82R17798 PMO-F

By: Deshotel, Bohac H.B. No. 1390

Substitute the following for H.B. No. 1390:

By: Quintanilla C.S.H.B. No. 1390

A BILL TO BE ENTITLED

AN ACT

relating to retainage under certain construction contracts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 53.053(e), Property Code, is amended to read as follows:

(e) A claim for retainage accrues on the last day of the month in which all work called for by the contract between the owner and the original contractor has been completed, finally settled, terminated, or abandoned.

SECTION 2. Section 53.056(d), Property Code, is amended to read as follows:

(d) Except as provided by Section 53.057, to [To] authorize the owner to withhold funds under Subchapter D, the notice to the owner must state that if the claim remains unpaid, the owner may be personally liable and the owner's property may be subjected to a lien unless:

(1) the owner withholds payments from the contractor for payment of the claim; or

(2) the claim is otherwise paid or settled.

SECTION 3. Section 53.057, Property Code, is amended to read as follows:

Sec. 53.057. DERIVATIVE CLAIMANT: NOTICE FOR [CONTRACTUAL] RETAINAGE CLAIM. (a) For the portion of a retainage claim not in excess of the amount of the required retainage under Section 53.101, a [A] claimant may give notice under this section instead of or in addition to notice under Section 53.056 or 53.252 if the claimant is to labor, furnish labor or materials, or specially fabricate materials, or has labored, furnished labor or materials, or specially fabricated materials, under an agreement with an original contractor or a subcontractor providing for retainage.

(b) The claimant must give notice that the claimant may have a lien claim for retainage to the owner or reputed owner [notice of the retainage agreement] not later than the earliest of:

(1) the 15th day of the second month following the date the claimant completed the work required under the claimant's contract with the original contractor or subcontractor;

(2) the 25th day after the date the work under the original contract is completed, provided that the owner, if required, gave notice under Section 53.106 or 53.108 to the claimant;

(3) the 25th day after the date the original contract is terminated, provided that the owner, if required, gave notice under Section 53.107 to the claimant; or

(4) the 25th day after the date the original contractor abandons performance under the original contract, provided that the owner, if required, gave notice under Section 53.107 to the claimant [the delivery of materials or the performance of labor by the claimant that first occurs after the claimant has agreed to the contractual retainage. If the agreement is with a subcontractor, the claimant must also give notice within that time to the original contractor].

(c) [The notice must contain:

[(1) the sum to be retained;

[(2) the due date or dates, if known; and

[(3) a general indication of the nature of the agreement.

[(d)] The notice must be sent by registered or certified mail to the last known business or residence address of the owner or reputed owner or the original contractor, as applicable.

(d) [(e)] If a claimant gives notice under this section [and Section 53.055 or, if the claim relates to a residential construction project, under this section and Section 53.252], the claimant is not required to give any other notice as to the retainage before the date the notice under Section 53.055 is required.

SECTION 4. Section 53.081(c), Property Code, is amended to read as follows:

(c) If notice is sent under Section 53.057, the owner may withhold funds immediately on receipt of the notice. The owner may withhold funds by retaining funds under Subchapter E for the period required by Section 53.082 [a copy of the claimant's affidavit prepared in accordance with Sections 53.052 through 53.055].

SECTION 5. Section 53.103, Property Code, is amended to read as follows:

Sec. 53.103. LIEN ON RETAINED FUNDS. A claimant has a lien on the retained funds if the claimant:

(1) sends the notices required by this chapter in the time and manner required; and

(2) files an affidavit claiming a lien not later than the [30th day after the] earlier of [the date]:

(A) the 60th day after the earliest of:

(i) the date the work under the original contract is completed, provided that the owner, if required, gave notice under Section 53.106 or 53.108 to the claimant;

(ii) the date the original contract is terminated, provided that the owner, if required, gave notice under Section 53.107 to the claimant; or

(iii) the date the original contractor abandons performance under the original contract, provided that the owner, if required, gave notice under Section 53.107 to the claimant; or

(B) the last day of the period provided under Section 53.052 [work is completed;

[(B) the original contract is terminated; or

[(C) the original contractor abandons performance under the original contract].

