The bill amends the Property Code 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 if an owner finances construction through a loan, the reserved funds are not trust funds until disbursed by the lender. 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 now recognizes beneficiaries of trust funds related to both payments and 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)