Chapter 1 Introduction to Texas Construction Law
§ 1.01 Construction in Texas
§ 1.02 Construction Industry Players and Roles
[1]Property Owners
[2]Developers
[3]Design Professionals
[4]Construction Managers, Advisors, and Consultants
[5]Construction Lenders
[6]Insurers
[7]Sureties
[8]Regulatory and Compliance Professionals
[9] Prime Contractors, Original Contractors, Direct Contractors, General Contractors, and Contractors
[10] Subcontractors, Trade Contractors, Material Suppliers, Fabricators, and Laborers
§ 1.03 Project Procurement and Delivery Methods
[1]Design Bid-Build (DBB) Method
[2]Design-Build (DB) Method
[3]Construction Manager-Agent (CMA) Method
[4]Construction Manager-at-Risk (CMAR) Method
[5]Competitive Bidding (CB) Method
[6]Competitive Sealed Proposals (CSP) Method
[7]Job Order Contracts (JOC) Method
[8]Integrated Project Delivery (IPD) Method
§ 1.04 Common Construction Contracts and Project Documents
[1]Common Form Agreements
[2]The Basis for Payment
[3]Types of Contracts
[4]Common Construction Project Documents
§ 1.05 Construction Causes of Action
[1]Breach of Written or Oral Contract
[2]Breach of Express or Implied Warranty
[3]Suit on Sworn Account
[4]Quantum Meruit
[5]Negligence
[6]Fraud and Fraudulent Inducement
[7]Fraud in a Real Estate Transaction
[8]Mechanic’s Lien Foreclosure
[9]Payment Bond Claim
[10]Violation of the Deceptive Trade Practices Act
[11]Violation of the Prompt Payment Act
[12]Violation of the Trust Fund Act
[13]Uniform Declaratory Judgments Act
Chapter 2 Common Construction Contract Provisions and Disputes
§ 2.01 No-Damage-for-Delay Provisions
[1]Nature, Purpose, and Function of No-Damage-for-Delay Provisions
[2]Enforceability of No-Damage-for-Delay Provisions
[3]Common Disputes Arising From No-Damage-for-Delay Provisions
[4]Elements of a Clear No-Damage-for-Delay Provision to Reduce Disputes
§ 2.02 Liquidated Damages Provisions
[1]Nature, Purpose, and Function of Liquidated Damages Provisions
[2]Enforceability of Liquidated Damages Provisions
[3]Common Disputes Arising From Liquidated Damages Provisions
[4] Elements of a Clear Liquidated Damages Provision to Reduce Disputes
§ 2.03 Unilateral Builder Termination with Stipulated Damages Provision
[1]Nature, Purpose, and Function of the Provision
[2]Common Disputes From the Provision
[3]Alternative Versions of the Provision to Reduce Disputes
§ 2.04 Contingent Payment Clauses
[1]Nature, Purpose, and Function of Contingent Payment Clauses
[2]Enforceability of Contingent Payment Clauses
[3]Common Disputes Arising From Contingent Payment Clauses
[4]Elements of a Clear Contingent Payment Clause to Reduce Disputes
§ 2.05 Escalation of Material Cost Provisions
[1] Nature, Purpose, and Function of Escalation of Material Cost Provisions
[2] Analysis of the TAB Residential Construction Contract Material Cost Escalation Provision
[3] Common Disputes Arising From Escalation of Material Cost Provisions
[4]Elements of a Clear Escalation of Material Cost to Reduce Disputes
§ 2.06 Allowance Provisions
[1] Nature, Purpose, and Function of Allowance Provisions
[2]Comparison of AIA and TAB Allowance Provisions
[3]Common Disputes Arising From Allowance Provisions
[4]Elements of a Clear Allowance Provision to Reduce Disputes
§ 2.07 Indemnity Provisions
[1] Nature, Purpose, and Function of Indemnity Provisions
[2]Enforceability of Indemnity Provisions
[3]Common Disputes Arising From Indemnity Provisions
[4] Elements of a Clear and Enforceable Indemnity Provision to Reduce Disputes
§ 2.08 Change Order Provisions
[1] Nature, Purpose, and Function of Change Order Provisions
[2]Comparison of AIA and TAB Change Order Provisions
[3]Common Disputes Arising From Change Order Provisions
[4]Elements of a Clear Change Order Provision to Reduce Disputes
§ 2.09 Time is of the Essence Provisions
[1] Nature, Purpose, and Function of Time is of the Essence Provisions
[2]The Law Concerning Timely Performance
[3]Common Disputes Over Timely Performance
[4] Elements of a Clear and Effective Time is of the Essence Provision to Reduce Disputes
§ 2.10 Mandatory Residential Disclosures
[1] The Chapter 27 Disclosure Statement
[2] The Chapter 53 Residential Construction Contract Disclosure Statement
[3]The “KNOW YOUR RIGHTS” Warning
[4] The Notice of a Consumer’s Right to Cancel a Consumer Transaction
[5] The Constitutional Three-Day Right of Recission Disclosure Statement
Chapter 3 The Statutory Mechanic’s Lien
§ 3.01 Overview of the Statutory Mechanic’s Lien
§ 3.02 The Basics
[1] Essential Terminology
[2]What is a Mechanic’s Lien?
