Relating to the beneficiaries of trust funds paid or received in connection with an improvement on specific real property.
Summary
HB 2226 amends the Texas Construction Trust Fund Act in Chapter 162 of the Property Code. First, it clarifies that a person who performs labor or furnishes materials for the construction or repair of an improvement on specific real property, or that person’s assignee, is a beneficiary of trust funds paid or received for the project. This is a technical but important update to the list of protected parties tied to construction payments.
The bill also adds a new restriction on assignments of a beneficiary’s interest in unpaid trust funds. An assignment would be enforceable only if it is in writing, is made no earlier than the date the assignee has already paid the beneficiary in good and sufficient funds, is not part of the original construction contract, and is made to another project participant such as a beneficiary, trustee, or property owner. The act would take effect September 1, 2025.
Impact
HB 2226 would change state law governing construction trust funds by tightening who may claim beneficiary status and by limiting when and to whom unpaid trust fund interests may be assigned. The practical effect is to protect contractors, subcontractors, laborers, and material suppliers from prearranged or contract-based assignments that could undermine their rights to payment, while preserving assignments that occur after payment and among parties directly connected to the project. It would amend Section 162.003 of the Property Code and add new Section 162.0031.
Sentiment
The available record shows no committee transcript or recorded votes, so there is no direct evidence of debate or opposition in the materials provided. The bill was left pending in committee, which suggests it had not yet advanced to final consideration at the time of the last action. Based on the text, the measure appears to be a targeted, technical construction-industry bill likely intended to clarify payment rights rather than make broad policy changes.
Contention
The main potential point of contention is the new limitation on assignments of unpaid trust fund interests. Parties that rely on assignment arrangements in construction financing or payment practices may view the restrictions as reducing flexibility, especially because assignments cannot be enforced unless they occur after payment and outside the construction contract. Another possible issue is the bill’s narrowing of enforceable assignments to certain project participants, which could exclude third-party assignees. No specific objections or supporters are identified in the provided legislative history.
Allows an owner or owners of real property to execute a deed that names one or more beneficiaries who will obtain title to the property at the owner's death without the necessity of probate.
Allows an owner or owners of real property to execute a deed that names one or more beneficiaries who will obtain title to the property at the owner's death without the necessity of probate.
Allows an owner or owners of real property to execute a deed that names one or more beneficiaries who will obtain title to the property at the owner's death without the necessity of probate.
Enacting the Kansas community property trust act to authorize the use of community property trusts during the marriage of settlor spouses and amending the Kansas uniform trust code to allow trustees to reimburse settlors of grantor trusts, authorize the use of designated representatives for trusts and permit the terms of a governing instrument to expand, restrict or eliminate certain general rules applicable to fiduciaries, trusts and trust administration.