In the last few years alone, massive changes have occurred in how the law handles things like the legitimacy of virtual signatures. It should come as a surprise to no one that given the challenges of COVID, the perpetual backlog of court cases, and massive shifts in technology that construction law is transforming.
Texas legislation in the past lagged behind when it came to how they handled construction law. Their legislation was plagued by imprecise language, and still required face-to-face interactions through notaries on lien waivers.
As of January 1st, 2022, construction law changed for new contracts. Take a look at the changes that rolled out this year. However, keep in mind that according to Saunders Walsh Law Firm, “The date on which the original contract was entered into will dictate the applicable law. Even if the subcontractor’s contract was signed after January 1, 2022, if the original contract pre-dates January 1, 2022, then the old law will apply.”
Terminology Changes in Texas Construction Law
To start, a large bulk of this bill revolves around clarifying various phrases and words that had unintended impact on court rulings. Additionally, these changes helped make the language more applicable to laypeople. One common complaint when it comes to navigating our legal system, is that laws are frequently difficult for normal people to understand. Over the years, companies and legal entities have used many methods to help bridge gap, such as visual aids and illustrations.
In this case, Texas legislature is trying to bring their language more in-line with what construction professionals use. By doing so, they are hoping to cut down on the number of disputes. They clarified some language around the different uses of “retainage”, defined more clearly what an “improvement” was, and many, many more changes.
Delivery of Notice
Next the new construction law discussed what methods were binding when delivering notices. In the past, these notices were commonly delivered by certified mail. Additionally they might be delivered in person. However, with the rise of more digital tech and other mail carriers, it was time for the law to be updated. Now, delivery of notice can be sent via “any other form of traceable, private delivery or mailing service that can confirm proof of receipt.”
This allows companies to use mailing and delivery services other than certified mail. Or in other words, more options.
Lien Waiver Notarization
Another notable change in this bill are the changes to notarization requirements. previously, Texas was one of the few states that required notarization on lien waivers. In most other states, both parties can choose to opt out of them. However, the pandemic during the last two years meant more and more people did not want to meet in person. Furthermore, this requirement could be a hassle for managers or owners. It was slowing business down.
Luckily, HB 2237 is removing that requirement entirely. Now, lien waivers no longer need to be notarized in Texas, so long as your contract originated after Jan 1, 2022.
How do these changes impact your business?
So what does this mean for you? Because of the many changes -major and minor- to Texas construction law, the impact could be great. As a result, we’ve provided a few examples for both Subcontractors and General Contractors. We also recommend looking at the bill yourself, or consulting your lawyer.
Law Changes relevant to GCs
One Year Statute of Limitations
This is a massive change for mechanic’s liens, and commercial contractors should take note. Previously, mechanic’s liens had a statute of 1 year for private, and 2 years for commercial. Now the statute of limitations for any project is 1 year. It will be doubly important to file in time and correctly for any unfortunate foreclosures.
Licensed Professionals Can Now Also File a Lien
Once, many architects, engineers and surveyors could not file liens. The new Texas construction law changes this. Under the current statute, these terms have been expanded. They will no longer need to be in contact directly with the owner to have a valid lien.
Project owners and managers should be very aware of these changes. If any of these groups contributed an “improvement” to the project, they are able to file a lien.
Law Changes Relevant to Subcontractors
You may not need to send as many notices.
According to Peck Law, “HB 2237 eliminates the second notice requirement for second-tier and lower subcontractors and prescribes the form of the notice that must be sent by subcontractors of every tier”. This is a little trickier than the wording lets on though. This applies to subcontractors who are working under other subcontractors.
These notices now have standardized forms
The new Texas construction law requires subcontractors to use the statutorily prescribed form. However, as mentioned above, the forms can be delivered in a variety of ways, not just in person or certified mail.
How Can Flashtract help you?
These changes in Texas construction law are fantastic news for companies looking to modernize. Flashtract generates digital documents for contractors or subcontractors. We deliver these critical construction billing documents, and store them for you on the cloud. We’re here to make communication and organization on a project even easier, no matter who is using the software.
Reach out to our sales team today to see how we can help standardize your billing process.