ASA-HC is proud to partner with the Texas Construction Association (TCA) to move legislative reform forward. By working together, we pass construction legislation that directly affects subcontractors and the construction industry, and we always keep our members informed of the latest legislation and news. Below are the issues we tackled on behalf of ASA members in Houston and throughout Texas.
Local Ordinances Affecting Business Policies
Local governments that enact ordinances regulating private employment practices create a patch-work of regulations for private, small businesses. The state should preempt local ordinances attempting to regulate the employer/employee relationship.
Lien Law Modernization
The Texas construction lien law system needs to be modernized so that the construction team on a project is better able to comply with the law. Sound changes include an early notice system that would be consistent with many other states, eliminating several confusing concepts unique to Texas, and providing owners, contractors, subcontractors, lenders, suppliers and title companies with more timely and accessible information regarding projects via an Internet portal.
Responsibility for Defective Plans and Specifications
In Texas, if construction work turns out to be defective due to an error in the plans and specifications, the contractor bears the responsibility for the consequences for the defective designs. Contractors in Texas are not licensed to prepare construction drawings, but because of a Texas Supreme Court case a person who is not allowed by law to prepare the documents is being required to warranty those documents. The construction team should not be liable for construction that is defective due to erroneous documents furnished by the owner
Retainage, the amount retained (usually 10%) each month from a payment for work performed, is tantamount to a loan from the person doing the work. The person provides a full month’s work, yet gets paid only 90%. In Texas, the construction team’s retainage is not protected if the lender forecloses on the construction loan. A loan via retainage should have equal priority to a loan from a bank.
Right to Repair
A property owner should give the construction team a notice of an alleged construction defect and allow a reasonable time to make repairs before filing suit for damages. A statute that provides for fair notice and time to repair will greatly reduce unnecessary lawsuits, but not prevent a lawsuit when a dispute over a construction defect cannot be otherwise resolved.
Statute of Repose
The construction team is currently exposed to 10 years of liability for construction defects. Disputes arise as to whether a defect was caused by defective construction, poor maintenance, or normal obsolescence. Reducing the period of liability from 10 years to 5 years will lower litigation costs and the insurance costs related thereto, yet allow for a reasonable period of time for construction defects to be determined. These savings can be passed to an owner through lower construction costs.
A quirky state statute allows for attorney fees to be recovered from an individual or a corporation, but not partnerships and limited liability companies. The type of legal entity should not dictate whether attorney fees are recoverable in a court case.