Bill Text: TX HB3498 | 2019-2020 | 86th Legislature | Introduced
Bill Title: Relating to mechanic's, contractor's, or materialman's liens.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-04-23 - Left pending in committee [HB3498 Detail]
Download: Texas-2019-HB3498-Introduced.html
86R8439 BEE-D | ||
By: Burrows | H.B. No. 3498 |
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relating to mechanic's, contractor's, or materialman's liens. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Sections 53.001(2), (3), (4), (11), (13), and | ||
(14), Property Code, are amended to read as follows: | ||
(2) "Improvement" includes: | ||
(A) permanent buildings, structures, parking | ||
structures, appurtenances, [ |
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sidewalks, [ |
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similar fixtures on or to be placed on real property [ |
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(B) clearing, grubbing, draining, or fencing of | ||
land as part of a construction project; | ||
(C) plants, landscaping, ponds, and storage | ||
facilities provided in conjunction with a construction project | ||
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(D) designs, drawings, plans, plats, surveys, | ||
and specifications provided by licensed architects, engineers, or | ||
surveyors [ |
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(3) "Labor" means: | ||
(A) labor used in the direct performance | ||
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(B) professional services used in the direct | ||
preparation of a design, drawing, plan, plat, survey, or | ||
specification [ |
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(4) "Material" means all or part of: | ||
(A) the material, machinery, fixtures, or tools: | ||
(i) incorporated into the work; | ||
(ii) used[ |
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performance [ |
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(iii) specially fabricated and suitable | ||
only for the work; [ |
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(iv) ordered and delivered for | ||
incorporation or use in the work [ |
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(B) rent at a reasonable rate and actual running | ||
repairs at a reasonable cost for construction equipment used [ |
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performance [ |
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construction or repair; or | ||
(C) power, water, fuel, and lubricants used | ||
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performance [ |
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(11) "Retainage" means an amount representing part of | ||
a contract payment that is not required to be paid to the claimant | ||
within the month following the month in which labor is performed, | ||
material is furnished, or specially fabricated material is | ||
delivered. [ |
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(13) "Subcontractor" means a person who has furnished | ||
labor or materials to fulfill an obligation to an original | ||
contractor or to a subcontractor to perform all or part of the work | ||
required by an original contract. The term includes a supplier of | ||
specially fabricated material or of equipment or materials | ||
delivered directly to the construction site. | ||
(14) "Work" means any part of construction or repair | ||
of an improvement performed under an original contract. | ||
SECTION 2. Sections 53.003(a) and (c), Property Code, are | ||
amended to read as follows: | ||
(a) This section applies to notices required by this chapter | ||
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(c) If notice is sent by [ |
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deposit or mailing of the notice in the United States mail in the | ||
form required constitutes compliance with the notice requirement. | ||
This subsection does not apply if the law requires receipt of the | ||
notice by the person to whom it is directed. | ||
SECTION 3. Sections 53.021(a), (c), and (e), Property Code, | ||
are amended to read as follows: | ||
(a) A person can claim [ |
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repair [ |
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a contract with the owner or the owner's agent, trustee, receiver, | ||
contractor, or subcontractor. | ||
(c) A licensed [ |
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providing services to prepare a design, drawing, plan, plat, | ||
survey, or specification [ |
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lien under this chapter [ |
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(e) A person who performs labor as part of, or who furnishes | ||
labor or materials for, the demolition of a structure on real | ||
property under [ |
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a project for the construction of an improvement can claim [ |
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SECTION 4. Sections 53.022(a) and (d), Property Code, are | ||
amended to read as follows: | ||
(a) The lien extends to the owner's interests in the | ||
improvements and to the particularly subdivided real property on | ||
which work was performed [ |
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(d) A lien against land not subdivided in a city, town, or | ||
village extends to not more than 50 acres on which the [ |
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performed. | ||
SECTION 5. Section 53.023, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.023. PAYMENT SECURED BY LIEN. (a) The lien secures | ||
payment for: | ||
(1) the labor done or material furnished for the | ||
construction, [ |
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(2) the specially fabricated material, even if the | ||
