or 53.252(c), the
1-20     owner may withhold funds immediately on receipt of [a copy of] the
1-21     notice [claimant's affidavit prepared in accordance with Sections
1-22     53.052 through 53.055].
1-23           SECTION 3.  Section 53.103, Property Code, is amended to read
1-24     as follows:
 2-1           Sec. 53.103.  LIEN ON RETAINED FUNDS.  (a) Except as provided
 2-2     by Subsection (b), a [A] claimant has a lien on the retained funds
 2-3     if the claimant:
 2-4                 (1)  sends the notices required by this chapter in the
 2-5     time and manner required; and
 2-6                 (2)  files an affidavit claiming a lien not later than
 2-7     the 30th day after the work is completed.
 2-8           (b)  If a claimant sends notice under Section 53.057 or
 2-9     53.252(c), the claimant has a lien on retained funds.
2-10           SECTION 4.  Section 53.252(c), Property Code, is amended to
2-11     read as follows:
2-12           (c)  To authorize the owner to withhold funds under
2-13     Subchapter D, [the] notice must be sent as provided by Section
2-14     53.057, if applicable, and the notice to the owner must state that
2-15     if the claim remains unpaid, the owner may be personally liable and
2-16     the owner's property may be subjected to a lien unless:
2-17                 (1)  the owner withholds payments from the contractor
2-18     for payment of the claim; or
2-19                 (2)  the claim is otherwise paid or settled.
2-20           SECTION 5.  (a)  This Act takes effect September 1, 1999.
2-21           (b)  The changes in law made by this Act apply only to
2-22     matters relating to or claims arising under an original contract,
2-23     as that term is defined by Section 53.001, Property Code, that is
2-24     executed or after September 1, 1999.  Matters relating to or claims
2-25     arising under an original contract that was executed before
2-26     September 1, 1999, are governed by the law as it existed on the
2-27     date the original contract was executed, and the former law is
 3-1     continued in effect for that purpose.