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A BILL TO BE ENTITLED
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AN ACT
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relating to the time period for which certain funds payable under a |
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construction contract must be reserved for the benefit of |
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mechanic's lien claimants. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 53.101, Property Code, is amended by |
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amending Subsection (a) and adding Subsections (a-1) and (a-2) to |
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read as follows: |
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(a) During the progress of work under an original contract |
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for which a mechanic's lien may be claimed and for the period |
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described by Subsection (a-1) [30 days after the work under the |
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contract is completed], the owner shall reserve: |
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(1) 10 percent of the contract price of the work to the |
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owner; or |
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(2) 10 percent of the value of the work, measured by |
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the proportion that the work done bears to the work to be done, |
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using the contract price or, if there is no contract price, using |
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the reasonable value of the completed work. |
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(a-1) The owner shall reserve the funds described by |
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Subsection (a) for a period ending the earlier of: |
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(1) the 31st day after the date the work under the |
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contract is completed; or |
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(2) the 61st day after the date: |
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(A) a certificate of occupancy is issued for the |
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improvement; or |
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(B) the improvement is first used for its |
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intended purpose. |
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(a-2) Subject to Section 28.003, the owner shall pay 50 |
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percent of the funds reserved under Subsection (a) not later than |
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the day described by Subsection (a-1)(2). |
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SECTION 2. The changes in law made by this Act apply only to |
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a contract entered into on or after the effective date of this Act. |
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A contract entered into before the effective date of this Act is |
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governed by the law as it existed immediately before the effective |
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date of this Act, and that 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. |