By Harris                                             S.B. No. 1067
         77R8337 ATP-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certain agreements for the payment of subcontractors.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  SHORT TITLE. This Act may be cited as the
 1-5     Subcontractor's Right to be Paid Act.
 1-6           SECTION 2.  LEGISLATIVE FINDINGS. The legislature finds that:
 1-7                 (1)  persons who furnish work, labor, and services, or
 1-8     provide materials for the improvements of real property have the
 1-9     right to be paid timely;
1-10                 (2)  contingent payment provisions in construction
1-11     contracts operate as an improper waiver of a subcontractor's right
1-12     to be paid by a general contractor for work properly performed; and
1-13                 (3)  the surrender of the right to be paid as a
1-14     prerequisite to obtaining a contract is against public policy and
1-15     should be void.
1-16           SECTION 3.  AMENDMENT. Subchapter D, Chapter 35, Business &
1-17     Commerce Code, is amended by adding Section 35.521 to read as
1-18     follows:
1-19           Sec. 35.521.  AGREEMENT FOR PAYMENT OF CONSTRUCTION
1-20     SUBCONTRACTOR. (a)  In this section:
1-21                 (1)  "Improvement" includes new construction,
1-22     remodeling, or repair.
1-23                 (2)  "Original contractor" means a person contracting
1-24     with an owner either directly or through the owner's agent for the
 2-1     improvement of the owner's real property.  The term includes a
 2-2     person who performs construction management services.
 2-3                 (3)  "Owner" means a person who has an interest in real
 2-4     property.
 2-5                 (4)  "Political subdivision" has the meaning assigned
 2-6     by Section 2251.001, Government Code.
 2-7                 (5)  "State agency" has the meaning assigned by Section
 2-8     2251.001, Government Code.
 2-9                 (6)  "Subcontractor" means a person who contracts to
2-10     furnish labor or material to an original contractor or another
2-11     subcontractor in connection with a contract for the improvement of
2-12     real property.
2-13           (b)  A provision in a contract or other agreement that
2-14     provides that the payment of a subcontractor for work performed or
2-15     materials furnished is conditioned on the receipt of payment by the
2-16     original contractor or another subcontractor from another person,
2-17     including the owner for whom the improvement is being made, is
2-18     void.
2-19           (c)  A person may not waive this section by contract or other
2-20     means.  A purported waiver of this section is void.
2-21           (d)  This section does not apply to a contract or agreement
2-22     entered into by a state agency or a political subdivision of this
2-23     state.
2-24           SECTION 4.  EFFECTIVE DATE. This Act takes effect September
2-25     1, 2001, and applies only to a contract or agreement entered into
2-26     on or after the effective date of this Act.  A contract or
2-27     agreement entered into before the effective date of this Act is
 3-1     governed by the law in effect when the contract or agreement was
 3-2     entered into, and the former law is continued in effect for that
 3-3     purpose.