Legislative Issues 2019

The Texas Construction Association has identified the following issues and for the 86th Legislative Session and will be dedicating their staff and lobbying efforts on the following items.

Lien Law Modernization.  The Texas lien law system needs to be modernized so that the construction team on a project would be better able to comply with the law and protect their lien rights.  Legislation was filed that would have made changes to the lien lawthat included an early notice system that would be consistent with many other states, eliminating several confusing concepts unique to Texas, and providing owners, contractors, claimants, lenders, suppliers and title companies with more timely and accessible information regarding projects via an Internet portal.  Read HB 3065 text.  HB 3065 died in the House Calendars Committee.

Responsibility for Defective Plans and Specifications.  In Texas, if construction work turns out to be defective due to an error in the plans and specifications, the contractor bears the responsibility for the consequences for the defective designs.  In Texas, contractors are not licensed to prepare construction drawings, but because of two Texas Supreme Court cases, a person who is not allowed by law to prepare the documents is being required to warranty those documents. Legislation was filed that would have established in law that the construction team should not be liable for construction that is defective due to erroneous documents furnished by the owner.  Read SB 1215 text.  A version of SB 1215 that differed from the original version of the legislation passed by the Senate and approved by the House Business & Industry.  The new version of the bill was passed by the House and the Senate concurred in the changes of SB 1215.  Governor Greg Abbott vetoed SB 1215.

Priority Retainage.  In Texas, the construction team’s retainage is not protected if the owner defaults on the loan or the lender forecloses on the loan.  Legislation was filed that would have recognized retainage for what it is:  a loan to the construction owner by the construction team.  The bill would have protected retainage in a similar fashion as the lender protects its construction loan.   It would have accomplished this by providing a priority to a lien for retainage that is equal to the priority to a lender’s deed of trust for the construction loan.  Read HB 2668 text.  HB 2668 died in the House Calendars Committee.

Right to Repair.  Legislation was filed that would have required that, before a suit is filed or arbitration is initiated, a person making a claim for damages caused by an alleged construction defect must 1) provide a notice to the contractor; 2) obtain an inspection of the alleged defect by a professional engineer and allow the contractor to the attend the inspection; 3) obtain a written report from the engineer concerning the alleged defect; and 4) allow 150 days after the date of the report for the contractor to correct any construction defect identified in the report.  The court or arbitrator would have been required to dismiss a claim if the above items were not followed by the claimant.  Read HB 2343 text.  HB 2343 died in the House Calendars Committee.

Statute of Repose.  Legislation was filed that would have reduced the Statute of Repose in Texas from 10 to 5 years.  Read HB 1053 text.  HB 1053 died in the House Judiciary & Civil Jurisprudence Committee.

Attorney Fees.  Legislation was filed that would have amended Chapter 38 of the Civil Practice & Remedies Code to add “other organization” to Sec. 38.001(a) so attorney fees could be recovered from an individual, corporation or other organization, including partnerships and LLCs, for claims for services, labor or materials.  Read HB 744 text.  HB 744 was passed by the House but died in the Senate State Affairs Committee.