By: Rodriguez S.B. No. 1281
 
 
 
   
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to mechanic's, contractor's, or materialman's liens.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter A, Chapter 53, Property Code, is
  amended by adding Section 53.0001 to read as follows:
         Sec. 53.0001.  LEGISLATIVE INTENT; LIBERAL CONSTRUCTION.
  (a)  It is the intent of the legislature to provide assurance of
  payment to laborers, contractors, subcontractors, and certain
  service providers who make improvements to real property.
         (b)  This chapter shall be liberally construed in favor of a
  claimant for payment under a contract for labor or material for an
  improvement to real property.
         SECTION 2.  Subdivision (15), Section 53.001, Property Code,
  is amended to read as follows:
               (15)  "Completion" [of an original contract] means the
  later of:
                     (A)  the 30th day after the date of the final
  inspection and written final acceptance by the governmental body
  that issued the building permit for the house, building, or
  improvement; or
                     (B)  the date of actual completion of the work,
  including any extras or change orders reasonably required or
  contemplated under the original contract, other than warranty work
  [or replacement or repair of the work] performed under the
  contract.
         SECTION 3.  Subsections (a), (c), (d), and (e), Section
  53.021, Property Code, are amended to read as follows:
         (a)  A person has a lien if:
               (1)  the person [labors, specially fabricates
  material, or] furnishes labor or materials:
                     (A)  for construction or repair [in this state]
  of[:
                     [(A)]  a house, building, [or] improvement,
  fixture,[;
                     [(B)     a levee or embankment to be erected for the
  reclamation of overflow land along a river or creek;] or
                     [(C)  a] railroad; or
                     (B)  that enhance the value, use, productivity,
  enjoyment, or aesthetics of real property; and
               (2)  the person [labors, specially fabricates the
  material, or] furnishes the labor or materials under or by virtue of
  a contract with the owner or the owner's agent, [trustee,
  receiver,] contractor, or subcontractor.
         (c)  An architect, engineer, or surveyor who prepares a plan
  or plat under or by virtue of a written contract with the owner or
  the owner's agent[, trustee, or receiver] in connection with the
  actual or proposed design, construction, or repair of improvements
  on real property or the location of the boundaries of real property
  has a lien on the property.
         (d)  A person who provides labor, plant material, or other
  supplies for the installation of landscaping for a house, building,
  or improvement, including the construction of a retention pond,
  retaining wall, berm, irrigation system, fountain, or other similar
  installation, under or by virtue of a written contract with the
  owner or the owner's agent, contractor, or subcontractor[, trustee,
  or receiver] has a lien on the property.
         (e)  A person who performs labor as part of, or who furnishes
  labor or materials for, the demolition of a structure on real
  property under or by virtue of a written contract with the owner of
  the property or the owner's agent, [trustee, receiver,] contractor,
  or subcontractor has a lien on the property.
         SECTION 4.  Subchapter B, Chapter 53, Property Code, is
  amended by adding Section 53.0211 to read as follows:
         Sec. 53.0211.  OWNER'S REPRESENTATIVE; NOTICES.  (a)  An
  owner of real property who enters into an original contract
  creating a lien under this chapter may designate a person in this
  state as the owner's representative to whom a notice or other
  documents may be sent under this chapter.
         (b)  Any notices required by this chapter to be sent to the
  owner may be sent to the owner or to the owner's representative.
         SECTION 5.  Section 53.022, Property Code, is amended to
  read as follows:
         Sec. 53.022.  PROPERTY TO WHICH LIEN EXTENDS. (a)  The lien
  extends to the real property on which the labor was performed or
  materials furnished and to any house, building, fixtures, or
  improvements on the property[, the land reclaimed from overflow, or
  the railroad and all of its properties, and to each lot of land
  necessarily connected or reclaimed].
         (b)  If the real property is located [The lien does not
  extend to abutting sidewalks, streets, and utilities that are
  public property.
         [(c)  A lien against land] in a city, town, or village, the
  lien extends to each lot on which the house, building, fixture, or
  improvement is located.
         (c)  If the real property is [situated or on which the labor
  was performed.
         [(d)  A lien against land] not in a city, town, or village,
  the lien extends to not more than 50 acres of the real property on
  which the house, building, fixture, or improvement is located
  [situated] or [on which] the labor and materials were furnished
  [was performed].