[3]Who is Entitled to a Mechanic’s Lien?
[4]Property to Which a Mechanic’s Lien Extends
[5] Determining Project and Property Type: Residential, Non-Residential, and Homestead Properties Explained
[6]Mandatory Steps to Perfect a Mechanic’s Lien
[7]The Law of Substantial Compliance
[8] Methods for Delivering Mechanic’s Lien Documents and Computing Days
[9] Written Contract Not Required Except for Mechanic’s Liens Against Homestead Properties
[10] Mechanic’s Lien Expiration—Deadline to File a Lawsuit to Foreclose
[11] Reimbursement of Attorney’s Fees and Costs
[12] Penalties for Knowingly Filing an Invalid Mechanic’s Lien
[13] Process for Releasing a Filed Mechanic’s Lien Affidavit
§ 3.03 Derivative Claimants – Notice of Claim for Unpaid Labor or Materials (Section 54.056)
[1] Notice of Claim for Unpaid Labor or Materials Explained
[2]Understanding Withheld Funds and Reserved Funds
[3]Mandatory Contents for a Valid Notice of Claim
[4]Deadline to Deliver the Notice of Claim
[5]Including the Mandatory Warnings for Homestead Properties
[6]Including a Statutory Request for Information
[7]Including Reference to Related Payment Statutes
[8]Additional Statutory Benefits from Delivering a Notice of Claim
§ 3.04 Derivative Claimants – Notice of Claim for Retainage (Section 54.057)
[1] Notice of Claim for Unpaid Retainage Explained
[2]Understanding Contractual Retainage
[3]The Effect of a Notice of Claim for Unpaid Retainage
[4] Mandatory Contents for a Valid Notice of Claim for Unpaid Retainage
[5]Deadline to Deliver the Notice of Claim for Unpaid Retainage
[6]Including the Mandatory Warnings for Homestead Properties
[7] Including a Request for Information and Reference to Payment Statutes
§ 3.05 All Claimants – The Lien Affidavit
[1] The Lien Affidavit Explained
[2]Contents of the Lien Affidavit
[3]Including the Mandatory Notice for Homestead Properties
[4]Filing the Lien Affidavit
[5]Deadlines to File the Lien Affidavit
[6]Delivering the Lien Affidavit
§ 3.06 Preferences and Priorities
[1] Preferences and Priorities Explained
[2]Preferences and Priorities to Withheld and Reserved Funds
[3]Preferences and Priorities to the Land and Improvements
§ 3.07 Foreclosing a Statutory Mechanic’s Lien
[1] Considerations Concerning Foreclosure Explained
[2]Steps for Obtaining a Judgment to Foreclose
[3]Post-Judgment Foreclosure Process
§ 3.08 Subchapter L Waiver & Release of Claims and All Bills Paid Affidavits
[1] Lien Waivers, Releases, and Bills Paid Affidavits Explained
[2]Understanding the Subchapter L Lien Waiver & Release of Claims
[3]Understanding the Bills Paid Affidavits
§ 3.09 Common Issues
[1] Lien on Money Owed to a Public Works Contractor
[2] Contractual Lien Waiver Void as Against Public Policy Except for Certain Residential Construction Contracts
[3]Contingent Payment Provisions Do Not Affect Lien Deadlines
[4]The Right to Assign and Enforce a Lien
[5] Original Contractor’s Duty to Defend and Indemnify Owner Against a Derivative Lien Claim
[6]How to Properly Amend a Filed Lien Affidavit
[7] Do the Constitutional Homestead Protections Apply to a Statutory Mechanic’s Lien?