material has not been delivered or incorporated into the | ||
construction or repair, less its fair salvage value [ |
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(b) Notwithstanding the foreclosure of a superior lien on | ||
real property, a subcontractor that supplied removables for an | ||
improvement and that secures a judgment validating the | ||
subcontractor's debt and mechanic's lien may obtain an order | ||
allowing the subcontractor to remove the amount of removables equal | ||
to the amount of the perfected lien interest, based on the fair | ||
market value of the removables. | ||
SECTION 6. Section 53.026(a), Property Code, is amended to | ||
read as follows: | ||
(a) A person who [ |
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relationship with a purported original contractor may perfect | ||
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procedures to perfect a lien of [ |
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purposes of this subsection, a "purported original contractor" is a | ||
contractor that [ |
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control the owner [ |
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voting stock, interlocking directorships, common management, or | ||
similar rights of control [ |
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SECTION 7. Section 53.052, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.052. FILING OF AFFIDAVIT. (a) Except as provided by | ||
Subsection (b), the person claiming the lien, other than a lien for | ||
contractual retainage, must file an affidavit with the county clerk | ||
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month after the date the claimant: | ||
(1) last provided labor or materials; or | ||
(2) completed the fabrication of specially fabricated | ||
materials that were not delivered to the project site [ |
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(b) A person claiming a lien arising from a residential | ||
construction project must file an affidavit with the county clerk | ||
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15th day of the third calendar month after the date the claimant | ||
last provided labor or materials [ |
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(c) Except as provided by Section 53.107(d), a person | ||
claiming a lien for contractual retainage must file an affidavit | ||
with the county clerk not later than the 15th day of the third | ||
calendar month after the date the original contract under which the | ||
person performed was completed, abandoned, or terminated. | ||
(d) An affidavit under Subsection (c) must be filed in the | ||
county where the improvements are located. The county clerk shall | ||
record the affidavit in records kept for that purpose and shall | ||
index and cross-index the affidavit in the names of the claimant, | ||
the original contractor, and the owner. Failure of the county clerk | ||
to properly record or index a filed affidavit does not invalidate | ||
the lien. | ||
SECTION 8. Section 53.055(a), Property Code, is amended to | ||
read as follows: | ||
(a) A person who files an affidavit must send a copy of the | ||
affidavit by [ |
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owner at the owner's last known business or residence address not | ||
later than the fifth day after the date the affidavit is filed with | ||
the county clerk. | ||
SECTION 9. The heading to Section 53.056, Property Code, is | ||
amended to read as follows: | ||
Sec. 53.056. DERIVATIVE CLAIMANT: NOTICE TO OWNER AND [ |
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ORIGINAL CONTRACTOR. | ||
SECTION 10. Section 53.056, Property Code, is amended by | ||
amending Subsection (a) and adding Subsections (a-1) and (a-2) to | ||
read as follows: | ||
(a) A subcontractor [ |
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53.057 for the lien to be valid. | ||
(a-1) For all labor provided or materials provided or | ||
specially fabricated during a month, the subcontractor must send a | ||
notice of progress payment debt to the owner or reputed owner and | ||
the original contractor by certified mail. The notice must be sent: | ||
(1) for debt other than retainage debt, not later than | ||
the 15th day of the third month after the date the labor was | ||
provided or the materials were provided or specially fabricated; or | ||
(2) for residential construction projects, not later | ||
than the 15th day of the second month after the date the labor was | ||
provided or the materials were provided or specially fabricated. | ||
(a-2) The notice must read: | ||
"NOTICE OF PROGRESS PAYMENT DEBT | ||
"Date: __________________ | ||
"Subcontractor: __________________ | ||
"Original contractor: __________________ | ||
"Party contracting with subcontractor: __________________ | ||
"Months during which labor or materials were provided or | ||
special fabrication was completed for which payment has not yet | ||
been received: __________________ | ||
"Total debt to date, including retainage: | ||
__________________ | ||
"Total debt to date, not including retainage: | ||
__________________ | ||
"The subcontractor below provides this notice only to | ||
preserve the subcontractor's lien rights. | ||
"__________________ (Subcontractor's signature) | ||
"__________________ (Subcontractor's printed name) | ||
"__________________ (Subcontractor's address)" | ||
SECTION 11. The heading to Section 53.057, Property Code, | ||
is amended to read as follows: | ||
Sec. 53.057. DERIVATIVE CLAIMANT: NOTICE FOR [ |
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RETAINAGE CLAIM. | ||
SECTION 12. Section 53.057, Property Code, is amended by | ||
amending Subsection (a) and adding Subsection (a-1) to read as | ||
follows: | ||
(a) A subcontractor whose contract provides for the | ||
withholding of retainage must [ |
