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HB 3288

AN ACT relating to the application of funds under construction contracts.

House Bill
Filed

Filed

Bill introduced by legislator

Committee

Hearing

Passed Cmte

Calendar

Passed

Sent

Enrolled

Governor

Signed

89th Regular Session

Jan 14, 2025 - Jun 2, 2025 • Session ended

Awaiting Committee Assignment

Bill filed, pending referral to House committee

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Committee

Not yet assigned

Fiscal Note

Not available

What This Bill Does

Prevents trustees from withholding or diverting construction trust funds due to a dispute on a different construction contract. It clarifies that such actions constitute misapplication of trust funds, which protects contractors and subcontractors from having their project funds improperly held or redirected. The law will apply to construction contracts entered into on or after September 1, 2025, ensuring clearer financial accountability in construction projects.

Subject Areas

Property Interests--Trusts Property Interests--General Business & Commerce--General BUILDING CONSTRUCTION

Bill Text

relating to the application of funds under 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)  A trustee 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.
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
SECTION 3.  This Act takes effect September 1, 2025.

Bill History

filed

Bill filed: AN ACT relating to the application of funds under construction contracts.

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