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Is a contractor legally required to have a construction account for each project?

TexasConstruction Accounting

Investigating a case in which a contractor has one construction account and is co-mingling funds from three different projects in the account. From what I have read during my research, it is only "advisable" to have separate accounts for each project, not a "must have" or "legally have" an account for each project.

1 reply

May 1, 2020
While there exists law on the books known as the Texas Construction Trust Fund Act (Tex. Prop. Code Sec. 162) which might tend to make you think separate accounts are a requirement of Texas contractors, unlike a traditional trustee, a separate project-specific account is not a requirement of that law, or any other Texas law that I am aware of. That does not mean that utilizing an owner's funds for another owner's project is legal. There is commonly litigation based upon that very issue. I won't go so far as to say it is a common practice in construction, but in my experience it is not rare.
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