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section [ |
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for the retainage lien to be valid. The subcontractor must send the | ||
notice of retainage claim to the owner or reputed owner and the | ||
original contractor, by certified mail, not later than the 30th day | ||
after the date the subcontractor's contract providing for retainage | ||
is completed, terminated, or abandoned [ |
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(a-1) The notice must read: | ||
"NOTICE OF RETAINAGE CLAIM | ||
"Date: __________________ | ||
"Subcontractor: __________________ | ||
"Original contractor: __________________ | ||
"Party contracting with subcontractor: __________________ | ||
"Amount of subcontractual retainage outstanding: | ||
__________________ | ||
"The subcontractor below provides this notice only to | ||
preserve the subcontractor's lien rights for retainage. | ||
"__________________ (Subcontractor's signature) | ||
"__________________ (Subcontractor's printed name) | ||
"__________________ (Subcontractor's address)" | ||
SECTION 13. Section 53.081(a), Property Code, is amended to | ||
read as follows: | ||
(a) If an owner receives notice under Section 53.056 or [ |
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53.057, [ |
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payments to the original contractor an amount necessary to pay the | ||
claim for which the owner [ |
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SECTION 14. Section 53.082, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.082. TIME FOR WHICH FUNDS ARE WITHHELD. Unless | ||
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settled, discharged, indemnified against under Subchapter H or I, | ||
or determined to be invalid by a final judgment of a court, the | ||
owner may [ |
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(1) the time for filing the affidavit of mechanic's | ||
lien has passed; or | ||
(2) if a lien affidavit has been filed, until the lien | ||
claim has been satisfied or released. | ||
SECTION 15. Section 53.084, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.084. OWNER'S LIABILITY. (a) Except for the amount | ||
described by Subsection (c) [ |
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original contractor before the owner is authorized to withhold | ||
funds under this subchapter. | ||
(b) If the owner has received a notice [ |
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required by Section 53.056 or 53.057 [ |
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lien has been secured, and if the claim has been reduced to final | ||
judgment, the owner is liable and the owner's property is subject to | ||
a claim for the amount the owner [ |
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contractor after the owner received the notice, which may not | ||
exceed the unpaid amount specified in the notice [ |
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(c) An owner is liable and the owner's property is subject | ||
to a claim for retainage debts of subcontractors of not more than 10 | ||
percent of the original contract price if: | ||
(1) the owner received the notices under Sections | ||
53.056 and 53.057; | ||
(2) the owner did not withhold sufficient funds from | ||
the original contractor to pay the amount owed; and | ||
(3) the claim has been reduced to final judgment. | ||
(d) Multiple claimants for retainage are entitled to a pro | ||
rata share of the claim amount allowed under Subsection (c). | ||
SECTION 16. The heading to Subchapter E, Chapter 53, | ||
Property Code, is amended to read as follows: | ||
SUBCHAPTER E. TERMINATION OR ABANDONMENT OF CONTRACT [ |
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SECTION 17. Sections 53.107(a), (b), and (d), Property | ||
Code, are amended to read as follows: | ||
(a) Not later than the 10th day after the date an original | ||
contract is terminated or the original contractor abandons | ||
performance under the original contract, the owner shall give | ||
notice to each subcontractor who, before the date of termination or | ||
abandonment, has: | ||
(1) given notice to the owner as provided by Section | ||
53.056 or [ |
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(2) sent to the owner by certified [ |
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mail a written request for notice of termination or abandonment. | ||
(b) The notice must contain: | ||
(1) the name and address of the owner; | ||
(2) the name and address of the original contractor; | ||
(3) a description, legally sufficient for | ||
identification, of the real property on which the improvements are | ||
located; | ||
(4) a general description of the improvements agreed | ||
to be furnished under the original contract; | ||
(5) a statement that the original contract has been | ||
terminated or that performance under the contract has been | ||
abandoned; and | ||
(6) the date of the termination or abandonment [ |
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(d) If an owner is required to send a notice to a | ||
subcontractor under this section and fails to send the notice, the | ||
subcontractor's deadline to file an affidavit for contractual | ||
retainage under Section 53.052 is the last business day of the | ||
fourth calendar month after the date the original contract was | ||
terminated or abandoned [ |
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SECTION 18. Section 53.122(a), Property Code, is amended to | ||
read as follows: | ||
(a) Except as provided by [ |
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53.124(e), perfected mechanic's liens are on equal footing without | ||
reference to the date of filing the affidavit claiming the lien. | ||
SECTION 19. Section 53.123(a), Property Code, is amended to | ||