[8]The “Purported Original Contractor”—Sham Contract Exception
[9]Bankruptcy and the Effect on Lien Perfection and Foreclosure
§ 3.10 Methods to Prevent or Remove an Invalid or Unenforceable Lien
[1] Methods to Prevent or Remove an Invalid or Unenforceable Lien Explained
[2] Demand to Refrain from Filing or to Remove an Invalid or Unenforceable Lien
[3] Court Intervention—Summary Motion to Remove Invalid or Unenforceable Lien and a Traditional Motion for Summary Judgment
[4]Bond to Indemnify Against a Lien
§ 3.11 Mechanic’s Liens Forms
[1] Affidavit of Commencement (Section 53.124)
[2] Notice of Claim for Unpaid Labor or Materials—Simple Version (Section 53.056)
[3] Notice of Claim for Unpaid Labor or Materials—Demand Version (Section 53.056)
[4] Notice of Claim for Unpaid Labor or Materials on a Residential Homestead Property—Simple Version (Sections 53.056 & 53.254)
[5] Notice of Claim for Unpaid Labor or Materials on a Residential Homestead Property—Demand Version (Sections 53.056 & 53.254)
[6]Affidavit of Completion (Section 53.106)
[7] Owner’s Notice of Termination or Abandonment of Work (Section 53.107)
[8] Notice of Claim for Unpaid Retainage—Simple Version (Section 53.057)
[9] Notice of Claim for Unpaid Retainage—Demand Version (Section 53.057)
[10]Original Contractor’s Mechanic’s Lien Affidavit (Section 53.054)
[11]Derivative Claimant’s Mechanic’s Lien Affidavit (Section 53.054)
[12] Original Contractor’s Residential Homestead Mechanic’s Lien Affidavit (Sections 53.054 & 53.254)
[13] Derivative Claimant’s Residential Homestead Lien Affidavit (Sections 53.054 & 53.254)
[14]Amended Mechanic’s Lien Affidavit (Section 53.054)
[15]Notice of Lien Filing Demand Letter
[16]Release of Lien (Section 53.157)
[17]Mandatory All Bills Paid Affidavit (Section 53.085)
[18]Final Bills-Paid Affidavit (Section 53.259)
[19] Conditional Waiver & Release on Progress Payment (Section 53.284(b))
[20] Unconditional Waiver & Release on Progress Payment (Section 53.284(c))
[21] Conditional Waiver & Release on Final Payment (Section 53.284(d))
[22] Unconditional Waiver & Release on Final Payment (Section 53.284(e))
[23]Claimant’s Notice for Lien on Money Due Public Works Contractor (Section 53.233)
Chapter 4 The Constitutional Mechanic’s Lien
§ 4.01 Overview of the Constitutional Mechanic’s Lien
§ 4.02 Who is Entitled to a Constitutional Lien
[1]Claimant Must Be a Mechanic, Artisan, or Materialman
[2] Claimant Must be in Direct Contractual Privity with the Property Owner
[3]Claimant Must Have Made or Repaired a Building or Article
§ 4.03 Mandatory Contractual Prerequisites for Homestead Properties
[1]Determining Property Type and Homestead Status
[2]Statutory and Constitutional Homestead Contractual Requirements
§ 4.04 How to Enforce a Constitutional Lien
[1]Self-Executing—Preliminary Notice nor Affidavit Required
[2]Exception for Enforcement Against a Bona Fide Purchaser
[3]Lien on Removeables
[4]Pleading and Proving a Constitutional Lien
[5]Statute of Limitations
[6]Recovering Attorney’s Fees and Costs
[7]Methods to Invalidate or Remove a Constitutional Lien Affidavit
§ 4.05Advantages and Disadvantages of a Constitutional Lien
§ 4.06 Constitutional Lien Forms
[1] Constitutional Mechanic’s Lien Affidavit (Article XVI, Section 37, of the Texas Constitution)
[2] Residential Homestead Constitutional Mechanic’s Lien Affidavit (Article XVI, Section 37, of the Texas Constitution and Texas Property Code, Section 53.254)
Chapter 5 Statutory Lien Against Mineral Property
§ 5.01 Overview of the Statutory Mineral Lien
§ 5.02 Who is Entitled to a Statutory Mineral Lien
§ 5.03 Property Subject to a Statutory Mineral Lien
