HBA-EVB, EVB S.B. 1274 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1274
By: Wentworth
Business & Industry
5/19/1999
Engrossed



BACKGROUND AND PURPOSE 

Currently, subcontractors may not be adequately protected  from a decision
by a contractor or owner to withhold or delay statutory retainage payments.
"Retainage" means an amount representing part of a contract payment that is
not required to be paid to the claimant within the month following the
month in which labor is performed, material is furnished, or specially
fabricated material is delivered.  S.B. 1274 sets forth procedures
involving retainage owed and provides for the accrual of interest on such
payments that are overdue. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter A, Chapter 53, Property Code, by adding
Section 53.004, as follows: 

Sec. 53.004.  RETAINAGE.  (a)  Provides that any retainage withheld accrues
interest at two points below the prime rate payable to the person entitled
to receive the retained funds. Provides that any retainage withheld after
the 45th day after the date work is completed, as defined by Section 53.106
(Affidavit of Completion), accrues interest at one and one-half percent
each month payable to the person entitled to receive the retained funds.
Defines "prime rate." 

(b)  Provides that interest on retained funds stops accruing under this
section on the earlier of the date the funds are delivered; the date the
funds are mailed, if the funds are delivered not later than the third day
after the date the funds are mailed; or the date a judgment is entered in
an action brought to recover the retained funds. 

SECTION 2.  Effective date: September 1, 1999.
Provides that the changes in law made by this Act apply only to matters
relating to or claims arising under an original contract, as that term is
defined by Section 53.001 (Definitions), Property Code, executed on or
after September 1, 1999. 

SECTION 3.  Emergency clause.