read as follows: | ||
(a) Except as provided by this section, a mechanic's lien | ||
attaches to an improvement [ |
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mortgage on the land on which it is located, and the person | ||
enforcing the lien may have the [ |
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SECTION 20. Section 53.124(e), Property Code, is amended to | ||
read as follows: | ||
(e) The time of inception of a lien that is created under | ||
Section 53.021(c) [ |
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affidavit of lien under Section 53.052. The priority of a lien | ||
claimed by a person entitled to a lien under Section 53.021(c) [ |
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the date of recording. A lien created under Section 53.021(c) [ |
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purchaser who acquires an interest in the real property before the | ||
time of inception of the lien. | ||
SECTION 21. Section 53.155, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.155. TRANSFER OF PROPERTY SOLD. If the [ |
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shall place the purchaser in possession. The purchaser is entitled | ||
to a reasonable time after the date of purchase within which to | ||
remove the purchased improvement [ |
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SECTION 22. Section 53.157, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.157. DISCHARGE OF LIEN. A mechanic's lien or | ||
affidavit claiming a mechanic's lien filed under Section 53.052 may | ||
be discharged of record by: | ||
(1) recording a lien release signed by the claimant | ||
under Section 53.152; | ||
(2) failing to institute suit to foreclose the lien in | ||
the county in which the improvement [ |
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the period prescribed by Section 53.158 or [ |
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(3) recording the original or certified copy of a | ||
final judgment or decree of a court of competent jurisdiction | ||
providing for the discharge; | ||
(4) filing the bond and notice in compliance with | ||
Subchapter H; | ||
(5) filing the bond in compliance with Subchapter I; | ||
or | ||
(6) recording a certified copy of the order removing | ||
the lien under Section 53.160 [ |
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SECTION 23. Section 53.158, Property Code, is amended by | ||
amending Subsection (a) and adding Subsection (a-1) to read as | ||
follows: | ||
(a) Suit [ |
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be brought to foreclose the lien not later than the first | ||
anniversary of [ |
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claimant filed [ |
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(a-1) Notwithstanding Section 16.069, Civil Practice and | ||
Remedies Code, or any other law, if suit is brought for an order | ||
finding that limitations have expired on bringing a lien | ||
foreclosure suit, the lien claimant's rights to pursue a suit to | ||
foreclose a lien are not revived. | ||
SECTION 24. Sections 53.159(a) and (f), Property Code, are | ||
amended to read as follows: | ||
(a) An owner or original contractor, on written request, | ||
shall furnish the following information [ |
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received[ |
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project: | ||
(1) a description of the real property being improved | ||
legally sufficient to identify it; | ||
(2) whether there is a surety bond and if so, the name | ||
and last known address of the surety and a copy of the bond; | ||
(3) whether there are any prior recorded liens or | ||
security interests on the real property being improved and if so, | ||
the name and address of the person having the lien or security | ||
interest; and | ||
(4) the date on which the original contract for the | ||
project was executed. | ||
(f) A person [ |
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as required by this section is liable to the requesting person for | ||
that person's reasonable and necessary costs incurred in procuring | ||
the requested information. | ||
SECTION 25. Sections 53.160(a), (b), (c), and (e), Property | ||
Code, are amended to read as follows: | ||
(a) An owner or original contractor may bring suit [ |
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invalid or unenforceable [ |
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validity or enforceability of the claim or lien and must [ |
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(b) The grounds for objecting to the validity or | ||
enforceability of the claim or lien for purposes of the motion are | ||
limited to the following: | ||
(1) notice of claim was not timely furnished to the | ||
owner or original contractor as required by Section 53.056 or [ |
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53.057 [ |
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(2) an affidavit claiming a lien failed to comply with | ||
Section 53.054 or was not filed as required by Section 53.052; | ||
(3) notice of the filed affidavit was not furnished to | ||
the owner or original contractor as required by Section 53.055; | ||
(4) [ |
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owner and a notice regarding the retainage have been deposited in | ||
the registry of the court and the owner has no additional liability | ||
to the claimant; | ||
(5) [ |
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homestead property: | ||
(A) no contract was executed or filed as required | ||
by Section 53.254; | ||
(B) the affidavit claiming a lien failed to | ||
contain the notice as required by Section 53.254; or | ||
(C) the notice of the claim failed to include the | ||
statement required by Section 53.254; and | ||