         SECTION 6.  Subsection (a), Section 53.026, Property Code,
  is amended to read as follows:
         (a)  A person who labors[, specially fabricates materials,]
  or furnishes labor or materials under a direct contractual
  relationship with another person is considered to be in direct
  contractual relationship with the owner and has a lien as an
  original contractor, if:
               (1)  [the owner contracted with the other person for
  the construction or repair of a house, building, or improvements
  and the owner can effectively control that person] through
  ownership of voting stock, interlocking directorships, or
  otherwise,[;
               [(2)]  the owner [contracted with the other person for
  the construction or repair of a house, building, or improvements
  and that other person] can effectively control that other person or
  that other person can effectively control the owner [through
  ownership of voting stock, interlocking directorships, or
  otherwise]; or
               (2)  the contract between [(3)]   the owner and that
  [contracted with the] other person [for the construction or repair
  of a house, building, or improvements and the contract] was made
  without good faith intention of the parties that the other person
  was to perform the contract.
         SECTION 7.  Chapter 53, Property Code, is amended by adding
  Subchapter B-1 to read as follows:
  SUBCHAPTER B-1.  NOTICE OF COMMENCEMENT
         Sec. 53.031.  NOTICE OF COMMENCEMENT.  (a)  If an owner
  enters into an original contract that creates a lien under Section
  53.021(a) on the owner's property, the owner shall, before the
  contractor furnishes any labor or materials to the property:
               (1)  file a notice of commencement that complies with
  this subchapter with the county clerk of each county in which the
  property is located;
               (2)  post the notice of commencement in a conspicuous
  place on the property; and
               (3)  furnish the notice of commencement to the original
  contractor.
         (b)  The owner shall ensure that the notice of commencement
  remains posted on the property until completion of the work.
         Sec. 53.032.  PAYMENT BOND. A copy of the payment bond, if
  any, must be filed with the notice of commencement filed with the
  county clerk and attached to the back of the notice of commencement
  at the time the notice is posted on the property.
         Sec. 53.033.  CONTENTS OF NOTICE. The notice of
  commencement must be in the form of an affidavit sworn to by the
  owner and must contain:
               (1)  a description of the property, legally sufficient
  for identification, and the street address of the property, if the
  street address is available;
               (2)  a general description of the work to be performed
  on the property;
               (3)  the name and address of all persons who own all or
  part of the property, and a description of the type of interest of
  each owner of the property;
               (4)  the name and address of each person who owns all or
  part of the fee simple title to the property, if different than the
  owner;
               (5)  the name and address of the original contractor;
               (6)  the name and address of the surety on a payment
  bond applicable to the construction or repair, if any, and the
  amount of the bond;
               (7)  the name and address of any person making a loan
  for the work; and
               (8)  the name and address of the owner's
  representative, if any.
         Sec. 53.034.  SUBCONTRACTOR REQUEST FOR NOTICE. (a)  A
  subcontractor may make a written request for a copy of the notice of
  commencement from the owner or reputed owner.
         (b)  The owner shall provide a copy of the notice of
  commencement to the subcontractor not later than the 10th day after
  receipt of the subcontractor's request.
         (c)  If the owner fails to give the notice to the
  subcontractor as required by Subsection (b), the subcontractor may
  delay sending the notice required under Section 53.056(c) until not
  later than the 20th day after the date the notice of commencement is
  provided to the subcontractor.
         Sec. 53.035.  LIEN NOTICE BY SUBCONTRACTOR NOT REQUIRED. A
  subcontractor is not required to send the notice required by
  Section 53.056(c) if, at the time the subcontractor furnishes the
  first labor or material to an owner's property, the owner has not
  complied with Sections 53.031 and 53.032.
         Sec. 53.036.  AMENDED NOTICE OF COMMENCEMENT. (a)  The
  owner shall file with the county clerk of each county in which the
  owner's property is located and post on the owner's property an
  amended notice of commencement if any information contained in an
  existing notice of commencement changes or is determined to be
  incorrect.
         (b)  The owner shall provide a copy of the amended notice to
  each subcontractor who sent a notice to the owner under Section
  53.056(c) or made a request for a notice under Section 53.034.
         (c)  If the owner fails to provide the copy of the amended
  notice to the subcontractor, any new or changed information in the
  amended notice of commencement may not be used as a basis to
  invalidate a notice provided or a lien claim filed by the
  subcontractor under this chapter.
         Sec. 53.037.  RELIANCE ON NOTICE. (a)  An original
  contractor or subcontractor required to send or file a notice or
  file a lien claim under this chapter may rely on the validity of the
  information contained in a notice of commencement and any amended
  notice of commencement.
