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2025 Texas legislature makes fewer changes to construction law than in recent years

9/29/25

By: Lauren Mabie and Patrick T. Mulry

Following two special sessions, the Texas legislature recently recessed from its bi-annual convocation. Unlike legislative sessions earlier this decade that made substantial changes in Texas construction law, this legislature saw fewer construction-law related bills become law than were expected. Possibly more interesting than the bills that were enacted are those that will be left crying on the steps of the state capitol until 2027, when most of them will likely be taken up again. The following is a summary of the new and the not-yet:

Enacted legislation:

• Expansion and Activation of Specialty Business Courts: Expands access to specialized business courts for disputes exceeding $10 million, or $5 million excluding interest, statutory/exemplary damages, penalties, fees and costs. Establishes 11 geographic divisions and enables six previously-authorized but non‑operational divisions, increasing predictability for complex commercial disputes (HB 40, 89th Reg. Sess.; revisions to various sections of the Civ. Prac. & Rem. Code).
• Contractual Venue and Governing Law in Construction Contracts: Restores and strengthens Texas venue and governing-law protections by rendering void (not merely voidable) any provision in a Texas construction contract requiring disputes to be litigated in another state or governed by another state’s law (HB 2960, 89th Reg. Sess.; amends Tex. Bus. & Comm. Code §§ 272.001(b)-(c) and Civ. Prac. & Rem. Code § 15.02(d)).
• Surveyor Liability and Indemnity in Construction Contracts: Extends existing engineer/architect protection to licensed land surveyors. Also prohibits contractual requirements that surveyors defend or indemnify others (including governmental entities) for liabilities not caused by the surveyor’s own negligence or misconduct; clarifies standard of care; renders such overbroad clauses void and unenforceable on public work (SB 687, 89th Reg. Sess.; revisions to various sections of the Civ. Prac. & Rem. Code).
• Accrual Date for Public Project Right to Repair: clarifies accrual date for public-project defect claims under the 2019 Right to Repair statute: a cause of action accrues on the date the owner’s written defect report (Prop. Code 2272.003) is postmarked by the U.S. Postal Service; confirms the 30‑day inspection and 120‑day correction windows remain intact (HB 1922, 89th Reg. Sess.; amends the Gov’t Code adding § 2272.010).
• Assignment of Construction Trust Fund Claims: Amends Property Code Chapter 162 to expressly permit assignment and reassignment of construction trust fund claims, enabling upstream contractors to pursue nonpaying parties responsible for downstream nonpayment (SB 841, 89th Reg. Sess.; amends Prop. Code §§ 162.003-31).
• Prompt Pay and Audit Limits for Public Owners: Clarifies that “bona fide disputes” remain an exception to public owner prompt pay requirements under Government Code Chapter 2251; but audit that continues more than 60 days after substantial completion is not a “bona fide dispute” for withholding payment (HB 3005, 89th Reg. Sess.; amends Gov’t Code § 2251.002(c)).
• Mechanic’s Lien Deadline Clarification: Provides that lien law deadlines falling on a weekend or legal holiday move to the next business day (SB 929, 89th Reg. Sess.; amends Prop. Code §§ 53.003(e), 53.124(e)).
• Statewide Building/Energy Code Authority Authorizes the State Energy Conservation Office (SECO) to adopt updated energy codes for commercial and residential buildings statewide, promoting uniformity across jurisdictions; requires SECO to evaluate cost‑benefit impacts and housing affordability prior to adoption (SB 783, 89th Reg. Sess.; amends Gov’t Code §§ 3000.002(c) – .003).

Not enacted legislation (failed or pending when second special session ended):

• Shortened Statute of Repose for Private Projects: Sought to reduce the repose period from 10 years to 8 years on private construction claims (HB 3223).
• Medical Billing Evidence/” Nuclear” Verdicts: Attempted to limit manufactured medical damages by admitting only amounts actually paid; make letters of protection admissible and authorize judicial remittitur of excessive awards (SB 30).
• Incorporation by Reference Transparency: Would have required upstream parties to furnish, upon request, all documents incorporated by reference at least 10 days before contract execution to downstream parties (SB 1040).
• Retainage as Trust Funds: Would have deemed retainage required under lien law to be considered “trust funds” under the Construction Trust Fund Act, adding fiduciary obligations and potential penalties for misapplication (SB 1612).
• Trust Fund Cross‑Project Default/Offset Prohibition: Would have made it a trust fund violation to withhold or divert funds due on one project based on defaults on unrelated projects (HB 3288).
• Private Prompt Pay Cross‑Project Default/Offset Prohibition: Would have barred withholding payment on a given project based on alleged defaults on other projects under the Private Prompt Pay Act (HB 3289).
• Retainage Timing Modifications: Proposed revised owner retainage hold periods following completion and a defined schedule for partial (50%) retainage release (HB 3290).
• Right to Repair, Version 3: Would have expanded Right to Repair protections to large‑scale infrastructure and updated the definition of “critical infrastructure” (HB 29).
• Water Reuse and Conservation Impact Fee Credits: Would require political subdivisions to credit water/wastewater impact fees for builder/developer water reuse, conservation or savings projects; establish uniform procedures for calculating, applying and approving credits (SB 14 (2nd Special)).
• Expansion of 811 Damage Prevention Protections: Would expand marking obligations to include telecommunications and petroleum or other liquids in underground conduits/pipelines; provide caller protections and add penalties for noncompliance (HB 1335).
• Caps Affecting Voter‑Approval Tax Rates for Certain Local Governments: Would modify voter‑approval tax rate calculations for taxing units and larger municipalities (SB 10 (2nd Special)).
• Project Labor Agreement (PLA) Prohibition: Sought to expand the 2019 Fair and Open Competition Act to prohibit union-only labor requirements on all public projects, including at the local level (cities, counties, school districts), ensuring open competition irrespective of union affiliation (SB 925).
• Repeal of the Non‑Residential Remodel/Rehab Tax: Proposed elimination of the existing tax on non‑residential renovation, intended to encourage reinvestment in existing facilities (SB 2020).
• Change Order Limits on Public Projects: Would have updated the current $1 million cap/25% framework to reflect modern project sizes: for contracts ≥ $5 million, retain 25% cap; for contracts ≤ $5 million, allow 50% or $1 million, whichever is greater (HB 386).
• Owner‑Caused Delay Damages on Public Contracts: Would have voided provisions barring compensatory damages for schedule delay caused solely by the governmental entity or its responsible parties. Defined compensatory damages as actual, reasonably unavoidable costs; excluded special/consequential damages, overhead, profit and indirect costs (SB 776).
• Statewide Adoption of the International Plumbing Code: Sought a single statewide plumbing code to replace jurisdictional variability, as some jurisdictions use the Uniform Plumbing Code (HB 747).

If you have questions about the new laws, want to discuss predictions for 2027 or need assistance with any construction litigation issues, please contact Patrick T. Mulry at patrick.mulry@fmglaw.com or your local FMG attorney. Special thanks to law clerk Lauren Mabie for her assistance with this article.

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