The Texas Legislature is officially back in session. While lawmakers generally have until March 8, 2019 to file bills, many bills of interest to the construction industry have already been filed. Below is a list of some key construction related bills we will be following this session along with a description of the bill and a link that can be used to track the bill’s progress.
Lien Law Changes – HB 589 focuses on mechanic’s and materialman’s liens and proposes sweeping changes to Chapter 53 of the Texas Property Code. The bill calls for Texas to shift to a web-based system and requires the Texas Secretary of State to establish and maintain a state lien website and to establish protocols for the posting and receiving of notices required under the new Chapter 53 through the new website. Proponents of the bill contend that these changes are necessary in order to modernize and simplify Texas construction lien laws. Opponents of the bill contend that these changes will overcomplicate a system that is already working and the early notice requirements may actually make it more difficult for subcontractors and suppliers to protect their rights.
Statutory Standard of Care – HB 1211 seeks to amend Chapter 130 of the Texas Civil Practice and Remedies Code, which currently focuses on the enforceability of indemnification provisions in certain construction contracts. The proposed amendment would add a statutory standard of care that must be included in all contracts for engineering or architectural services. If this bill becomes law, all contracts for engineering or architectural services will have to include a provision that requires licensed engineers or registered architects to perform services with the professional skill and care ordinarily provided by competent engineers or architects practicing under the same or similar circumstances and professional license.
Mandatory Worker’s Compensation Coverage – The general rule in Texas is that an employer is not required to obtain workers’ compensation coverage unless the employer is a public employer or an exception to the general rule applies. If passed in their current form, HB 750 and SB 163 would first amend Section 406.096 of the Texas Labor Code so that it is titled “Required Provision of Coverage for Employees of Building or Construction Contractors and Subcontractors.” They would then insert an exception to the general rule that would require contractors and subcontractors to provide workers’ compensation insurance coverage for each of their employees. This would mean that workers’ compensation insurance would no longer be optional for Texas contractors and subcontractors.
Expanded Definition of Necessities – Currently, the Texas Deceptive Trade Practices Act bars Texans from taking advantage of a disaster by selling or leasing “fuel, food, medicine, or another necessity” at an exorbitant or excessive price. HB 1152 would amend the list of necessities that give rise to a potential violation to include “building materials” and “construction tools.” This would mean building supply companies would be exposed to new liability in the wake of certain disasters if their charges for materials or tools are found to be exorbitant or excessive. It could also mean that Texas contractors or subcontractors charging for building materials in connection with performing disaster recovery work could be exposed to new liability as well.
Other Expected Bills – As a final note, we expect additional bills of interest to the construction industry to be filed in the coming weeks. We could see bills related to apportioning responsibility for defects in plans and specifications, notice of and a right to cure defects in commercial construction, the ability to incorporate other documents by reference without including a copy of the incorporated documents with the contract at the time of signing, and whether an owner or contractor may withhold funds owed for work on one project as a result of issues on another unrelated project. We will continue to monitor the bills filed and will update this post periodically as additional bills of interest are filed.
Sean McChristian is a partner in the construction practice group of Porter Hedges. He represents contractors, subcontractors, developers, owners, suppliers, sureties, and design professionals in all types of construction-related disputes. Sean is certified by the Texas Board of Legal Specialization in Construction Law. To read Sean’s full bio, click here.