Bill Text: TX HB2180 | 2013-2014 | 83rd Legislature | Introduced
Bill Title: Relating to lender notice to contractors regarding a construction loan or financing agreement for the improvement of real property and related procedures for suspending contractors' and subcontractors' performance.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2013-04-30 - Left pending in committee [HB2180 Detail]
Download: Texas-2013-HB2180-Introduced.html
83R507 AJA-F | ||
By: Bell | H.B. No. 2180 |
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relating to lender notice to contractors regarding a construction | ||
loan or financing agreement for the improvement of real property | ||
and related procedures for suspending contractors' and | ||
subcontractors' performance. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 28, Property Code, is amended by adding | ||
Section 28.0091 to read as follows: | ||
Sec. 28.0091. LENDER NOTICE OF DEFAULT TO CONTRACTORS; | ||
SUSPENSION OF PERFORMANCE PENDING CURE. (a) This section applies | ||
only to a lender that provides financing through a construction | ||
loan or under a financing agreement for an improvement to real | ||
property for which the real property or improvement is collateral. | ||
(b) For an improvement to real property for which financing | ||
is provided as described by Subsection (a), the contractor shall | ||
provide to the lender: | ||
(1) the contractor's name, physical and mailing | ||
addresses and e-mail address, if available, and telephone number; | ||
and | ||
(2) the name of the person to whom any notice under | ||
this section should be delivered. | ||
(c) Except as provided by Subsection (f), each contractor | ||
and subcontractor providing labor, materials, equipment, or | ||
services for an improvement described by this section is entitled | ||
to suspend contractually required performance without penalty or | ||
liability for damages if the lender suspends a disbursement of loan | ||
proceeds or ceases disbursements of loan proceeds to a borrower or | ||
property owner under the loan or financing agreement to which this | ||
section applies. | ||
(d) Except as provided by Subsection (f), a lender shall | ||
immediately notify the contractor identified under Subsection (b) | ||
of a suspension of a disbursement of loan proceeds or cessation of | ||
disbursements of loan proceeds described by Subsection (c). | ||
(e) On receipt of notice under Subsection (d), a contractor | ||
shall immediately notify each of the contractor's subcontractors of | ||
the suspension of the disbursement of loan proceeds or cessation of | ||
disbursements of loan proceeds and of the subcontractor's right | ||
under this section to suspend contractually required performance | ||
without penalty or liability for damages as a result of the | ||
suspension of the disbursement of loan proceeds or cessation of | ||
disbursements of loan proceeds. | ||
(f) A lender is not required to give notice to a contractor | ||
under Subsection (d) with respect to a suspension of a disbursement | ||
of loan proceeds or cessation of disbursements of loan proceeds | ||
described by Subsection (c) if, before the lender suspends the | ||
disbursement of loan proceeds or ceases the disbursements of loan | ||
proceeds, a written agreement exists between the lender and the | ||
contractor that: | ||
(1) provides for the continued performance by the | ||
contractor and for payment to the contractor in the event of a | ||
default by the borrower or property owner under the loan or | ||
financing agreement; | ||
(2) provides for notice from the lender to the | ||
contractor that the borrower or property owner is in default under | ||
the loan or financing agreement; | ||
(3) requires that, on the receipt of notice under | ||
Subdivision (2), the contractor shall immediately notify the | ||
contractor's subcontractors of the borrower's or property owner's | ||
default under the loan or financing agreement; and | ||
(4) specifically states that subcontractors of the | ||
contractor are third-party beneficiaries of the lender's | ||
obligations under the agreement. | ||
(g) A subcontractor is a third-party beneficiary of a | ||
lender's obligations under Subsection (d) with equal standing to a | ||
contractor to enforce remedies. | ||
SECTION 2. The change in law made by this Act applies only | ||
to a construction loan or financing agreement entered into on or | ||
after the effective date of this Act. A construction loan or | ||
financing agreement entered into before the effective date of this | ||
Act is governed by the law in effect immediately before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
SECTION 3. This Act takes effect September 1, 2013. |