The bill amends the Property Code of Texas to clarify the treatment of construction contract trust funds. It introduces a new 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 states that such funds are not deemed trust funds until they are disbursed by the lender if the owner finances construction through a loan. The bill also clarifies that funds released in good faith to contractors before the end of the reservation period are not trust funds.

Further amendments include changes to Section 162.003(a), which now explicitly states that beneficiaries include those with funds reserved under Section 53.101. New provisions in Section 162.031 and Section 162.032 provide protections for trustees, stating that failure to reserve required funds is not considered misapplication unless there is intent to defraud. The bill also establishes that courts must 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 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)
House Committee Report: Property Code 162.003, Property Code 162.031, Property Code 162.032 (Property Code 162)