§ 5.04 Steps for Perfecting a Mineral Lien Under Chapter 56
[1]Summary of the Steps
[2]Subcontractor’s Preliminary Notice
[3]All Claimants—Lien Affidavit Requirements
[4]Deadline to File the Lien Affidavit
§ 5.05 Priorities and Enforcing a Statutory Mineral Lien
[1]Priority of a Statutory Mineral Lien
[2]Action to Foreclose a Statutory Mineral Lien
[3]Additional Protections Afforded to Mineral Lienholders
Chapter 6 Performance and Payment Bonds
§ 6.01 Overview of Surety Performance and Payment Bonds
§ 6.02 Essential Terminology
§ 6.03The Chapter 53 Statutory Bond to Pay Liens or Claims
[1]The Statutory Private Payment Bond Explained
[2]Requirements for a Valid Statutory Payment Bond
[3]Requirements and Benefits of Filing the Bond and Original Contract
[4]Alternative Methods for Perfecting a Claim Against the Bond
[5]Enforcement of a Statutory Payment Bond Claim
§ 6.04 Texas Public Work Performance and Payment Bonds
[1]Texas Public Work Performance and Payment Bonds Explained
[2]Application and Requirements for a Valid Bond
[3] Governmental Entity Liability for Failure to Require a Payment Bond
[4]Request for Information Concerning a Bond
§ 6.05 Perfecting and Enforcing a Texas Public Work Payment Bond Claim
[1] Preliminary Notices Required for Claimants Not Hired by the Prime Contractor
[2] All Claimants—The Third Month Notice of Claim and Sworn Statement of Account
[3]Requirements to Perfect a Claim for Unpaid Retainage
[4]Methods for Mailing the Notices
[5]Enforcing a Payment Bond Claim
§ 6.06 Federal Project Performance and Payment Bond Claims (Miller Act)
[1]Purpose of the Miller Act and Bonds Required
[2]Persons Whom the Payment Bond Protects
[3]Perfecting a Claim Against the Payment Bond
[4]Lawsuit to Enforce a Payment Bond
[5]Recoverable Damages
§ 6.06 Payment Bond Claim Forms
[1]Request for Information to the Prime Contractor (Section 2253.024)
[2] Request for Information to the Governmental Entity (Section 2253.026)
[3]Notice of Retainage Agreement (Section 2253.047(b))
[4] Second Month Notice of Claim—Simple Version (Section 2253.047(c))
[5] Second Month Notice of Claim—Demand Version (Section 2253.047(c))
[6]Third Month Notice of Claim-Simple Version (Section 2253.041)
[7]Third Month Notice of Claim-Demand Version (Section 2253.041)
[8]Notice of Claim for Retainage—Simple Version (Section 2253.046)
[9] Notice of Claim for Retainage—Demand Version (Section 2253.046)
Chapter 7 Common Construction Statutes
§ 7.01 The Construction Trust Fund Act
[1]Overview of the Trust Fund Act
[2]The Creation of a Fiduciary Duty Over Trust Funds
[3] Construction Account Required for Homestead Projects Over $5,000.00
[4]Liability and Affirmative Defenses Under the Trust Fund Act
[5]Bankruptcy
[6]Pre-Suit Application of the Trust Fund Act
§ 7.02 The Private Prompt Payment Act
[1]Overview of the Private Prompt Payment Act
[2]Application of the Private Prompt Payment Act
[3]Payment Obligations and Deadlines
[4]Right to Withhold Payment for a Good Faith Dispute
[5]Statutory Right to Suspend Work
[6]Election Not to Proceed with Additional Work
[7]Interest on Overdue Payments and Recovery of Attorney’s Fees
[8]Pre-Suit Application of the Private Prompt Payment Act
§ 7.03 The Public Prompt Payment Act
[1]Overview of the Public Prompt Payment Act
[2]Payment Obligations and Deadlines
[3]Interest on Overdue Payment
[4]Exception to Prompt Payment for a Bona Fide Dispute
[5] Exception to Prompt Payment for Error or Disputed Amount of Vendor Invoice
[6]Statutory Right to Suspend Work for Non-Payment
[7]Election Not to Proceed with Additional Work
[8]Pre-Suit Application of the Public Prompt Payment Act
