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A BILL TO BE ENTITLED
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AN ACT
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relating to the payment or application of funds under construction |
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contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Section 272.001, Business & |
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Commerce Code, is amended to read as follows: |
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Sec. 272.001. VOIDABLE CONTRACT PROVISIONS [PROVISION]. |
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SECTION 2. Section 272.001, Business & Commerce Code, is |
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amended by adding Subsection (c) to read as follows: |
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(c) If a construction contract contains a provision that |
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allows a party to the contract to wholly or partly withhold payment |
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owed under one contract to satisfy a claim or damages alleged under |
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another contract, that provision is voidable by the party whose |
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payment may be withheld under the provision. |
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SECTION 3. Section 28.003, Property Code, is amended by |
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adding Subsection (c) to read as follows: |
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(c) For purposes of this section, a good faith dispute does |
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not include a dispute relating to a contract, work order, |
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contractual arrangement, or any other agreement between the parties |
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that is not related to the contract for construction under which |
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payment is requested or required. |
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SECTION 4. Section 162.031, Property Code, is amended by |
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adding Subsection (a-1) to read as follows: |
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(a-1) A trustee who retains or otherwise diverts trust funds |
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due to a dispute, including an alleged default, arising under a |
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construction contract other than the contract in connection with |
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which the trust funds were received by or placed under the control |
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or direction of the trustee has misapplied the trust funds. |
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SECTION 5. Subchapter B, Chapter 162, Property Code, is |
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amended by adding Section 162.034 to read as follows: |
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Sec. 162.034. ATTORNEY'S FEES. The court may award costs |
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and reasonable attorney's fees in an action brought under this |
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subchapter. |
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SECTION 6. (a) Except as provided by Subsection (b) of this |
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section, the changes in law made by this Act apply only to a |
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contract that is entered into on or after the effective date of this |
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Act. |
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(b) Section 162.034, Property Code, as added by this Act, |
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applies only to an action commenced on or after the effective date |
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of this Act. |
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SECTION 7. This Act takes effect September 1, 2023. |