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A BILL TO BE ENTITLED
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AN ACT
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relating to an account for construction retainage; providing a |
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civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 162.005, Property Code, is amended by |
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adding Subdivision (7) to read as follows: |
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(7) "Construction trust fund account" means an account |
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in a federally insured financial institution into which are |
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deposited only funds required by Section 162.0061(a) to be |
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deposited in a construction trust fund account and other funds |
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deposited by the property owner that are necessary to pay charges |
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imposed on the account by the financial institution. |
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SECTION 2. Subchapter A, Chapter 162, Property Code, is |
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amended by adding Sections 162.0061 and 162.008 to read as follows: |
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Sec. 162.0061. CONSTRUCTION TRUST FUND ACCOUNT REQUIRED IN |
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CERTAIN CIRCUMSTANCES. (a) Except as provided by this section, a |
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property owner who enters into a construction loan or financing |
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agreement to pay toward the improvement of real property that is |
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secured wholly or partly by a lien on the property or improvement |
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shall deposit in a construction trust fund account in a financial |
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institution not later than contemporaneously with payment to a |
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contractor the amount retained under Subchapter E, Chapter 53, and |
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other retainage, as defined by Section 53.001, retained by the |
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owner from the contractor to be held in trust for the benefit of a |
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person described by Section 162.003(a). Trust funds deposited in a |
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construction trust fund account under this section shall be used |
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first toward the satisfaction of the owner's obligations and a |
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claimant's rights under Subchapter E, Chapter 53. Trust funds |
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remaining in the construction trust fund account after the |
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satisfaction of those obligations and rights may be used by the |
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owner for other construction payments under this chapter or other |
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purposes of the owner. Trust funds under this section are not |
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subject to seizure, offset, or taking by the financial institution |
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or a creditor of the owner. This subsection does not reduce the |
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owner's obligation or liability under Subchapter E, Chapter 53. |
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(b) This section does not apply to a property owner who |
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enters into a construction loan or financing agreement to pay |
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toward the construction, remodeling, or repair of a single-family |
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house or duplex used for residential purposes. |
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(c) This section does not apply to a property owner |
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improving real property if the value of the improvement to be made |
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is $250,000 or less. |
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Sec. 162.008. MANAGEMENT OF CONSTRUCTION TRUST FUND |
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ACCOUNTS. (a) If a property owner required to maintain a |
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construction trust fund account under Section 162.0061 opens and |
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maintains a separate construction trust fund account with the |
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financial institution for each project subject to this subchapter, |
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the periodic statement received from the financial institution |
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must: |
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(1) refer to the account as a "construction trust |
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fund" account; and |
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(2) identify the project for which the construction |
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trust fund account is maintained. |
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(b) If a property owner required to maintain a construction |
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trust fund account opens and maintains a construction trust fund |
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account with the financial institution into which funds for two or |
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more projects subject to this subchapter are deposited: |
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(1) the periodic statement received from the financial |
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institution must refer to the account as a "construction trust |
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fund" account; and |
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(2) the owner shall maintain an account record for the |
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construction trust fund account that provides information relating |
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to: |
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(A) the source and amount of the funds in the |
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account and the date the funds were deposited; |
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(B) the date and amount of each disbursement from |
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the account and the person to whom the funds were disbursed; and |
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(C) the current balance of the account. |
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(c) For each construction trust fund account maintained by |
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the property owner under Subsection (b), the owner shall maintain |
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the account record for each construction project for which trust |
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funds have been deposited. |
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(d) A property owner shall, not later than the 14th day |
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after receipt of a written request, provide a person who is a |
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beneficiary of trust funds with a copy of: |
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(1) the periodic statement received from the financial |
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institution regarding the construction trust fund account into |
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which the trust funds of which the person is a beneficiary have been |
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deposited; and |
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(2) the account record required to be maintained by |
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the owner with respect to the construction project for which the |
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trust funds have been deposited. |
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SECTION 3. Section 162.032, Property Code, is amended by |
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adding Subsection (d) to read as follows: |
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(d) If a beneficiary of the trust funds required to be |
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maintained in a construction trust fund account incurs actual |
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damages as a result of the property owner's failure to establish or |
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maintain a construction trust fund account in violation of Section |
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162.0061 or failure to establish or maintain an account record for |
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the construction trust fund account in violation of Section |
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162.008, the beneficiary may recover the beneficiary's actual |
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damages, reasonable attorney's fees, and a civil penalty of $500, |
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in addition to any other remedy provided by law, from the property |
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owner and each trustee who is an owner, officer, director, or agent |
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of the property owner and who receives trust funds or controls or |
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directs trust funds. |
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SECTION 4. The change in law made by this Act applies only |
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to an amount retained under an original contract entered into on or |
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after the effective date of this Act. An amount retained under an |
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original contract entered into before the effective date of this |
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Act is governed by the law as it existed immediately before that |
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date, and that law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2011. |