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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. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 4, Business & Commerce Code, is amended by |
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adding Chapter 60 to read as follows: |
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CHAPTER 60. ACCOUNT FOR CONSTRUCTION RETAINAGE |
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Sec. 60.001. DEFINITIONS. In this chapter: |
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(1) "Construction contract" has the meaning assigned |
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by Section 272.0001. |
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(2) "Retainage" is an amount or agreed percentage of |
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money in a construction contract between a contractor and a |
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subcontractor that is withheld from a payment and not due to be paid |
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until completion of the contract or on an agreed date. |
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Sec. 60.002. ESCROW ACCOUNT FOR RETAINAGE. If a |
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construction contract or an agreement collateral to or affecting |
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the construction contract contains a provision providing for |
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retainage, the contractor shall deposit and hold any retainage in |
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an escrow account. Money in the escrow account is available to |
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satisfy the contractor's obligation to a subcontractor. |
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Sec. 60.003. LATE PAYMENT. If a contractor does not satisfy |
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the contractor's obligation to the subcontractor within three |
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months after the date the subcontractor completes performance due |
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under the construction contract, the contractor is liable to the |
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subcontractor in an amount equal to the sum of: |
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(1) the original obligation; and |
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(2) three percent of the original obligation. |
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SECTION 2. The changes in law made by this Act apply only to |
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a contract that is entered into or renewed on or after the effective |
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date of this Act. A contract entered into before the effective date |
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of this Act is governed by the law in effect on the date the contract |
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was entered into, and the former law is continued in effect for that |
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purpose. |
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SECTION 3. This Act takes effect September 1, 2025. |