The bill amends the Property Code of Texas to establish new regulations regarding construction contract trust funds. It introduces Section 162.011, which specifies that funds reserved by property owners under Section 53.101 are considered trust funds only if beneficiaries have perfected a lien claim and the property is subject to a senior lien from a lender. Additionally, it clarifies that funds are not deemed trust funds until they are disbursed by the lender if the owner finances construction through a loan. The bill also states that funds released in good faith to contractors before the end of the reservation period are not classified as trust funds.

Further amendments include changes to Section 162.003(a), which expands the definition of beneficiaries to include those associated with reserved funds under Section 53.101. New provisions in Sections 162.031 and 162.032 provide protections for trustees, stating that failure to reserve required funds is not considered misapplication unless done with intent to defraud, and they are not liable for damages in such cases. Lastly, Section 162.034 mandates that courts award reasonable attorney's fees and costs to the prevailing party in actions under this chapter. The changes will apply to construction contracts entered into on or after the effective date of the Act, which is set for September 1, 2025.

Statutes affected:
Introduced: Property Code 162.001, Property Code 162.003 (Property Code 162)
Senate Committee Report: Property Code 162.001, Property Code 162.003 (Property Code 162)
Engrossed: Property Code 162.001, Property Code 162.003 (Property Code 162)
House Committee Report: Property Code 162.003, Property Code 162.031, Property Code 162.032 (Property Code 162)