(6) [ |
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affidavit. | ||
(c) The claimant is not required to file a response. The | ||
claimant and any other party that has appeared in the proceeding | ||
must be notified by at least 30 [ |
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hearing on the motion. [ |
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(e) The court shall promptly determine a motion to remove a | ||
claim or lien under this section under the same standards as a | ||
motion for summary judgment. If the court determines that the | ||
movant is not entitled to remove the lien, the court shall enter an | ||
order denying the motion. If the court determines that the movant is | ||
entitled to remove the lien, the court shall enter an order removing | ||
the lien claimed in the lien affidavit. The order is appealable if | ||
the order is the final order in the case [ |
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SECTION 26. Sections 53.161(a) and (g), Property Code, are | ||
amended to read as follows: | ||
(a) In the order removing a lien, the court shall set the | ||
amount of security that the claimant may provide in order to | ||
preserve the potential validity of the lien claim on appeal [ |
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must be at least 75 percent of the [ |
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[ |
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and attorney's fees the movant is likely to incur in the appeal | ||
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lien. [ |
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(g) If an appeal is not taken or if the bond or deposit is | ||
not timely made, the [ |
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as to a creditor or subsequent purchaser for valuable consideration | ||
who obtains an interest in the property [ |
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SECTION 27. Section 53.205(a), Property Code, is amended to | ||
read as follows: | ||
(a) The bond protects all persons with a claim that is [ |
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[ |
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lien [ |
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[ |
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SECTION 28. Sections 53.206(a), (b), and (d), Property | ||
Code, are amended to read as follows: | ||
(a) To perfect a claim against a bond in a manner other than | ||
that prescribed by Subchapter C [ |
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must [ |
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[ |
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the bond all applicable notices under the appropriate subchapter [ |
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(b) To perfect a claim under this section, a person is not | ||
required to [ |
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(d) A person satisfies the requirements of this section | ||
relating to providing notice to the surety if the person mails the | ||
notice by certified [ |
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(1) at the address stated on the bond or on an | ||
attachment to the bond; | ||
(2) at the address on file with the Texas Department of | ||
Insurance; or | ||
(3) at any other address allowed by law. | ||
SECTION 29. Section 53.207, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.207. FAILURE TO SEND [ |
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SURETY. [ |
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fixed under this chapter [ |
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[ |
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surety does not relieve the surety of any liability under the bond | ||
if the claimant has complied with the requirements of this | ||
subchapter, nor does that failure impose any liability on the | ||
owner. | ||
SECTION 30. The heading to Section 53.254, Property Code, | ||
is amended to read as follows: | ||
Sec. 53.254. CONTRACT REQUIREMENTS FOR LIEN ON HOMESTEAD. | ||
SECTION 31. Section 53.254(g), Property Code, is amended to | ||
read as follows: | ||
(g) For the lien on a homestead to be valid, a [ |
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must [ |
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and [ |
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following statement: | ||
"If a subcontractor or supplier who furnishes materials or | ||
performs labor for construction of improvements on your property is | ||
not paid, your property may be subject to a lien for the unpaid | ||
amount if[ |
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[ |
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the claimant, you fail to withhold payment to your contractor that | ||
is sufficient to cover the unpaid claim until the dispute is | ||
resolved. Additionally, you may be liable for up to an additional | ||
10 percent of the price of the original contract for contractual | ||
retainage claims"[ |
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SECTION 32. Section 53.255(b), Property Code, is amended to | ||
read as follows: | ||
(b) The disclosure statement must read substantially | ||
similar to the following: | ||
"KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW. You | ||
are about to enter into a transaction to build a new home or remodel | ||
existing residential property. Texas law requires your contractor | ||
to provide you with this brief overview of some of your rights, | ||
responsibilities, and risks in this transaction. | ||
"CONVEYANCE TO CONTRACTOR NOT REQUIRED. Your contractor may | ||
not require you to convey your real property to your contractor as a | ||
condition to the agreement for the construction of improvements on | ||
your property. | ||
