The bill, H.B. No. 2484, introduces a new chapter to the Business & Commerce Code, specifically Chapter 60, which establishes regulations regarding construction retainage. It defines key terms such as "construction contract" and "retainage," the latter referring to a portion of payment withheld from subcontractors until the completion of the contract. The bill mandates that if a construction contract includes a retainage provision, the contractor must deposit the retainage into an escrow account, ensuring that the funds are available to fulfill obligations to subcontractors.

Additionally, the bill stipulates that if a contractor fails to pay the subcontractor within three months after the subcontractor has completed their work, the contractor will be liable for the original amount owed plus an additional three percent. The provisions of this bill will apply only to contracts entered into or renewed after its effective date of September 1, 2025, while contracts established before this date will continue to be governed by the previous law.

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