         (b)  A deficiency or error in a notice provided or a lien
  claim filed under this chapter may not be used to invalidate the
  notice or lien claim if the deficiency or error resulted from
  reliance on incorrect information provided in the notice of
  commencement or applicable amended notice of commencement.
         Sec. 53.038.  LIABILITY OF OWNER FOR INCORRECT INFORMATION.
  If the notice of commencement or amended notice of commencement
  contains incorrect information, the owner and an individual signing
  the notice on behalf of the owner, if any, are liable to a lien
  claimant for all damages, including damages for any loss of lien or
  bond rights, attorney's fees, expenses, and costs suffered as a
  result of the lien claimant's reliance on the incorrect
  information.
         SECTION 8.  Section 53.052, Property Code, is amended to
  read as follows:
         Sec. 53.052.  FILING OF LIEN CLAIM [AFFIDAVIT]. (a)  Except
  as provided by Subsection (b), the person claiming the lien must
  file a lien claim [an affidavit] with the county clerk of the county
  in which the property is located [or into which the railroad
  extends] not later than the 140th [15th] day [of the fourth calendar
  month] after the date of completion, termination, or abandonment of
  the original contract [day on which the indebtedness accrues].
         (b)  A person claiming a lien arising from a residential
  construction project must file a lien claim [an affidavit] with the
  county clerk of the county in which the property is located not
  later than the 110th [15th] day [of the third calendar month] after
  the date of completion, termination, or abandonment of the original
  contract [day on which the indebtedness accrues].
         (c)  Not later than the 10th day after the date a
  subcontractor files a lien claim, the subcontractor must send a
  copy of the lien claim to the owner or reputed owner and the
  original contractor to the owner's and contractor's last known
  addresses.  Unless the owner was prejudiced by receiving late
  notice of a lien claim under this subsection, the receipt of a late
  notice of the lien claim [The county clerk shall record the
  affidavit in records kept for that purpose and shall index and
  cross-index the affidavit in the names of the claimant, the
  original contractor, and the owner. Failure of the county clerk to
  properly record or index a filed affidavit] does not invalidate the
  lien.
         SECTION 9.  Section 53.054, Property Code, is amended to
  read as follows:
         Sec. 53.054.  CONTENTS OF LIEN CLAIM [AFFIDAVIT]. (a)  The
  lien claim [affidavit must be signed by the person claiming the lien
  or by another person on the claimant's behalf and] must contain
  [substantially]:
               (1)  a sworn statement of the amount of the claim;
               (2)  the name and last known address of the owner or
  reputed owner;
               (3)  a general statement of the kind of work done and
  materials furnished by the claimant [and, for a claimant other than
  an original contractor, a statement of each month in which the work
  was done and materials furnished for which payment is requested];
               (4)  the name and last known address of the person by
  whom the claimant was employed or to whom the claimant furnished the
  materials or labor;
               (5)  the name and last known address of the original
  contractor;
               (6)  a description, legally sufficient for
  identification, of the property sought to be charged with the lien;
  and
               (7)  the claimant's name, mailing address, and, if
  different, physical address[; and
               [(8)     for a claimant other than an original contractor,
  a statement identifying the date each notice of the claim was sent
  to the owner and the method by which the notice was sent].
         (b)  The claimant may attach the information required by
  Subsection (a) to the lien claim [to the affidavit a copy of any
  applicable written agreement or contract and a copy of each notice
  sent to the owner].
         (c)  The lien claim [affidavit] is not required to set forth
  individual items of work done or material furnished [or specially
  fabricated]. The lien claim [affidavit] may use broad descriptive
  terms, [any] abbreviations, or symbols customary in the trade.
         SECTION 10.  Section 53.056, Property Code, is amended to
  read as follows:
         Sec. 53.056.  SUBCONTRACTOR [DERIVATIVE CLAIMANT]: NOTICE
  TO OWNER OR ORIGINAL CONTRACTOR. (a)  Except as provided by
  Section 53.035 [Subchapter K], a subcontractor [claimant other than
  an original contractor] must give the notice prescribed by this
  section to the owner, or reputed owner, and the original contractor
  for the lien to be valid.