"KNOW YOUR CONTRACTOR. Before you enter into your agreement | ||
for the construction of improvements to your real property, make | ||
sure that you have investigated your contractor. Obtain and verify | ||
references from other people who have used the contractor for the | ||
type and size of construction project on your property. | ||
"GET IT IN WRITING. Make sure that you have a written | ||
agreement with your contractor that includes: (1) a description of | ||
the work the contractor is to perform; (2) the required or | ||
estimated time for completion of the work; (3) the cost of the work | ||
or how the cost will be determined; and (4) the procedure and | ||
method of payment, including provisions for [ |
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and conditions for final payment. If your contractor made a | ||
promise, warranty, or representation to you concerning the work the | ||
contractor is to perform, make sure that promise, warranty, or | ||
representation is specified in the written agreement. An oral | ||
promise that is not included in the written agreement may not be | ||
enforceable under Texas law. | ||
"READ BEFORE YOU SIGN. Do not sign any document before you | ||
have read and understood it. NEVER SIGN A DOCUMENT THAT INCLUDES AN | ||
UNTRUE STATEMENT. Take your time in reviewing documents. If you | ||
borrow money from a lender to pay for the improvements, you are | ||
entitled to have the loan closing documents furnished to you for | ||
review at least one business day before the closing. Do not waive | ||
this requirement unless a bona fide emergency or another good cause | ||
exists, and make sure you understand the documents before you sign | ||
them. If you fail to comply with the terms of the documents, you | ||
could lose your property. You are entitled to have your own | ||
attorney review any documents. If you have any question about the | ||
meaning of a document, consult an attorney. | ||
"GET A LIST OF SUBCONTRACTORS AND SUPPLIERS. Before | ||
construction commences, your contractor is required to provide you | ||
with a list of the subcontractors and suppliers the contractor | ||
intends to use on your project. Your contractor is required to | ||
supply updated information on any subcontractors and suppliers | ||
added after the list is provided. Your contractor is not required | ||
to supply this information if you sign a written waiver of your | ||
rights to receive this information. | ||
"MONITOR THE WORK. Lenders and governmental authorities may | ||
inspect the work in progress from time to time for their own | ||
purposes. These inspections are not intended as quality control | ||
inspections. Quality control is a matter for you and your | ||
contractor. To ensure that your home is being constructed in | ||
accordance with your wishes and specifications, you should inspect | ||
the work yourself or have your own independent inspector review the | ||
work in progress. | ||
"MONITOR PAYMENTS. If you use a lender, your lender is | ||
required to provide you with a periodic statement showing the money | ||
disbursed by the lender from the proceeds of your loan. Each time | ||
your contractor requests payment from you or your lender for work | ||
performed, your contractor is also required to furnish you with a | ||
disbursement statement that lists the name and address of each | ||
subcontractor or supplier that the contractor intends to pay from | ||
the requested funds. Review these statements and make sure that the | ||
money is being properly disbursed. | ||
"CLAIMS BY SUBCONTRACTORS AND SUPPLIERS. Under Texas law, if | ||
a subcontractor or supplier who furnishes labor or materials for | ||
the construction of improvements on your property is not paid, you | ||
may become liable and your property may be subject to a lien for the | ||
unpaid amount, even if you have not contracted directly with the | ||
subcontractor or supplier. To avoid liability, you should take the | ||
following actions: | ||
(1) If you receive a written notice from a | ||
subcontractor or supplier, you should withhold payment from your | ||
contractor for the amount of the claim stated in the notice until | ||
the dispute between your contractor and the subcontractor or | ||
supplier is resolved. If your lender is disbursing money directly | ||
to your contractor, you should immediately provide a copy of the | ||
notice to your lender and instruct the lender to withhold payment in | ||
the amount of the claim stated in the notice. If you continue to pay | ||
the contractor after receiving the written notice without | ||
withholding the amount of the claim, you may be liable and your | ||
property may be subject to a lien for the amount you failed to | ||
withhold. | ||
(2) During construction and for 30 days after final | ||
completion, termination, or abandonment of the contract by the | ||
contractor, you should withhold or cause your lender to withhold | ||
the greater of the amount you are required to withhold under the | ||
contract or an amount equal to 10 percent of the amount of payments | ||
made for the work performed by your contractor. This is [ |
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referred to as [ |
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withhold at least [ |
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completion, termination, or abandonment of the contract by the | ||
contractor and if a valid claim is timely made by a claimant and | ||
your contractor fails to pay the claim, you may be personally liable | ||
and your property may be subject to a lien up to the amount that you | ||
failed to withhold. | ||
"If a claim is not paid within a certain time period, the | ||
claimant is required to file a mechanic's lien affidavit in the real | ||
property records in the county where the property is located. A | ||
