Texas Construction Law Updates
2017 Legislative UpdatesIan Fullington - Tuesday, January 23, 2018
In Texas, the 85th Legislature enacted several important pieces of legislation relevant to construction. Overall, only 18.3% or 1,211 total bills, passed the Texas Legislature and 50 bills were vetoed by Gov. Greg Abbott. Among other budgetary items, funding for schools was reduced by approximately $1.1 billion and about $2 billion was taken from highway projects.
While high-profile reforms such as lien-law modernization and right-to-repair failed to pass, several important pieces of construction legislation did pass:
- SB 807 – Modified Tex. Bus. & Comm. Code § 272.0001, 272.001. Effective Sept. 1, 2017.
- The Texas Business & Commerce Code allows a construction contractor working on a project in Texas to void provisions in a construction contract
selecting another state's law or requiring litigation in an out-of-state venue.
- SB 807 expanded the ability to void out-of-state choice-of-law and venue provisions to include architect and engineers. It also expanded the statute
to include contracts "collateral to or affecting the construction contract."
- HB 3021 – Modified Tex. Govt. Code § 2254.0031. Effective Sept. 1, 2017.
- Engineers and architects can no longer be required to indemnify or defend a state governmental entity for claims or liabilities resulting from the
negligent acts or omissions of the entity or its employees.
- HB 3270 – Modified Tex. Education Code § 22.08341. Effective Sept. 1, 2017.
- The Texas Education Code requires background checks for the employees of contractors and subcontractors working on public schools. However, HB 3270
amends the Education Code to exempt employees not working around children. Stated another way, if children are not present, background checks will
not be required.
- SB 1289 – Modified Tex. Govt. Code § 2252.202. Effective Sept. 1, 2017.
- Iron and steel used on state projects must be from the United States. However, there are several exceptions:
- If there are insufficient quantities of US iron or steel;
- If US iron or steel isn’t reasonably available;
- If the quality of U.S. steel is insufficient;
- If there is a more than 20% price increase;
- If buying US iron or steel is inconsistent with the public interest; and,
- Electrical components are not considered to be iron or steel products.
- Insurance claims can be denied completely unless the owner or contractor can show how much damage resulted from causes covered under the policy
- Liquidated-damage provision enforced by Houston Court of Appeals
- Texas Supreme Court refuses to look beyond the contract language to determine a party’s obligations
- 2017 Legislative Updates
- Construction contracts can incorporate documents executed by the parties without describing them with specificity
- Partial performance can overcome the absence of a written contract
- Arbitration agreement found unenforceable because employer could modify it without advance notice to the employee
- Challenges to overall enforceability of a contract can be determined by an arbitrator
- Failure to investigate contractor’s performance may prevent an owner from later recovering damages for latent defects
- Pay attention to the signature block and guaranty provisions when signing a contract
- Arbitration (2)
- Condition Precedent (1)
- Construction Contracts (5)
- Construction Defects (1)
- Employment Contracts (1)
- Federal Courts (1)
- Government Contracts (1)
- Guaranty Agreement (1)
- Indemnity (1)
- Individual Liability (1)
- Insurance (1)
- Legislative Update (1)
- Limitations (1)
- Notice of Claim (1)
- Real-Estate Contracts (1)
- Settlement Agreements (2)
- Trust Fund Act (1)