         (b)  The notice must include:
               (1)  a general description of the labor and materials
  furnished or to be furnished by the subcontractor;
               (2)  the name, address, and telephone number of the
  subcontractor;
               (3)  the name of the person who contracted with the
  subcontractor for the labor or materials; and
               (4)  a sufficient description of the real property to
  which the labor and materials are furnished, or are to be furnished,
  including a legal description, subdivision plat, or street address
  [If the lien claim arises from a debt incurred by a subcontractor,
  the claimant must give to the original contractor written notice of
  the unpaid balance. The claimant must give the notice not later
  than the 15th day of the second month following each month in which
  all or part of the claimant's labor was performed or material
  delivered. The claimant must give the same notice to the owner or
  reputed owner and the original contractor not later than the 15th
  day of the third month following each month in which all or part of
  the claimant's labor was performed or material or specially
  fabricated material was delivered].
         (c)  Except as provided by Section 53.034(c), the
  subcontractor's notice must be sent not later than the 30th day
  after the first date the subcontractor provides the labor or
  materials for the improvement of the owner's property.  If a
  subcontractor fails to send a timely notice under this subsection
  or Section 53.034(c), the subcontractor may claim a lien only for
  the labor and materials furnished not earlier than the 30th day
  before the date the notice was sent and for all labor and materials
  furnished after the date the notice was sent [If the lien claim
  arises from a debt incurred by the original contractor, the
  claimant must give notice to the owner or reputed owner, with a copy
  to the original contractor, in accordance with Subsection (b)].
         (d)  A subcontractor may send only one notice to an owner
  under this section with respect to all labor and materials
  furnished or to be furnished for the improvement of the owner's
  property [To authorize the owner to withhold funds under Subchapter
  D, the notice to the owner must state that if the claim remains
  unpaid, the owner may be personally liable and the owner's property
  may be subjected to a lien unless:
               [(1)     the owner withholds payments from the contractor
  for payment of the claim; or
               [(2)  the claim is otherwise paid or settled].
         (e)  If the notice is sent by registered or certified mail,
  the effective date of the notice is the date the notice is deposited
  for mailing.  The effective date of a notice delivered by other
  means is the date the notice is received [The notice must be sent by
  registered or certified mail and must be addressed to the owner or
  reputed owner or the original contractor, as applicable, at his
  last known business or residence address].
         (f)  The notice is not defective if, after the date of the
  notice, the subcontractor furnishes labor or materials that are not
  within the scope of the notice's general description of the labor
  and materials furnished or to be furnished [A copy of the statement
  or billing in the usual and customary form is sufficient as notice
  under this section].
         SECTION 11.  The heading to Subchapter D, Chapter 53,
  Property Code, is amended to read as follows:
  SUBCHAPTER D.  BILLS PAID AFFIDAVIT [FUNDS WITHHELD BY OWNER
  FOLLOWING NOTICE]
         SECTION 12.  The heading to Section 53.085, Property Code,
  is amended to read as follows:
         Sec. 53.085.  BILLS PAID AFFIDAVIT REQUIRED.
         SECTION 13.  The heading to Subchapter E, Chapter 53,
  Property Code, is amended to read as follows:
  SUBCHAPTER E.  TERMINATION OR ABANDONMENT OF WORK [REQUIRED
  RETAINAGE FOR BENEFIT OF LIEN CLAIMANTS]
         SECTION 14.  Subsections (a) and (b), Section 53.107,
  Property Code, are amended to read as follows:
         (a)  Not later than the 10th day after the date an original
  contract is terminated or the original contractor abandons
  performance under the original contract, the owner shall give
  notice to each subcontractor who[, before the date of termination
  or abandonment, has]:
               (1)  before the date of termination or abandonment,
  sent [given] notice to the owner as provided by Section 53.056[,
  53.057, or 53.058]; [or]
               (2)  before the date of termination or abandonment,
  sent to the owner [by certified or registered mail] a written
  request for notice of termination or abandonment; or
               (3)  did not send a written request for notice of
  termination or abandonment or a notice required under Section
  53.056, but provided to the owner written notice that the
  subcontractor provided labor, material, or services to the owner's
  property.
         (b)  The notice must contain:
               (1)  the name and address of the owner;
               (2)  the name and address of the original contractor;
               (3)  a description, legally sufficient for
  identification, of the real property on which the improvements are
  located;
               (4)  a general description of the improvements agreed
  to be furnished under the original contract;
               (5)  a statement that the original contract has been
  terminated or that performance under the contract has been
  abandoned; and
               (6)  the date of the termination or abandonment[; and
               [(7)     a conspicuous statement that a claimant may not
  have a lien on the retained funds unless the claimant files an
  affidavit claiming a lien not later than the 40th day after the date
  of the termination or abandonment].