mechanic's lien affidavit is not a lien on your property, but the | ||
filing of the affidavit could result in a court imposing a lien on | ||
your property if the claimant is successful in litigation to | ||
enforce the lien claim. | ||
"SOME CLAIMS MAY NOT BE VALID. When you receive a written | ||
notice of a claim or when a mechanic's lien affidavit is filed on | ||
your property, you should know your legal rights and | ||
responsibilities regarding the claim. Not all claims are valid. A | ||
notice of a claim by a subcontractor or supplier is required to be | ||
sent, and the mechanic's lien affidavit is required to be filed, | ||
within strict time periods. The notice and the affidavit must | ||
contain certain information. All claimants may not fully comply | ||
with the legal requirements to collect on a claim. If you have paid | ||
the contractor in full before receiving a notice of a claim and have | ||
fully complied with the law regarding [ |
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may not be liable for that claim. Accordingly, you should consult | ||
your attorney when you receive a written notice of a claim to | ||
determine the true extent of your liability or potential liability | ||
for that claim. | ||
"OBTAIN A LIEN RELEASE AND A BILLS-PAID AFFIDAVIT. When you | ||
receive a notice of claim, do not release withheld funds without | ||
obtaining a signed and notarized release of lien and claim from the | ||
claimant. You can also reduce the risk of having a claim filed by a | ||
subcontractor or supplier by requiring as a condition of each | ||
payment made by you or your lender that your contractor furnish you | ||
with an affidavit stating that all bills have been paid. Under | ||
Texas law, on final completion of the work and before final payment, | ||
the contractor is required to furnish you with an affidavit stating | ||
that all bills have been paid. If the contractor discloses any | ||
unpaid bill in the affidavit, you should withhold payment in the | ||
amount of the unpaid bill until you receive a waiver of lien or | ||
release from that subcontractor or supplier. | ||
"OBTAIN TITLE INSURANCE PROTECTION. You may be able to obtain | ||
a title insurance policy to insure that the title to your property | ||
and the existing improvements on your property are free from liens | ||
claimed by subcontractors and suppliers. If your policy is issued | ||
before the improvements are completed and covers the value of the | ||
improvements to be completed, you should obtain, on the completion | ||
of the improvements and as a condition of your final payment, a ' | ||
completion of improvements' policy endorsement. This endorsement | ||
will protect your property from liens claimed by subcontractors and | ||
suppliers that may arise from the date the original title policy is | ||
issued to the date of the endorsement." | ||
SECTION 33. Section 53.281(b), Property Code, is amended to | ||
read as follows: | ||
(b) A waiver and release is effective to release the owner, | ||
the owner's property, the contractor, and the surety on a payment | ||
bond from claims and liens only if: | ||
(1) the waiver and release substantially complies with | ||
one of the forms prescribed by Section 53.284; | ||
(2) the waiver and release is signed by the claimant or | ||
the claimant's authorized agent [ |
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(3) in the case of a conditional release, evidence of | ||
payment to the claimant exists. | ||
SECTION 34. Sections 53.282(a) and (b), Property Code, are | ||
amended to read as follows: | ||
(a) A statement purporting to waive, release, or otherwise | ||
adversely affect a lien or payment bond claim is not enforceable and | ||
does not create an estoppel or impairment of a lien or payment bond | ||
claim unless: | ||
(1) the statement is in writing and substantially | ||
complies with a form prescribed by Section 53.284; | ||
(2) for a conditional lien waiver, the claimant has | ||
actually received payment in good and sufficient funds in full for | ||
the lien or payment bond claim; or | ||
(3) the statement is: | ||
(A) in a written original contract or subcontract | ||
for the construction, remodel, or repair of a single-family house, | ||
townhouse, or duplex or for land development related to a | ||
single-family house, townhouse, or duplex; and | ||
(B) made before labor or materials are provided | ||
under the original contract or subcontract. | ||
(b) The filing of a lien rendered unenforceable by a lien | ||
waiver under Subsection (a)(3) is a violation of [ |
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Section 12.002, Civil Practice and Remedies Code[ |
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SECTION 35. Sections 53.284(b) and (c), Property Code, are | ||
amended to read as follows: | ||
(b) If a claimant or potential claimant is required to | ||
execute a waiver and release in exchange for or to induce the | ||
payment of a progress payment and is not paid in exchange for the | ||
waiver and release or if a single payee check or joint payee check | ||
is given in exchange for the waiver and release, the waiver and | ||
release must read: | ||
"CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT | ||
"Project ___________________ | ||
"Job No. ___________________ | ||
"On receipt by the signer of this document of a check from | ||
________________ (maker of check) in the sum of $__________ payable | ||
to _____________________ (payee or payees of check) and when the | ||
check has been properly endorsed and has been paid by the bank on | ||
which it is drawn, this document becomes effective to release any | ||
mechanic's lien right, any right arising from a payment bond that | ||
complies with a state or federal statute, any common law payment | ||
