Texas Bar Journal • September 2025

The Legislative Update

Construction Law

Written by Ian P. Faria and Reagan H. Noser

A few of the bills passed in the 89th legislative regular session are relevant to the construction industry in Texas.

HB 1922—Accrual of Cause of Action Under the Right of Repair Statute

The passage of HB 1922 establishes a clear accrual date for claims under the “right of repair” statute within Chapter 2272 of the Texas Government Code. Under Chapter 2272, when a governmental entity brings a construction defect claim, it must provide the parties with a written report by certified mail, return receipt requested that identifies and describes the complained of construction defect. Effective September 1, 2025, the accrual date for construction defect claims under the right to repair statute is the date that the report required under Section 2772.003 is postmarked by the U.S. Postal Service. This change decreases uncertainty for governmental entities and contractors in regard to accrual of claims under the right to repair statute.

SB 841—Assignment of Trust Fund Claims

While only SB 841 passed, legislators filed several bills regarding trust fund claims. The Texas Construction Trust Fund Act provides subcontractors and suppliers who are not properly paid with the right to claims against a general contractor or some other upstream party who received payment from the owner, for the upstream party’s misapplication of those trust funds. Until SB 841, the statute did not provide recourse to general contractors who properly paid subcontractors or suppliers but then that downstream party pocketed the money without properly paying money owed to additional subcontractors or suppliers.

Essentially, only parties who were not paid had this statutory legal remedy. Now, effective September 1, 2025, any assignee of the party that did not receive payment can be classified as a beneficiary of trust funds paid or received. This provides general contractors or parties other than those entitled to payment to assert claims against those who improperly use, retain, or disburse trust funds paid to them.

HB 40—Business Court

In 2023, the Texas Legislature created the Texas Business Court. Now in 2025, the Legislature is clarifying the court’s role and amending multiple provisions of the Civil Practice and Remedies Code and Government Code to include the Business Court. Effective September 1, 2025, HB 40 specifically provides, among other things, that the Business Court has concurrent civil jurisdiction with district courts in actions to enforce arbitration agreements, appointing arbitrators, reviewing arbitration awards, or other judicial actions authorized by an arbitration agreement. This legislation provides procedural guidance and simplifies the integration of the Business Court with many existing statutes.

SB 687—Surveyor Liability

SB 687 expands liability protections within Section
130.002 of the Texas Civil Practice and Remedies Code to include land surveyors. As of September 1, 2025, land surveyors are now protected, along with architects and engineers, from certain indemnification clauses in construction contracts. The legislation removes land surveyors’ liability for a third party’s negligence and makes them responsible for their own negligence in connection with certain construction or services contracts.

SB 783—Regulations Adopted for Residential or Commercial Buildings

SB 783 limits Texas governmental entities’ regulatory authority over construction and modification of residential and commercial buildings. While the bill expands the list of exceptions under which a local ordinance or regulation can impose building standards, it also explicitly recognizes the adoption of energy codes by the State Energy Conservation Office. Section 388.003 of the Health and Safety Code now provides that the State Energy Conservation Office may adopt and substitute a newer version of the International Residential Code, which is applicable to all single-family residential construction, only after evaluating the economic impact of the proposed energy code changes, such as cost-effectiveness of the proposed amendment or adoption.

HB 2960—Texas Home Rule Statute

HB 2960 clarified changes to Texas’ home rule statute relating to construction contracts. This act changes the Texas Business and Commerce Code and makes provisions in construction contracts affecting real property void rather than voidable when they provide that a contract or agreement or any conflict arising under the contract or agreement is subject to another state’s law, litigation in the courts of another state, or arbitration in another state. HB 2960 further clarifies that to the extent that a venue provision in a contract is void under the act, unless the parties stipulate to another venue after the dispute arises, an action arising out of the contract shall be brought only in this state in the county in which the property that is the subject of the litigation is located. This rule only applies to contracts entered into or renewed on or after September 1, 2025.

SB 929—Lien Law Clarification

Effective immediately when passed on May 21, 2025, SB 929 cleans up Section 53.003(e) of the Texas Property Code as it relates to lien deadlines. The code is now updated with proper references and properly titled sections for who can file a mechanic’s lien. SB 929 also clarifies that if a deadline under Chapter 53 falls on a Saturday, Sunday, or legal holiday, the deadline is extended to the next non-weekend or holiday day.

HB 2559—Moratoriums on Property Development

A moratorium is a prohibition or delay of certain actions, specifically in the context of property development as it relates to HB 2559. Effective September 1, 2025, HB 2559 creates additional notice requirements and increases the time between hearings so that affected parties have the opportunity to be heard regarding moratoriums related to property development proposed by a municipality. These newly created requirements involve sending notice of hearings to those who requested notice of the hearing, requiring two separate hearings to be held, and requiring 28 days between readings of the ordinance imposing the moratorium.

SB 1883—Approval of Land Use Assumptions, Capital Improvements, and Impact Fees

SB 1883 amends the law related to the approval of land use assumptions, capital improvement plans, and impact fees. Specific political subdivisions are authorized by the Local Government Code to impose impact fees on new developments to generate revenue for funding or recouping the costs of specified capital improvements or facility expansions necessitated by and attributable to the new development. Effective September 1, 2025, to provide additional transparency, political subdivisions considering impact fees must make the capital improvement plan and land use assumption publicly available at least 60 days before the first publication of the hearing notice. The bill also increases the approval threshold to adopt impact fees to a two-thirds vote. Additionally, political subdivisions cannot increase an impact fee for three years from the later of the date the fee was adopted or most recently increased. SB 1883 also now requires 50% of the membership of the advisory committee to be representatives of the real estate, development, or building industries. With these changes, the public gets more time to analyze and participate in the process for adoption or increases of impact fees.

IAN P. FARIA is certified in construction law by the Texas Board of Legal Specialization and focuses his practice on megaprojects in all construction disciplines, including infrastructure, petrochemical, commercial, industrial, and residential construction law. He is a member of Bradley’s Construction and Government Contracts practice groups and was a founding partner and first office managing partner for the Houston office. Faria has extensive trial experience conducting jury trials, bench trials, and arbitrations for claims ranging in value from multimillion to multibillion dollars

REAGAN H. NOSER is an associate in Bradley’s Construction and Litigation practice groups. Her practice involves broad-based commercial litigation, including construction defects, commercial projects, residential projects, negligence, contract, fraud, lien and bonds, and DTPA matters.