§ 7.04 The Deceptive Trade Practices Act
[1] Overview of the Deceptive Trade Practices-Consumer Protection Act
[2]Eligibility to Assert a DTPA Claim Restricted to “Consumers”
[3]Potential Defendants and Exemptions
[4]Waiver Generally Void and Unenforceable
[5]Pre-Suit Notice and Offer of Settlement Process
[6]Consumer’s Cause of Action and Statute of Limitations
[7] False, Misleading, or Deceptive Act or Practice – “Laundry List” Violations
[8] False, Misleading, or Deceptive Act or Practice – Tie-in Statutes
[9] Unconscionable Action or Course of Action
[10] Breach of Express or Implied Warranty
[11] Statutory Damages and Other Available Relief
§ 7.05 Prohibition Against Acting as a Public Adjuster
[1] Overview of Texas Insurance Code, Chapter 4102 – Public Insurance Adjusters
[2] Prohibition on Acting or Holding Oneself Out as a Public Adjuster Without a License
[3]Remedies Available for Violations
§ 7.06 The Statute of Repose
[1]Overview of the Statute of Repose
[2]Claims Against Contractors—6 to 10 Year Statute of Repose
[3]Exceptions to Statute of Repose for Claims Against Contractors
[4] Claims Against Architects, Engineers, and Interior Designers—10 Years
[5]Claims by Certain Governmental Entities—8 Year Statute of Repose
§ 7.07 Contingent Payment Clauses
[1]Contingent Payment Clauses Explained
[2] Overview and Application of Texas Business and Commerce Code, Chapter 56
[3] Clause Unenforceable if Non-Payment Results from Payor’s Default
[4] Clause Unenforceable if Sham Relationship Between Payor and Obligor
[5]Clause Unenforceable if Unconscionable
[6] Clause Unenforceable Following Notice of Objection by Contingent Payee
§ 7.08 The Texas Home Solicitation Act
[1]Overview of the Texas Home Solicitation Act
[2]Application of the Texas Home Solicitation Act
[3]Consumer’s Right to Cancel and Obligations of a Merchant
[4]Consumer’s Remedies
§ 7.09 Limitation on Commercial Property Owner’s Liability for Acts of Independent Contractors
[1]Overview of Civil Practice and Remedies Code, Chapter 95
[2]Applicability of Civil Practice and Remedies Code, Chapter 95
[3]Liability Protection for Property Owners and Exception
[4] Deduction for Workers’ Compensation Benefits from Damages Award
§ 7.10 Recovery of Attorney’s Fees Under Chapter 38
[1]Overview of Civil Practice and Remedies Code, Chapter 38
[2]Application of Civil Practice and Remedies Code, Chapter 38
[3]Prerequisites to an Award of Attorney’s Fees Under Chapter 38
[4]Claimant’s Right to an Award of Reasonable Attorney’s Fees
§ 7.11 Certificate of Merit—Action Against Licensed or Registered Professionals
[1]The Certificate of Merit Explained
[2] Application of Section 150.002 of the Texas Civil Practice and Remedies Code
[3]Filing Deadline and Exception
[4]Contents of a Valid Certificate of Merit
[5]Dismissal for Failure to File a Certificate of Merit
[6] Waiver of the Right to Seek Dismissal for Failure to File Certificate of Merit
§ 7.12 Selected Statutes Affecting Texas Public Works Projects
[1]Retainage of Funds on Public Works Projects
[2]Defect Claims on Public Works Projects
[3] Sovereign Immunity and Limitations on Awards Against Governmental Entities
§ 7.12 Application of the Occupational Safety and Health Act of 1970 to the Construction Site
[1] Introduction to Employer Safety Obligations on Construction Projects
[2]OSHA Construction Industry Standards
[3]OSHA Worksite Inspections
[4]OSHA Violations, Citations, and Penalties
Chapter 8 Application of the Commercial General Liability Policy to Construction Disputes
§ 8.01 Chapter Overview
§ 8.02 Understanding the Framework of a CGL Policy
