TITLE: Relating to the application of funds under certain construction contracts.

SUMMARY: Relating to the application of funds under certain construction contracts.

FULL TEXT:
AN ACT relating to the application of funds under certain construction contracts. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 162.031, Property Code, is amended by adding Subsection (a-1) to read as follows: (a-1) This subsection applies only to a trustee who receives trust funds or who has control or direction of trust funds in connection with a nonresidential construction contract. A trustee, other than an owner, who retains or otherwise diverts trust funds due to a dispute, including an alleged default, arising under a construction contract other than the contract in connection with which the trust funds were received by or placed under the control or direction of the trustee has misapplied the trust funds. For purposes of this subsection, "owner" means the person or entity that: (1) owns or controls the premises at which construction of improvements is to be performed; and (2) is responsible for payment to the contractor for the construction of improvements. SECTION 2. The changes in law made by this Act apply only to a contract that is entered into on or after the effective date of this Act. SECTION 3. This Act takes effect September 1, 2025.