         SECTION 15.  Subsection (a), Section 53.122, Property Code,
  is amended to read as follows:
         (a)  Except as provided by [Subchapter E and] Section
  53.124(e), perfected mechanic's liens that have the same inception
  date are on equal footing without reference to the date of filing
  the [affidavit claiming the] lien claim.
         SECTION 16.  The heading to Section 53.124, Property Code,
  is amended to read as follows:
         Sec. 53.124.  INCEPTION OF [MECHANIC'S] LIEN.
         SECTION 17.  Subsections (a) and (e), Section 53.124,
  Property Code, are amended to read as follows:
         (a)  Except as provided by Subsection (e), [for purposes of
  Section 53.123,] the time of inception of a mechanic's lien for an
  original contractor and subcontractor is the commencement of
  construction of improvements or delivery of materials to the land
  on which the improvements are to be located and on which the
  materials are to be used.
         (e)  The time of inception of a lien for an architect,
  engineer, surveyor, landscape original contractor or
  subcontractor, or demolition original contractor or subcontractor
  is the date the person files a lien claim [that is created under
  Section 53.021(c), (d), or (e) is the date of recording of an
  affidavit of lien under Section 53.052. The priority of a lien
  claimed by a person entitled to a lien under Section 53.021(c), (d),
  or (e) with respect to other mechanic's liens is determined by the
  date of recording. A lien created under Section 53.021(c), (d), or
  (e) is not valid or enforceable against a grantee or purchaser who
  acquires an interest in the real property before the time of
  inception of the lien].
         SECTION 18.  Sections 53.152, 53.154, 53.156, 53.157,
  53.158, and 53.172, Property Code, are amended to read as follows:
         Sec. 53.152.  RELEASE OF CLAIM OR LIEN. (a)  If an owner,
  the original contractor, or a person who pays or satisfies any
  indebtedness secured by a lien filed under this chapter submits to
  the lien holder [When a debt for labor or materials is satisfied or
  paid by collected funds, the person who furnished the labor or
  materials shall, not later than the 10th day after the date of
  receipt of] a written request for a release of the lien, the lien
  holder shall[,] furnish to the requesting person a release of the
  indebtedness and any lien claimed[,] to the extent of the
  indebtedness paid. [An owner, the original contractor, or any
  person making the payment may request the release.]
         (b)  A release of lien must be furnished not later than the
  10th day after the date of receipt of a written request and must be
  in a form that would permit it to be filed of record.
         Sec. 53.154.  FORECLOSURE OF LIEN; VENUE. (a)  A mechanic's
  lien may be foreclosed only on judgment of a court of competent
  jurisdiction foreclosing the lien and ordering the sale of the
  property subject to the lien.
         (b)  A suit to foreclose the lien must be brought in a court
  of competent jurisdiction in the county in which the real property
  that is subject to the lien is located.
         Sec. 53.156.  COSTS AND ATTORNEY'S FEES.  In any proceeding
  to foreclose a lien or to enforce a claim against a bond issued
  under Subchapter H[, I,] or J or in any proceeding to declare that
  any lien or claim is invalid or unenforceable in whole or in part,
  the court shall award costs and reasonable attorney's fees as are
  equitable and just.  With respect to a lien or claim arising out of a
  residential construction contract, the court is not required to
  order the property owner to pay costs and attorney's fees under this
  section.
         Sec. 53.157.  DISCHARGE OF LIEN. A mechanic's lien claim [or
  affidavit claiming a mechanic's lien] filed under Section 53.052
  may be discharged of record by:
               (1)  recording a lien release signed by the claimant
  under Section 53.152;
               (2)  failing to institute suit to foreclose the lien in
  the county in which the property is located within the period
  prescribed by Section 53.158[, 53.175, or 53.208]; or
               (3)  recording the original or certified copy of a
  final judgment or decree of a court of competent jurisdiction
  providing for the discharge[;
               [(4)     filing the bond and notice in compliance with
  Subchapter H;
               [(5)     filing the bond in compliance with Subchapter I;
  or
               [(6)     recording a certified copy of the order removing
  the lien under Section 53.160 and a certificate from the clerk of
  the court that states that no bond or deposit as described by
  Section 53.161 was filed by the claimant within 30 days after the
  date the order was entered].
         Sec. 53.158.  PERIOD FOR BRINGING SUIT TO FORECLOSE LIEN.  
  (a)  Except as provided by Subsection (b), suit must be brought to
  foreclose the lien within two years after the last day a claimant
  may file the lien claim [affidavit] under Section 53.052 [or within
  one year after completion, termination, or abandonment of the work
  under the original contract under which the lien is claimed,
  whichever is later].
