Office of House Bill AnalysisH.B. 2056
By: Coleman
Business & Industry


Historically, general contractors in Texas who have a direct contractual
relationship with an owner of property on which a structure is to be built
have had three options available to them to secure payment for labor and
materials.  The first is a statutory lien, which some consider somewhat
complicated, which requires that notices with specific wording be sent to
the owner within a specific time period.  The second option is a
contractual lien, which is based on the terms of the contract between the
owner and the general contractor.  The third option is the constitutional
lien, which is created merely by the execution of a contract between the
owner and the builder and requires no specific contractual provisions or
separate notices or filings of any kind.  Contractual and constitutional
liens require an enforceable contract with property owners, while statutory
liens are remedies provided by statute.  Statutory liens are also the only
recourse for subcontractors who are seeking to secure payment for services
rendered.  Recent additions to law governing statutory liens may have made
it unclear as to whether the ability of a general contractor to obtain a
contractual or constitutional lien has been affected.  Additionally,
current law does not protect purchasers or owners of real property from
having a lien placed on their property for the nonpayment by a seller or
general contractor of labor and materials.  House Bill 2056 clarifies
existing law to specify that a general contractor's ability to obtain a
lien is not affected and provides this protection to purchasers and owners. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 2056 amends the Property Code to provide that a person must
comply with applicable law if the person intends to perfect a mechanic's
lien arising from a claim resulting from a residential construction
project.  The bill specifies that before a residential construction
contract is executed by the owner, the original contractor who intends to
seek protection under a disclosure statement required for a residential
construction contract is required to deliver the disclosure statement to
the owner. 

H.B. 2056 requires the lender to deliver all documentation relating to the
closing of a loan to the original contractor in addition to the owner no
later than three business days before the closing, rather than one day, if
the owner is obtaining third-party financing for the construction of
improvements under a residential construction contract. 

The bill requires the original contractor, in connection with final payment
under a residential contract to execute and deliver to the owner's agent at
the time the final payment is tendered an affidavit stating that the
original contractor has paid or will pay each person pursuant to their
contract with the original contractor for all labor and materials used in
the construction of improvements on real property.  The bill requires the
seller of any real property on which a structure of no more than four units
is constructed and that is intended as a principal residence for the
purchaser to execute and deliver at the time of closing an affidavit
stating that the seller has paid or will pay each person pursuant to their
contract with the seller for all labor and materials used in relation to
improvements on the property. 
If the original contractor or the seller has not paid in full each person
pursuant to their contract with the original contractor or seller, the
original contractor and the seller are required to state in the affidavit
the total amount owed and agree to protect the owner or purchaser, as
applicable, and the real property from any mechanic's liens.  The bill
removes provisions also requiring the original contractor or seller to also
provide the name and address of each person to whom payment is owed or has
been made. 


September 1, 2001.