Does the prompt payment act apply to Texas custom home builders?

6 days ago

May 25 2020, we invoiced the builder. We have reached out numerous times via text and phone calls and we have not received a response. We tried reaching out to the homeowner as well and nothing. Can we legally send a demand letter and potentially follow up with a lien? Any advice is appreciated. Thank you.

Additional info about this contractor
Project Role: Subcontractor
Project Type: Residential
Attorney E. Aaron Cartwright III, Attorney At Law
19 reviews

Hello,

Yes. The Prompt Payment Act does apply to Texas custom home builders.

Yes, you may legally send demand letter and follow up with a lien. You have until July 15 to send the first notice based on what you’ve stated here. Do yourself a favor and send that notice to the builder and the homeowner at the same time. If the project has not been completed, consider including language instructing them to trap funds.

E. Aaron Cartwright III
214-789-1354
Aaron@EACLawyer.com

Managing member Santire Law Firm

 

Texas has two Prompt Pay Acts.  One of them explicitly applies to private  (non-government) construction projects.  It does not apply to public entity projects. The other Prompt Pay Act applies to insurance situations such as medical billing.


As regards construction projects, the Act requires the owner to pay the general contractor no later than 35 days after the invoice is submitted.  Once this happens the Act requires the general contractor to pay subcontractors for their respective portions of the owner’s payment that is attributable to the subcontractor’s work and this must be done within 7 days of the general contractor receiving payment from the owner.  The same obligation applies to the first tier subcontractors payment to second tier subcontractors.  Payment can be withheld for a good faith dispute over work performed.  However, the Act sets out a formula as to how much can be withheld.  The Act also sets out the amount of interest on late payments and provides for attorney fees and legal costs in successfully pursuing payment.
Founder The Cromeens Law Firm, PLLC
8 reviews

Hello,

Yes, the prompt pay act applies to residential project, and yes, you should send a demand letter and file a lien. Your lien needs to be filed by August 15 or 30 days after the final completion of the residence, whichever happens first. You need to send your intent to lien letter to the owner and the builder on or before 7-15-2020.

Thanks,

Karalynn Cromeens
Managing Partner

8431 Katy Freeway
Houston, TX 77024
Tel: (713) 715-7334

http://www.TheCromeensLawFirm.com

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