Bill Text: TX HB1428 | 2011-2012 | 82nd Legislature | Comm Sub


Bill Title: Relating to an account for construction retainage; providing a civil penalty.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2011-05-02 - Considered in Calendars [HB1428 Detail]

Download: Texas-2011-HB1428-Comm_Sub.html
  82R17082 TJS-F
 
  By: Deshotel H.B. No. 1428
 
  Substitute the following for H.B. No. 1428:
 
  By:  Quintanilla C.S.H.B. No. 1428
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to an account for construction retainage; providing a
  civil penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 162.005, Property Code, is amended by
  adding Subdivision (7) to read as follows:
               (7)  "Construction trust fund account" means an account
  in a federally insured financial institution into which are
  deposited only funds required by Section 162.0061(a) to be
  deposited in a construction trust fund account and other funds
  deposited by the property owner that are necessary to pay charges
  imposed on the account by the financial institution.
         SECTION 2.  Subchapter A, Chapter 162, Property Code, is
  amended by adding Sections 162.0061 and 162.008 to read as follows:
         Sec. 162.0061.  CONSTRUCTION TRUST FUND ACCOUNT REQUIRED IN
  CERTAIN CIRCUMSTANCES.  (a)  Except as provided by this section, a
  property owner who enters into a construction loan or financing
  agreement to pay toward the improvement of real property that is
  secured wholly or partly by a lien on the property or improvement
  shall deposit in a construction trust fund account in a financial
  institution not later than contemporaneously with payment to a
  contractor the amount retained under Subchapter E, Chapter 53, and
  other retainage, as defined by Section 53.001, retained by the
  owner from the contractor to be held in trust for the benefit of a
  person described by Section 162.003(a).  Trust funds deposited in a
  construction trust fund account under this section shall be used
  first toward the satisfaction of the owner's obligations and a
  claimant's rights under Subchapter E, Chapter 53.  Trust funds
  remaining in the construction trust fund account after the
  satisfaction of those obligations and rights may be used by the
  owner for other construction payments under this chapter or other
  purposes of the owner.  Trust funds under this section are not
  subject to seizure, offset, or taking by the financial institution
  or a creditor of the owner.  This subsection does not reduce the
  owner's obligation or liability under Subchapter E, Chapter 53.
         (b)  This section does not apply to a property owner who
  enters into a construction loan or financing agreement to pay
  toward the construction, remodeling, or repair of a single-family
  house or duplex used for residential purposes.
         (c)  This section does not apply to a property owner
  improving real property if the value of the improvement to be made
  is $250,000 or less.
         Sec. 162.008.  MANAGEMENT OF CONSTRUCTION TRUST FUND
  ACCOUNTS. (a) If a property owner required to maintain a
  construction trust fund account under Section 162.0061 opens and
  maintains a separate construction trust fund account with the
  financial institution for each project subject to this subchapter,
  the periodic statement received from the financial institution
  must:
               (1)  refer to the account as a "construction trust
  fund" account; and
               (2)  identify the project for which the construction
  trust fund account is maintained.
         (b)  If a property owner required to maintain a construction
  trust fund account opens and maintains a construction trust fund
  account with the financial institution into which funds for two or
  more projects subject to this subchapter are deposited:
               (1)  the periodic statement received from the financial
  institution must refer to the account as a "construction trust
  fund" account; and
               (2)  the owner shall maintain an account record for the
  construction trust fund account that provides information relating
  to:
                     (A)  the source and amount of the funds in the
  account and the date the funds were deposited;
                     (B)  the date and amount of each disbursement from
  the account and the person to whom the funds were disbursed; and
                     (C)  the current balance of the account.
         (c)  For each construction trust fund account maintained by
  the property owner under Subsection (b), the owner shall maintain
  the account record for each construction project for which trust
  funds have been deposited.
         (d)  A property owner shall, not later than the 14th day
  after receipt of a written request, provide a person who is a
  beneficiary of trust funds with a copy of:
               (1)  the periodic statement received from the financial
  institution regarding the construction trust fund account into
  which the trust funds of which the person is a beneficiary have been
  deposited; and
               (2)  the account record required to be maintained by
  the owner with respect to the construction project for which the
  trust funds have been deposited.
         SECTION 3.  Section 162.032, Property Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  If a beneficiary of the trust funds required to be
  maintained in a construction trust fund account incurs actual
  damages as a result of the property owner's failure to establish or
  maintain a construction trust fund account in violation of Section
  162.0061 or failure to establish or maintain an account record for
  the construction trust fund account in violation of Section
  162.008, the beneficiary may recover the beneficiary's actual
  damages, reasonable attorney's fees, and a civil penalty of $500,
  in addition to any other remedy provided by law, from the property
  owner and each trustee who is an owner, officer, director, or agent
  of the property owner and who receives trust funds or controls or
  directs trust funds.
         SECTION 4.  The change in law made by this Act applies only
  to an amount retained under an original contract entered into on or
  after the effective date of this Act.  An amount retained under an
  original contract entered into before the effective date of this
  Act is governed by the law as it existed immediately before that
  date, and that law is continued in effect for that purpose.
         SECTION 5.  This Act takes effect September 1, 2011.
feedback