CHAPTER 2253. PUBLIC WORK PERFORMANCE AND PAYMENT BONDS

State Codes and Statutes

Statutes > Texas > Government-code > Title-10-general-government > Chapter-2253-public-work-performance-and-payment-bonds

GOVERNMENT CODE

TITLE 10. GENERAL GOVERNMENT

SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT

CHAPTER 2253. PUBLIC WORK PERFORMANCE AND PAYMENT BONDS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2253.001. DEFINITIONS. In this chapter:

(1) "Governmental entity" means a governmental or

quasi-governmental authority authorized by state law to make a

public work contract, including:

(A) the state, a county, or a municipality;

(B) a department, board, or agency of the state, a county, or a

municipality; and

(2) "Payment bond beneficiary" means a person for whose

protection and use this chapter requires a payment bond.

(3) "Prime contractor" means a person, firm, or corporation that

makes a public work contract with a governmental entity.

(4) "Public work contract" means a contract for constructing,

altering, or repairing a public building or carrying out or

completing any public work.

(5) "Public work labor" means labor used directly to carry out a

public work.

(6) "Public work material" means:

(A) material used, or ordered and delivered for use, directly to

carry out a public work;

(B) specially fabricated material;

construction equipment used, or reasonably required and delivered

for use, directly to carry out work at the project site; or

(D) power, water, fuel, and lubricants used, or ordered and

delivered for use, directly to carry out a public work.

(7) "Retainage" means the part of the payments under a public

work contract that are not required to be paid within the month

after the month in which the public work labor is performed or

public work material is delivered under the contract.

(8) "Specially fabricated material" means material ordered by a

prime contractor or subcontractor that is:

(A) specially fabricated for use in a public work; and

(B) reasonably unsuitable for another use.

(9) "Subcontractor" means a person, firm, or corporation that

provides public work labor or material to fulfill an obligation

to a prime contractor or to a subcontractor for the performance

and installation of any of the work required by a public work

contract.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 8.20, eff.

Sept. 1, 1999.

Sec. 2253.002. EXEMPTION. This chapter does not apply to a

public work contract entered into by a state agency relating to

an action taken under Subchapter F or I, Chapter 361, Health and

Safety Code, or Subchapter I, Chapter 26, Water Code.

Added by Acts 1997, 75th Leg., ch. 793, Sec. 18, eff. Sept. 1,

1997.

SUBCHAPTER B. GENERAL REQUIREMENTS; LIABILITY

Sec. 2253.021. PERFORMANCE AND PAYMENT BONDS REQUIRED. (a) A

governmental entity that makes a public work contract with a

prime contractor shall require the contractor, before beginning

the work, to execute to the governmental entity:

(1) a performance bond if the contract is in excess of $100,000;

and

(2) a payment bond if:

(A) the contract is in excess of $25,000, and the governmental

entity is not a municipality or a joint board created under

Subchapter D, Chapter 22, Transportation Code; or

(B) the contract is in excess of $50,000, and the governmental

entity is a municipality or a joint board created under

Subchapter D, Chapter 22, Transportation Code.

(b) The performance bond is:

(1) solely for the protection of the state or governmental

entity awarding the public work contract;

(2) in the amount of the contract; and

(3) conditioned on the faithful performance of the work in

accordance with the plans, specifications, and contract

documents.

(1) solely for the protection and use of payment bond

beneficiaries who have a direct contractual relationship with the

prime contractor or a subcontractor to supply public work labor

or material; and

(2) in the amount of the contract.

(d) A bond required by this section must be executed by a

corporate surety in accordance with Section 1, Chapter 87, Acts

of the 56th Legislature, Regular Session, 1959 (Article 7.19-1,

Vernon's Texas Insurance Code).

(e) A bond executed for a public work contract with the state or

a department, board, or agency of the state must be payable to

the state and its form must be approved by the attorney general.

A bond executed for a public work contract with another

governmental entity must be payable to and its form must be

approved by the awarding governmental entity.

(f) A bond required under this section must clearly and

prominently display on the bond or on an attachment to the bond:

(1) the name, mailing address, physical address, and telephone

number, including the area code, of the surety company to which

any notice of claim should be sent; or

(2) the toll-free telephone number maintained by the Texas

Department of Insurance under Subchapter B, Chapter 521,

Insurance Code, and a statement that the address of the surety

company to which any notice of claim should be sent may be

obtained from the Texas Department of Insurance by calling the

toll-free telephone number.