[1]Declaration Page
[2]Insuring Agreement
[3]Definition Section
[4]Who Is an Insured
[5]Exclusions
[6]Conditions
[7]Limits of Insurance
[8]Endorsements
§ 8.03 Scope of Coverage
[1]Occurrence Requirement
[2]Property Damage Requirement
§ 8.04 Exclusions from Coverage
[1]Exclusion A—Expected or Intended Injury Exclusion
[2]Exclusion B—Contractual Liability Exclusion
[3]Exclusion J(5)—Performing Operations Exclusion
[4]Exclusion J(6)—Faulty Workmanship Exclusion
[5]Exclusion K—Your Product Exclusion
[6]Exclusion L—Your Work Exclusion
[7]Exclusion M—Impaired Property Exclusion
§ 8.05 Obligations of the Insured
[1]Notice of the Claim
[2]Insured’s Duty to Cooperate
[3] Unauthorized Settlements and Voluntary Payments Under Texas CGL Policies
§ 8.06 Insurer’s Duties to its Insured
[1]Insurer’s Duty to Provide a Defense
[2]Insurer’s Duty to Indemnify
[3]Insurer’s Duty to Settle in Good Faith
[4] Insurer’s Duty to Provide a Timely Coverage Decision and Pay Claims
[5] Insurer’s Duty to Provide an Independent Defense When Conflicts Arise
[6]Insurer’s Options in Responding to a Claim or Lawsuit
Chapter 9 The Residential Construction Liability Act
§ 9.01 Overview of the Residential Construction Liability Act
§ 9.02 Essential Terminology
§ 9.03 Application and Enforceability of the RCLA
[1]Claims Covered by the RCLA
[2]Claims Excluded From the RCLA
[3]Mandatory Written Contract Disclosure Statement
§ 9.04 RCLA Preemption Over Other Conflicting Laws and Contractor’s Statutory Defenses
[1]RCLA Preemption Over Other Conflicting Laws Explained
[2]Homeowner’s Recoverable Damages and Limitations
[3]Homeowner’s Heightened Burden of Proof – Proximate Causation
[4] Homeowner’s Burden of Proof for Breach of Implied Warranty of Habitability
[5]Contractor’s Affirmative Defenses
§ 9.05 The RCLA Notice and Offer of Settlement Process Explained
§ 9.06 Homeowner’s Notice of Construction Defects and Production of Supporting Evidence
[1]The Notice of Construction Defects Explained
[2] Identification of the Construction Defects and Production of Supporting Evidence
[3]The Homeowner’s Use of Construction Consultants
[4] Deadline to Serve the Notice of Construction Defects and Exceptions to Sending the Notice
[5]Methods for Serving the Notice
[6] Imminent Threat to Health and Safety – Exception to Deadlines and Repairs
[7] Contractor’s Remedy for Homeowner’s Failure to Provide the Notice of Construction Defects or Supporting Evidence
[8] Consequence of Repairing Defective Work Before Participating in the Notice and Offer of Settlement Process
§ 9.07 Contractor’s Right to Inspect the Property
[1] Scope, Limitations, and Deadline for Contractor to Inspect the Property
[2] Contractor’s Remedy for Homeowner’s Failure to Provide Reasonable Opportunity to Inspect the Property
§ 9.08 Contractor’s Offer of Settlement
[1]The Offer of Settlement Explained
[2]Types of Available Offers
[3]Contents of a Reasonable Offer of Settlement
[4]Deadline to Make an Offer of Settlement and Exceptions
[5]Methods of Service
[6]Builder’s Unilateral Option to Repurchase Residence
§ 9.09 Homeowner’s Response to the Offer of Settlement
[1]Evaluating the Reasonableness of the Contractor’s Offer
[2]Deadline to Respond to the Contractor’s Offer
[3]Consequence of Rejecting a Reasonable Offer
[4]Written Acceptance of an Offer to Repair
[5]Written Rejection of an Unreasonable Offer
[6]Contractor’s Opportunity to Make a Supplemental Offer
§ 9.10 RCLA Litigation
[1] Contractor’s Abatement for Owner’s Failure to Comply with the RCLA
[2]Providing Notice of Construction Defects Through a Pleading
[3]Mediation
[4]Arbitration
[5]Frivolous Suit Provision
