Those traveling to the areas affected by Hurricane Harvey should take note. In 2011, Texas passed legislation on “Disaster Remediation Contractors.” The act creates requirements for contractors participating in remediation work who are not from the area where work is being performed.
The act can be found here, but we’ve got a breakdown below. The act is short and sweet- it merely defines a few terms, provides a few requirements, and makes it clear that bad actions by Disaster Remediation Contractors will not be tolerated.
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Disaster Remediation Contractors
First off, let’s discuss who is NOT a Disaster Remediation Contractor.
Most local contractors will not fall under the act. Specifically, those that have maintained a physical business address in the county where work is being performed (or maintained such an address in an adjacent county) are excluded. Texas contractors that do not have a physical business address in the county (or an adjacent county) will be considered a Disaster Remediation Contractor if the following definitions apply.
Who is a Disaster Remediation Contractor?
The term is pretty broad. It’s defined as an individual, corporation, trust, partnership, association, or other legal entity who:
“engages in disaster remediation for compensation, other than (one) who has a permit, license, registration, or other authorization from the Texas Commission on Environmental Quality for the collection, transportation, treatment, storage, processing, or disposal of solid waste.”
To backtrack a bit, “disaster remediation” refers to:
“removal, cleaning, sanitizing, demolition, reconstruction, or other treatment of improvements to real property performed because of damage or destruction to that property caused by a natural disaster.“
When natural disasters occur in Texas, those non-local individuals and business that help with the tasks listed above (for compensation!) must adhere to the requirements that follow.
- All contracts by a Disaster Remediation Contractor must be in writing.
- Full payment prior to work may not be required.
- Required progress payments must be reasonably appropriate for the work that has been done, including materials provided.
- Contracts must contain the following language in bold, (at least) 10 pt font:
“This contract is subject to Chapter 58, Business & Commerce Code. A contractor may not require a full or partial payment before the contractor begins work and may not require partial payments in an amount that exceeds an amount reasonably proportionate to the work performed, including any materials delivered.”
The requirements created by the act cannot be waived. Disaster Remediation Contractors are also subject to Texas’ deceptive trade laws, which can be found here. Those found to be in violation are subject to steep penalties. Considering the fraud and scams we’ve seen after other disasters, protecting owners is high priority.
Importantly, the requirements only apply to remediation work in areas where a disaster has been declared by the governor or county judge.
Currently, these counties are: Aransas, Atascosa, Austin, Bastrop, Bee, Bexar, Brazoria, Brazos, Burleson, Caldwell, Calhoun, Cameron, Chambers, Colorado, Comal, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Guadalupe, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Karnes, Kerr, Kleberg, Lavaca, Lee, Leon, Liberty, Live Oak, Madison, Matagorda, Montgomery, Newton, Nueces, Polk, Refugio, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller, Washington, Wharton, Willacy and Wilson counties.
Do they have lien rights?
The act is silent on lien rights, so we can assume that lien rights would operate just as they would on any other project. However, as we regularly mention, Texas is home to the toughest notice requirements in the country. These notice requirements must be adhered to in order to preserve lien rights- but we’ve got you covered. Check out our Texas Mechanics Lien & Notice FAQs for an easy guide to Texas lien law.
For your other questions on Texas construction payment law, here are our Texas Construction Payment Resources.
Disaster recovery work is important following an event like Hurricane Harvey. Unfortunately, this is also a time when homeowners must take great precaution. After nearly every disaster, horror stories pop up about contractors who prey on owners of damaged properties. This legislation on Disaster Remediation Contractors goes a long way to protect against that. What’s more, those contractors, subs, and suppliers who play by the rules have less to worry about – they won’t be undercut by dishonest contractors acting outside the lines.