bill changing how long owners hold back 10 percent

The text as introduced · 320 words

89R11482 SCR-F

By: Hinojosa of Hidalgo
S.B. No. 1530

A BILL TO BE ENTITLED

AN ACT

relating to the time period for which certain funds payable under a

construction contract must be reserved for the benefit of

mechanic's lien claimants.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 53.101, Property Code, is amended by

amending Subsection (a) and adding Subsection (a-1) to read as

follows:

(a) During the progress of work under an original contract

for which a mechanic's lien may be claimed and for the period

described by Subsection (a-1) [ 30 days after the work under the

contract is completed ], the owner shall reserve:

(1) 10 percent of the contract price of the work to the

owner; or

(2) 10 percent of the value of the work, measured by

the proportion that the work done bears to the work to be done,

using the contract price or, if there is no contract price, using

the reasonable value of the completed work.

(a-1) After the completion of work under an original

contract for which a mechanic's lien may be claimed, the owner shall

reserve the funds described by Subsection (a) for a period ending

the earlier of:

(1) the 31st day after the date the work under the

contract is completed; or

(2) the 61st day after the date:

(A) a certificate of occupancy is issued for the

improvement; or

(B) the improvement is first used for its

intended purpose.

SECTION 2. The changes in law made by this Act apply only to

a contract entered into on or after the effective date of this Act.

A 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 3. This Act takes effect September 1, 2025.