The bill amends the Government Code and Property Code regarding the withholding of retainage by governmental entities and owners in construction contracts. Specifically, it prohibits governmental entities from withholding retainage after the completion of work by the prime contractor, including during the warranty period, and introduces new provisions that allow for the withholding of retainage only for specially fabricated materials that have been delivered and accepted, and are covered by a manufacturer's warranty. Additionally, it clarifies that funds for the value of the installation of such specially fabricated materials by a subcontractor are not subject to these provisions.

Furthermore, the bill modifies the requirements for owners regarding the reservation of funds during the progress of work under a contract. It states that owners are not required to reserve funds for specially fabricated materials that have been delivered and accepted, provided they are covered by a manufacturer's warranty. The changes in law will apply only to original contracts entered into on or after the effective date of the Act, which is set for September 1, 2025.

Statutes affected:
Introduced: Property Code 53.101 (Property Code 53)
House Committee Report: Government Code 2252.032, Property Code 53.101 (Property Code 53, Government Code 2252)