SECTION 6. Section 53.106, Property Code, is amended to read as follows:

Sec. 53.106. AFFIDAVIT OF COMPLETION. (a) An owner may file with the county clerk of the county in which the property is located an affidavit of completion. The affidavit must contain:

(1) the name and address of the owner;

(2) the name and address of the original contractor;

(3) a description, legally sufficient for identification, of the real property on which the improvements are located;

(4) a description of the improvements furnished under the original contract;

(5) a statement that the improvements under the original contract have been completed and the date of completion; and

(6) a conspicuous statement that a claimant may not have a lien on retained funds unless the claimant:

(A) complies with the notice requirement under Section 53.057 not later than the earlier of:

(i) the 15th day of the second month following the date the claimant completed the work required under the claimant's contract with the original contractor or subcontractor; or

(ii) the 25th day after the date the work under the original contract is completed; and

(B) files an [the] affidavit claiming a lien not later than the 60th [30th] day after the date the work under the original contract is completed [of completion].

(b) A copy of the affidavit must be sent by certified or registered mail to the original contractor not later than the date the affidavit is filed and to each claimant who sends a notice of lien liability to the owner under Section 53.056, 53.057, 53.058, 53.252, or 53.253 not later than the date the affidavit is filed or the fifth [10th] day after the date the owner receives the notice of lien liability, whichever is later.

(c) A copy of the affidavit must also be sent to each person who furnishes labor or materials for the property and who furnishes the owner with a written request for the copy. The owner must furnish the copy to the person not later than the date the affidavit is filed or the fifth [10th] day after the date the request is received, whichever is later.

(d) Except as provided by this subsection, an affidavit filed under this section on or before the fifth [10th] day after the date of completion of the improvements is prima facie evidence of the date the work under the original contract is completed for purposes of this subchapter and Section 53.057. If the affidavit is filed after the fifth [10th] day after the date of completion, the date of completion for purposes of this subchapter and Section 53.057 is the date the affidavit is filed. This subsection does not apply to a person to whom the affidavit was not sent as required by this section.

SECTION 7. Sections 53.107(a), (b), (c), and (d), Property Code, are amended to read as follows:

(a) Not later than the fifth [10th] day after the date an original contract is terminated or the original contractor abandons performance under the original contract, the owner shall give notice to each subcontractor who, before the date of termination or abandonment, has:

(1) given notice to the owner as provided by Section 53.056, 53.057, or 53.058; or

(2) sent to the owner by certified or registered mail a written request for notice of termination or abandonment.

(b) The notice must contain:

(1) the name and address of the owner;

(2) the name and address of the original contractor;

(3) a description, legally sufficient for identification, of the real property on which the improvements are located;

(4) a general description of the improvements agreed to be furnished under the original contract;

(5) a statement that the original contract has been terminated or that performance under the contract has been abandoned;

(6) the date of the termination or abandonment; and

(7) a conspicuous statement that a claimant may not have a lien on the retained funds unless the claimant:

(A) complies with the notice requirement in Section 53.057 not later than the earlier of:

(i) the 15th day of the second month following the date the claimant completed the work required under the claimant's contract with the original contractor or subcontractor; or

(ii) the 25th day after the date the original contract is terminated or abandoned; and

(B) files an affidavit claiming a lien not later than the 60th [30th] day after the date of the termination or abandonment.

(c) A notice sent in compliance with this section on or before the fifth [10th] day after the date of termination or abandonment is prima facie evidence of the date the original contract was terminated or work was abandoned for purposes of this subchapter.

(d) A subcontractor to whom an owner fails to send notice under this section is not required to comply with Section 53.057 to claim retainage and may claim a lien by filing a lien affidavit as prescribed by Section 53.052 [who fails to file a lien affidavit in the time prescribed by Section 53.103(2) has a lien to the extent authorized under this subchapter if:

[(1) the subcontractor otherwise complies with this chapter; and

[(2) the owner did not provide the subcontractor notice as required by this section].

SECTION 8. Subchapter E, Chapter 53, Property Code, is amended by adding Section 53.108 to read as follows:

Sec. 53.108. NOTICE OF COMPLETION TO SECURE RETAINAGE CLAIM. (a) Not later than the fifth day after the date of completion, an owner shall send by certified mail, return receipt requested, or registered mail a notice of completion to:

(1) the original contractor;

(2) any person who provides a notice under Section 53.056, 53.057, 53.058, 53.252, or 53.253; and

(3) any person who furnished labor or provided materials for the improvement and requests a copy of the notice of completion.

