2021 legislative Issues
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.
Texas Economic Protection and Recovery Act (TEPRA)
TEPRA will help restart our economy and encourage job creation and investment in all corners of the state. By focusing on core principles such and local mandate preemption, liability protections, and workforce development, TEPRA will ensure that job creators in Texas do not have their hands tied by policies that hurt economic growth. Allowing job creators to do what they do best is the key to the state’s ability to recover and come back stronger than before.
Lien Law Modernization
The Texas construction lien law system needs to be modernized to enable general contractors and subcontractors to comply more easily with the law without having to engage legal counsel for each project. The original intent of the lien law system was to provide a statutory remedy to secure payment for labor, materials, or machinery furnished in the improvement of property. However, this has been lost in, among other issues, the different notice requirements and deadlines placed on claimants to secure their lien rights. Sound changes include a simplified notice requirement, clarifying the difference between statutory retainage and contractual retainage, and providing owners, contractors, subcontractors, lenders, suppliers and title companies with clearer statutory guidance for the process.
Responsibility for Defective Plans and Specifications
Under current Texas case law, a contractor may bear the liability for defects in construction that are based on construction documents prepared or procured by the owner or the owner’s agent or design professional. The construction team should not be liable for construction that is defective due to erroneous documents furnished by the owner. In fact, contractors are statutorily prohibited from preparing or altering engineering or architectural design plans and specifications. Statutory changes are needed to clarify that the construction team is only liable for defects resulting from construction errors. Please support SB 219 by Sen. Hughes.
Securing Retainage
Retainage, the amount an owner retains (usually 10%) each month from a payment for work performed, is tantamount to a loan from the contractor or subcontractor to the owner. The person provides a full month’s work, yet gets paid only 90%. By not paying a portion of funds owed until the end of a project, the owner is able to avoid drawing those funds from a financial institution, thereby avoiding interest and other costs. In Texas, the construction team’s retainage is not protected if the lender forecloses on the construction loan; therefore, statutory changes are necessary to ensure that retainage is secured, and survives the foreclosure of a bank’s lien on a project.