BILL ANALYSIS

Senate Research Center	H.B. 2960
89R15221 PRL-D	By: Hayes (Hughes)
	State Affairs
	5/6/2025
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Texas law protects contractors from being forced to litigate disputes out of state, ensuring that businesses do not have to bear the cost of long-distance legal battles or be subjected to laws not aligned with Texas industry standards. The bill author has informed the committee that this protection has been crucial for Texas contractors, particularly smaller businesses that lack the resources to pursue or defend claims in distant jurisdictions. However, the Fourteenth Court of Appeals in Houston, in the case In re MVP Terminalling, LLC, recently determined that these longstanding protections could be waived. According to the Texas Construction Association, this ruling created significant uncertainty in the construction industry, effectively eliminated out-of-state venue protections for contractors, and placed Texas contractors at a disadvantage in contract negotiations. H.B. 2960 seeks to address this issue by changing the voidable nature of construction contract provisions relating to out-of-state venues and requiring an action arising out of such a contract, to the extent a venue provision is void, to be brought only in the Texas county in which the applicable property is located, unless the parties stipulate to another venue after the dispute arises.

H.B. 2960 amends the Business & Commerce Code to change the voidable nature of a provision contained in a construction contract concerning real property located in Texas or an agreement collateral to or affecting the contract that subjects the contract or agreement or any conflict arising under the contract or agreement to another state's law, litigation in the courts of another state, or arbitration in another state from being voidable by a party obligated by the contract or agreement to perform the work that is the subject of the construction contract to being void as against public policy. The bill requires an action arising out of such a contract, to the extent that a venue provision in the contract is void under the bill's provisions, to be brought only in Texas in the county in which the property that is the subject of the litigation is located, unless the parties stipulate to another venue after the dispute arises.

H.B. 2960 applies only to a contract that is entered into or renewed on or after the bill's effective date.

H.B. 2960 amends current law relating to choice of law and venue for certain construction contracts.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends the heading to Section 272.001, Business & Commerce Code, to read as follows:

Sec. 272.001.� CERTAIN CONTRACT PROVISIONS VOID.

SECTION 2. Amends Section 272.001, Business & Commerce Code, by amending Subsection (b) and adding Subsection (c), as follows:

(b)� Provides that, if a construction contract or an agreement collateral to or affecting the construction contract contains a provision making the contract or agreement or any conflict arising under the contract or agreement subject to another state's law, litigation in the courts of another state, or arbitration in another state, that provision is void as against public policy, rather than voidable by a party obligated by the contract or agreement to perform the work that is the subject of the construction contract.

(c) Requires that an action arising out of the contract, to the extent that a venue provision in a contract is void under Subsection (b), unless the parties stipulate to another venue after the dispute arises, be brought only in this state in the county in which the property that is the subject of the litigation is located.

SECTION 3. Amends Section 15.020(d), Civil Practice and Remedies Code, to provide that Section 15.020 (Major Transactions: Specification of Venue by Agreement) does not apply to an action if certain criteria are met, including if the agreement regarding venue is void, rather than voidable, under Chapter 272 (Law Applicable to Certain Construction Contracts), Business & Commerce Code.

SECTION 4.� Makes application of this Act prospective.

SECTION 5.� Effective date: September 1, 2025.