         (b)  For a claim arising from a residential construction
  project, suit must be brought to foreclose the lien within one year
  after the last day a claimant may file a lien claim [affidavit]
  under Section 53.052 [or within one year after completion,
  termination, or abandonment of the work under the original contract
  under which the lien is claimed, whichever is later].
         Sec. 53.172.  BOND REQUIREMENTS. The bond must:
               (1)  describe the property on which the liens are
  claimed;
               (2)  refer to each lien claimed in a manner sufficient
  to identify it;
               (3)  be in an amount that is double the amount of the
  liens referred to in the bond unless the total amount claimed in the
  liens exceeds $60,000 [$40,000], in which case the bond must be in
  an amount that is the greater of 1-1/2 times the amount of the liens
  or the sum of $60,000 [$40,000] and the amount of the liens;
               (4)  be payable to the parties claiming the liens;
               (5)  be executed by:
                     (A)  the party filing the bond as principal; and
                     (B)  a corporate surety authorized and admitted to
  do business under the law in this state and licensed by this state
  to execute the bond as surety, subject to Sections
  3503.001-3503.005, Insurance Code [Section 1, Chapter 87, Acts of
  the 56th Legislature, Regular Session, 1959 (Article 7.19-1,
  Vernon's Texas Insurance Code)]; and
               (6)  be conditioned substantially that the principal
  and sureties will pay to the named obligees or to their assignees
  the amount that the named obligees would have been entitled to
  recover if their claims had been proved to be valid and enforceable
  liens on the property.
         SECTION 19.  The heading to Section 53.173, Property Code,
  is amended to read as follows:
         Sec. 53.173.  NOTICE OF BOND TO INDEMNIFY.
         SECTION 20.  Subsections (c) and (d), Section 53.173,
  Property Code, are amended to read as follows:
         (c)  The notice must be served on each obligee by mailing a
  copy of the notice and the bond to the obligee by certified United
  States mail, return receipt requested, addressed to the claimant at
  the address stated in the lien claim [affidavit] for the obligee.
         (d)  If the claimant's lien claim [affidavit] does not state
  the claimant's address and the address is not available to the
  principal in a notice sent by the lien claimant under Section
  53.056, the notice is not required to be mailed to the claimant.
         SECTION 21.  Subsection (f), Section 53.254, Property Code,
  is amended to read as follows:
         (f)  A [An affidavit for] lien claim filed under this
  subchapter that relates to a homestead must contain the following
  notice conspicuously printed, stamped, or typed in a size equal to
  at least 10-point boldface or the computer equivalent, at the top of
  the page:
         "NOTICE: THIS IS NOT A LIEN.  THIS IS ONLY [AN AFFIDAVIT
  CLAIMING] A LIEN CLAIM."
         SECTION 22.  Subsection (b), Section 53.255, Property Code,
  is amended to read as follows:
         (b)  The disclosure statement must read substantially
  similar to the following:
         "KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW. You
  are about to enter into a transaction to build a new home or remodel
  existing residential property. Texas law requires your contractor
  to provide you with this brief overview of some of your rights,
  responsibilities, and risks in this transaction.
         "CONVEYANCE TO CONTRACTOR NOT REQUIRED.  Your contractor may
  not require you to convey your real property to your contractor as a
  condition to the agreement for the construction of improvements on
  your property.
         "KNOW YOUR CONTRACTOR.  Before you enter into your agreement
  for the construction of improvements to your real property, make
  sure that you have investigated your contractor. Obtain and verify
  references from other people who have used the contractor for the
  type and size of construction project on your property.
         "GET IT IN WRITING.  Make sure that you have a written
  agreement with your contractor that includes: (1) a description of
  the work the contractor is to perform; (2) the required or estimated
  time for completion of the work; (3) the cost of the work or how the
  cost will be determined; and (4) the procedure and method of
  payment, including [provisions for statutory retainage and]
  conditions for final payment. If your contractor made a promise,
  warranty, or representation to you concerning the work the
  contractor is to perform, make sure that promise, warranty, or
  representation is specified in the written agreement. An oral
  promise that is not included in the written agreement may not be
  enforceable under Texas law.
