By: Smith of Harris (Senate Sponsor - Jackson) H.B. No. 1513
         (In the Senate - Received from the House April 23, 2009;
  April 24, 2009, read first time and referred to Committee on
  Business and Commerce; May 14, 2009, reported favorably by the
  following vote:  Yeas 8, Nays 0; May 14, 2009, sent to printer.)
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to construction contract trust funds and the
  misapplication of those funds.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 162.001(c), Property Code, is amended to
  read as follows:
         (c)  A fee payable to a contractor is not considered trust
  funds if:
               (1)  the [If a] contractor and property owner have
  entered into a written construction contract for the improvement of
  specific real property in this state before the commencement of
  construction of the improvement and the contract provides for the
  payment by the owner of the costs of construction and a reasonable
  fee specified in the contract payable to the contractor; and
               (2)  [,] the fee is earned as provided by the contract
  and paid to the contractor or disbursed from a construction account
  described by Section 162.006, if applicable [is not considered
  trust funds].
         SECTION 2.  Section 162.001, Property Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  Trust funds paid to a creditor under this chapter are
  not property or an interest in property of a debtor who is a trustee
  described by Section 162.002.
         SECTION 3.  Section 162.003, Property Code, is amended to
  read as follows:
         Sec. 162.003.  BENEFICIARIES OF TRUST FUNDS. (a) An
  artisan, laborer, mechanic, contractor, subcontractor, or
  materialman who labors or who furnishes labor or material for the
  construction or repair of an improvement on specific real property
  in this state is a beneficiary of any trust funds paid or received
  in connection with the improvement.
         (b)  A property owner is a beneficiary of trust funds
  described by Section 162.001 in connection with a residential
  construction contract, including funds deposited into a
  construction account described by Section 162.006.
         SECTION 4.  Section 162.004, Property Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  Regardless of whether a construction contract is
  covered by a statutory or common law payment bond, this chapter
  applies to a public or private construction contract for the
  improvement of specific real property in this state.
         SECTION 5.  Section 162.031, Property Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  A trustee who commingles trust funds with other funds in
  the trustee's possession does not defeat a trust created by this
  chapter.
         SECTION 6.  This Act takes effect September 1, 2009.
 
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