(b) The notice must contain:

(1) the name and address of the owner;

(2) the name and address of the original contractor;

(3) a description, legally sufficient for identification, of the real property on which the improvements are located;

(4) a description of the improvements furnished under the original contract;

(5) a statement that the improvements under the original contract have been completed; and

(6) the date of completion.

(c) A notice sent in compliance with this section is prima facie evidence under Sections 53.053(e) and 53.057 of the date the work under the original contract was completed.

(d) An owner who sends a copy of an affidavit of completion as prescribed by Section 53.106 satisfies the requirements of this section.

(e) A person described by Subsection (a) to whom an owner fails to send notice under this section is not required to comply with Section 53.057 to claim contractual retainage and may claim a lien by filing a lien affidavit as prescribed by Section 53.052.

SECTION 9. Sections 53.159(a), (b), and (e), Property Code, are amended to read as follows:

(a) An owner, on written request, shall furnish the following information within a reasonable time, but not later than the 10th day after the date the request is received, to any person furnishing labor or materials for the project:

(1) a description of the real property being improved legally sufficient to identify it;

(2) whether there is a surety bond and if so, the name and last known address of the surety and a copy of the bond; [and]

(3) whether there are any prior recorded liens or security interests on the real property being improved and if so, the name and address of the person having the lien or security interest; and

(4) the date on which the original contract for the project was executed.

(b) An original contractor, on written request by a person who furnished work under the original contract, shall furnish to the person the following information within a reasonable time, but not later than the 10th day after the date the request is received:

(1) the name and last known address of the person to whom the original contractor furnished labor or materials for the construction project; [and]

(2) whether the original contractor has furnished or has been furnished a payment bond for any of the work on the construction project and if so, the name and last known address of the surety and a copy of the bond; and

(3) the date on which the original contract for the project was executed.

(e) If a person from whom information is requested does not have a direct contractual relationship on the project with the person requesting the information, the person from whom information is requested, other than a claimant requested to furnish information under Subsection (d), may require payment of the actual costs, not to exceed $25, in furnishing the requested information. A subcontractor who does not receive information requested under Subsection (a)(4) within the period prescribed by Subsection (a) is not required to comply with Section 53.057 and may perfect a lien for retainage by filing a lien affidavit under Section 53.052.

SECTION 10. Section 53.160(b), Property Code, is amended to read as follows:

(b) The grounds for objecting to the validity or enforceability of the claim or lien for purposes of the motion are limited to the following:

(1) notice of claim was not furnished to the owner or original contractor as required by Section 53.056, 53.057, 53.058, 53.252, or 53.253;

(2) an affidavit claiming a lien failed to comply with Section 53.054 or was not filed as required by Section 53.052;

(3) notice of the filed affidavit was not furnished to the owner or original contractor as required by Section 53.055;

(4) the deadlines for perfecting a lien claim for retainage under this chapter have expired and the owner complied with the requirements of Section 53.101 and paid the retainage and all other funds owed to the original contractor before:

(A) the claimant perfected the lien claim; and

(B) the owner received a notice of the claim as required by this chapter;

(5) all funds subject to the notice of a claim to the owner and a notice regarding the [perfection of a claim against the statutory] retainage have been deposited in the registry of the court and the owner has no additional liability to the claimant;

(6) when the lien affidavit was filed on homestead property:

(A) no contract was executed or filed as required by Section 53.254;

(B) the affidavit claiming a lien failed to contain the notice as required by Section 53.254; or

(C) the notice of the claim failed to include the statement required by Section 53.254; and

(7) the claimant executed a valid and enforceable waiver or release of the claim or lien claimed in the affidavit.

SECTION 11. Chapter 53, Property Code, as amended by this Act, applies only to a lien claim for labor or materials furnished under a subcontract where the original contract was entered into on or after the effective date of this Act. A lien claim for labor or materials furnished under a subcontract where the original contract was entered into before the effective date of this Act is governed by the law in effect immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 12. This Act takes effect September 1, 2011.