         "READ BEFORE YOU SIGN.  Do not sign any document before you
  have read and understood it. NEVER SIGN A DOCUMENT THAT INCLUDES AN
  UNTRUE STATEMENT.  Take your time in reviewing documents. If you
  borrow money from a lender to pay for the improvements, you are
  entitled to have the loan closing documents furnished to you for
  review at least one business day before the closing. Do not waive
  this requirement unless a bona fide emergency or another good cause
  exists, and make sure you understand the documents before you sign
  them. If you fail to comply with the terms of the documents, you
  could lose your property. You are entitled to have your own
  attorney review any documents. If you have any question about the
  meaning of a document, consult an attorney.
         "GET A LIST OF SUBCONTRACTORS AND SUPPLIERS.  Before
  construction commences, your contractor is required to provide you
  with a list of the subcontractors and suppliers the contractor
  intends to use on your project. Your contractor is required to
  supply updated information on any subcontractors and suppliers
  added after the list is provided. Your contractor is not required
  to supply this information if you sign a written waiver of your
  rights to receive this information.
         "MONITOR THE WORK.  Lenders and governmental authorities may
  inspect the work in progress from time to time for their own
  purposes. These inspections are not intended as quality control
  inspections. Quality control is a matter for you and your
  contractor. To ensure that your home is being constructed in
  accordance with your wishes and specifications, you should inspect
  the work yourself or have your own independent inspector review the
  work in progress.
         "MONITOR PAYMENTS.  If you use a lender, your lender is
  required to provide you with a periodic statement showing the money
  disbursed by the lender from the proceeds of your loan. Each time
  your contractor requests payment from you or your lender for work
  performed, your contractor is also required to furnish you with a
  disbursement statement that lists the name and address of each
  subcontractor or supplier that the contractor intends to pay from
  the requested funds.  Review these statements and make sure that the
  money is being properly disbursed.
         "CLAIMS BY SUBCONTRACTORS AND SUPPLIERS.  Under Texas law, if
  a subcontractor or supplier who furnishes labor or materials for
  the construction of improvements on your property is not paid, you
  may become liable and your property may be subject to a lien for the
  unpaid amount, even if you have not contracted directly with the
  subcontractor or supplier. [To avoid liability, you should take
  the following actions:
               [(1)     If you receive a written notice from a
  subcontractor or supplier, you should withhold payment from your
  contractor for the amount of the claim stated in the notice until
  the dispute between your contractor and the subcontractor or
  supplier is resolved. If your lender is disbursing money directly
  to your contractor, you should immediately provide a copy of the
  notice to your lender and instruct the lender to withhold payment in
  the amount of the claim stated in the notice. If you continue to pay
  the contractor after receiving the written notice without
  withholding the amount of the claim, you may be liable and your
  property may be subject to a lien for the amount you failed to
  withhold.
               [(2)     During construction and for 30 days after final
  completion, termination, or abandonment of the contract by the
  contractor, you should withhold or cause your lender to withhold 10
  percent of the amount of payments made for the work performed by
  your contractor. This is sometimes referred to as 'statutory
  retainage.' If you choose not to withhold the 10 percent for at
  least 30 days after final completion, termination, or abandonment
  of the contract by the contractor and if a valid claim is timely
  made by a claimant and your contractor fails to pay the claim, you
  may be personally liable and your property may be subject to a lien
  up to the amount that you failed to withhold.]
         "If a subcontractor or supplier who furnishes labor or
  materials for the construction of improvements on your property is
  not paid, the subcontractor or supplier [claim is not paid within a
  certain time period, the claimant] is required to file a mechanic's
  lien claim [affidavit] in the real property records in the county
  where the property is located. A mechanic's lien claim [affidavit]
  is not a lien on your property, but the filing of the claim 
  [affidavit] could result in a court imposing a lien on your property
  if the claimant is successful in litigation to enforce the lien
  claim.
         "SOME CLAIMS MAY NOT BE VALID.  When [you receive a written
  notice of a claim or when] a mechanic's lien claim [affidavit] is
  filed on your property, you should know your legal rights and
  responsibilities regarding the claim. Not all claims are valid. A
  [notice of a claim by a] subcontractor or supplier is required to
  send a notice and file [be sent, and] the mechanic's lien claim
  [affidavit is required to be filed,] within strict time periods.
  The notice and the lien claim [affidavit] must contain certain
  information. All claimants may not fully comply with the legal
  requirements to collect on a claim. [If you have paid the
  contractor in full before receiving a notice of a claim and have
  fully complied with the law regarding statutory retainage, you may
  not be liable for that claim.] Accordingly, you should consult your
  attorney when you receive a written notice of a claim to determine
  the true extent of your liability or potential liability for that
  claim.