bond right, any claim for payment, and any rights under any similar | ||
ordinance, rule, or statute related to claim or payment rights for | ||
persons in the signer's position that the signer has on the property | ||
of ________________ (owner) located at ______________________ | ||
(location) to the following extent: ______________________ (job | ||
description). | ||
"This release covers a progress payment for all labor, | ||
services, equipment, or materials furnished to the property or to | ||
__________________ (person with whom signer contracted) as | ||
indicated in the attached statement(s) or progress payment | ||
request(s), except for unpaid retention, pending modifications and | ||
changes, or other items furnished. This excludes retainage and the | ||
following open matters: ___________________________. | ||
"Before any recipient of this document relies on this | ||
document, the recipient should verify evidence of payment to the | ||
signer. | ||
"The signer warrants that the signer has already paid or will | ||
use the funds received from this progress payment to promptly pay in | ||
full all of the signer's laborers, subcontractors, materialmen, and | ||
suppliers for all work, materials, equipment, or services provided | ||
for or to the above referenced project in regard to the attached | ||
statement(s) or progress payment request(s). | ||
"Date ____________________________ | ||
"_________________________________ (Company name) | ||
"By ______________________________ (Signature) | ||
"_________________________________ (Title)" | ||
(c) If a claimant or potential claimant is required to | ||
execute an unconditional waiver and release to prove the receipt of | ||
good and sufficient funds for a progress payment and the claimant or | ||
potential claimant asserts in the waiver and release that the | ||
claimant or potential claimant has been paid the progress payment, | ||
the waiver and release must: | ||
(1) contain a notice at the top of the document, | ||
printed in bold type at least as large as the largest type used in | ||
the document, but not smaller than 10-point type, that reads: | ||
"NOTICE: | ||
"This document waives rights unconditionally and states that | ||
you have been paid for giving up those rights. It is prohibited for | ||
a person to require you to sign this document if you have not been | ||
paid the payment amount set forth below. If you have not been paid, | ||
use a conditional release form."; and | ||
(2) below the notice, read: | ||
"UNCONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT | ||
"Project ___________________ | ||
"Job No. ___________________ | ||
"The signer of this document has been paid and has received a | ||
progress payment in the sum of $___________ for all labor, | ||
services, equipment, or materials furnished to the property or to | ||
_____________________ (person with whom signer contracted) on the | ||
property of _______________________ (owner) located at | ||
______________________ (location) to the following extent: | ||
______________________ (job description). The signer therefore | ||
waives and releases any mechanic's lien right, any right arising | ||
from a payment bond that complies with a state or federal statute, | ||
any common law payment bond right, any claim for payment, and any | ||
rights under any similar ordinance, rule, or statute related to | ||
claim or payment rights for persons in the signer's position that | ||
the signer has on the above referenced project to the following | ||
extent: | ||
"This release covers a progress payment for all labor, | ||
services, equipment, or materials furnished to the property or to | ||
__________________ (person with whom signer contracted) as | ||
indicated in the attached statement(s) or progress payment | ||
request(s), except for unpaid retention, pending modifications and | ||
changes, or other items furnished. This excludes retainage and the | ||
following open matters:___________________________. | ||
"The signer warrants that the signer has already paid or will | ||
use the funds received from this progress payment to promptly pay in | ||
full all of the signer's laborers, subcontractors, materialmen, and | ||
suppliers for all work, materials, equipment, or services provided | ||
for or to the above referenced project in regard to the attached | ||
statement(s) or progress payment request(s). | ||
"Date ____________________________ | ||
"_________________________________ (Company name) | ||
"By ______________________________ (Signature) | ||
"_________________________________ (Title)" | ||
SECTION 36. The following provisions of the Property Code | ||
are repealed: | ||
(1) Sections 53.021(b) and (d); | ||
(2) Section 53.022(c); | ||
(3) Section 53.026(b); | ||
(4) Section 53.053; | ||
(5) Sections 53.056(b), (c), (d), (e), and (f); | ||
(6) Sections 53.057(b), (b-1), (c), (d), (e), (f), and | ||
(g); | ||
(7) Section 53.058; | ||
(8) Sections 53.081(b), (c), and (d); | ||
(9) Section 53.083; | ||
(10) Sections 53.101, 53.102, 53.103, 53.104, 53.105, | ||
and 53.106; | ||
(11) Section 53.107(e); | ||
(12) Section 53.158(b); | ||
(13) Sections 53.159(b), (c), (d), and (e); | ||
(14) Section 53.160(f); | ||
(15) Sections 53.161(b) and (f); | ||
(16) Section 53.162; | ||
(17) Sections 53.203(d) and (e); | ||
(18) Section 53.205(b); | ||
(19) Section 53.206(c); | ||
(20) Sections 53.252 and 53.253; and | ||
(21) Section 53.283. | ||
SECTION 37. The changes in law made by this Act apply only | ||
to an original contract entered into on or after the effective date | ||
of this Act. An original contract entered into before the effective | ||
date of this Act is governed by the law as it existed immediately | ||
before the effective date of this Act, and that law is continued in | ||
effect for that purpose. | ||
SECTION 38. This Act takes effect September 1, 2019. |