         "OBTAIN A LIEN RELEASE AND A BILLS-PAID AFFIDAVIT.  [When you
  receive a notice of claim, do not release withheld funds without
  obtaining a signed and notarized release of lien and claim from the
  claimant.] You can [also] reduce the risk of having a claim filed
  by a subcontractor or supplier by requiring as a condition of each
  payment made by you or your lender that your contractor furnish you
  with an affidavit stating that all bills have been paid. Under
  Texas law, on final completion of the work and before final payment,
  the contractor is required to furnish you with an affidavit stating
  that all bills have been paid. If the contractor discloses any
  unpaid bill in the affidavit, you should withhold payment in the
  amount of the unpaid bill until you receive a waiver of lien or
  release from that subcontractor or supplier.
         "OBTAIN TITLE INSURANCE PROTECTION.  You may be able to
  obtain a title insurance policy to insure that the title to your
  property and the existing improvements on your property are free
  from liens claimed by subcontractors and suppliers. If your policy
  is issued before the improvements are completed and covers the
  value of the improvements to be completed, you should obtain, on the
  completion of the improvements and as a condition of your final
  payment, a 'completion of improvements' policy endorsement. This
  endorsement will protect your property from liens claimed by
  subcontractors and suppliers that may arise from the date the
  original title policy is issued to the date of the endorsement."
         SECTION 23.  Subsection (d), Section 56.054, Business &
  Commerce Code, is amended to read as follows:
         (d)  A contingent payor is considered to have exercised
  diligence for purposes of Subsection (b)(1) under a contract for a
  private project governed by Chapter 53, Property Code, if the
  contingent payee receives in writing from the contingent payor:
               (1)  the name, address, and business telephone number
  of the primary obligor;
               (2)  a description, legally sufficient for
  identification, of the property on which the improvements are being
  constructed;
               (3)  [the name and address of the surety on any payment
  bond provided under Subchapter I, Chapter 53, Property Code, to
  which any notice of claim should be sent;
               [(4)]  if a loan has been obtained for the construction
  of improvements:
                     (A)  a statement, furnished by the primary obligor
  and supported by reasonable and credible evidence from all
  applicable lenders, of the amount of the loan;
                     (B)  a summary of the terms of the loan;
                     (C)  a statement of whether there is foreseeable
  default of the primary obligor; and
                     (D)  the name, address, and business telephone
  number of the borrowers and lenders; and
               (4) [(5)]  a statement, furnished by the primary
  obligor and supported by reasonable and credible evidence from all
  applicable banks or other depository institutions, of the amount,
  source, and location of funds available to pay the balance of the
  contract amount if there is no loan or the loan is not sufficient to
  pay for all of the construction of the improvements.
         SECTION 24.  Subdivision (3), Section 3503.051, Insurance
  Code, is amended to read as follows:
               (3)  "Notice of claim" means a written notification by
  a claimant who makes a claim for payment from the surety company.  
  The term does not include a routine statutory notice required by
  Section 53.056 [53.056(b), 53.057, 53.058], 53.252(b), or 53.253,
  Property Code, or Section 2253.047, Government Code.
         SECTION 25.  The following provisions of the Property Code
  are repealed:
               (1)  Subdivisions (1), (2), (11), and (12), Section
  53.001;
               (2)  Sections 53.002 and 53.003;
               (3)  Subsection (b), Section 53.021;
               (4)  Sections 53.023, 53.024, and 53.025;
               (5)  Sections 53.051, 53.053, 53.055, 53.057, 53.058,
  53.081, 53.082, 53.083, and 53.084;
               (6)  Subsections (b), (c), and (d), Section 53.085;
               (7)  Sections 53.101, 53.102, 53.103, 53.104, 53.105,
  and 53.106;
               (8)  Subsection (d), Section 53.107, Subsection (c),
  Section 53.122, and Subsections (c) and (d), Section 53.124;
               (9)  Sections 53.153, 53.155, 53.159, 53.160, 53.161,
  and 53.162;
               (10)  Subchapter I, Chapter 53;
               (11)  Sections 53.252 and 53.253; and
               (12)  Subsection (g), Section 53.254.
         SECTION 26.  The changes in law made by this Act apply only
  to an original contract entered into on or after the effective date
  of this Act. An original contract entered into before the effective
  date of this Act is governed by the law as it existed immediately
  before the effective date of this Act, and that law is continued in
  effect for that purpose.
         SECTION 27.  This Act takes effect January 1, 2014.