(g) A governmental entity may not require a contractor for any

public building or other construction contract to obtain a surety

bond from any specific insurance or surety company, agent, or

broker.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.43(a), eff.

Sept. 1, 1995; Acts 2001, 77th Leg., ch. 380, Sec. 1, eff. Sept.

1, 2001; Acts 2001, 77th Leg., ch. 614, Sec. 2, eff. Sept. 1,

2001; Acts 2003, 78th Leg., ch. 1275, Sec. 2(86), eff. Sept. 1,

2003.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.122, eff. September 1, 2005.

Acts 2009, 81st Leg., R.S., Ch.

1304, Sec. 1, eff. September 1, 2009.

Sec. 2253.022. PERFORMANCE AND PAYMENT BONDS; INSURED LOSS. (a)

A governmental entity shall ensure that an insurance company

that is fulfilling its obligation under a contract of insurance

by arranging for the replacement of a loss, rather than by making

a cash payment directly to the governmental entity, furnishes or

has furnished by a contractor, in accordance with this chapter:

(1) a performance bond as described by Section 2253.021(b) for

the benefit of the governmental entity; and

(2) a payment bond as described in Section 2253.021(c) for the

benefit of the beneficiaries described by that subsection.

(b) The bonds required to be furnished under Subsection (a) must

be furnished before the contractor begins work.

for the insurance company to furnish the bonds required by this

section.

(d) To recover in a suit with respect to which the insurance

company has furnished or caused to be furnished a payment bond,

the only notice required of a payment bond beneficiary is the

notice given to the surety in accordance with Subchapter C.

(e) This section does not apply to a governmental entity when a

surety company is complying with an obligation under a bond that

had been issued for the benefit of the governmental entity.

(f) If the payment bond required by Subsection (a) is not

furnished, the governmental entity is subject to the same

liability that a surety would have if the surety had issued the

payment bond and the governmental entity had required the bond to

be provided. To recover in a suit under this subsection, the only

notice required of a payment bond beneficiary is a notice given

to the governmental entity, as if the governmental entity were

the surety, in accordance with Subchapter C.

Added by Acts 1997, 75th Leg., ch. 1132, Sec. 3, eff. Sept. 1,

1997.

Sec. 2253.023. ATTEMPTED COMPLIANCE. (a) A bond furnished by a

prime contractor in an attempt to comply with this chapter shall

be construed to comply with this chapter regarding the rights

created, limitations on those rights, and remedies provided.

(b) A provision in a bond furnished by a prime contractor in an

attempt to comply with this chapter that expands or restricts a

right or liability under this chapter shall be disregarded, and

this chapter shall apply to that bond.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.024. INFORMATION FROM CONTRACTOR OR SUBCONTRACTOR.

(a) A prime contractor, on the written request of a person who

provides public work labor or material and when required by

Subsection (c), shall provide to the person:

(1) the name and last known address of the governmental entity

with whom the prime contractor contracted for the public work;

(2) a copy of the payment and performance bonds for the public

work, including bonds furnished by or to the prime contractor;

and

(3) the name of the surety issuing the payment bond and the

performance bond and the toll-free telephone number maintained by

the Texas Department of Insurance under Subchapter B, Chapter

521, Insurance Code, for obtaining information concerning

licensed insurance companies.

(b) A subcontractor, on the written request of a governmental

entity, the prime contractor, a surety on a bond that covers the

public work contract, or a person providing work under the

subcontract and when required by Subsection (c), shall provide to

the person requesting the information:

(1) the name and last known address of each person from whom the

subcontractor purchased public work labor or material, other than

public work material from the subcontractor's inventory;

(2) the name and last known address of each person to whom the

subcontractor provided public work labor or material;

(3) a statement of whether the subcontractor furnished a bond

for the benefit of its subcontractors and materialmen;

(4) the name and last known address of the surety on the bond

the subcontractor furnished; and

(5) a copy of that bond.

time but not later than the 10th day after the receipt of the

written request for the information.

(d) A person from whom information is requested may require

payment of the actual cost, not to exceed $25, for providing the

requested information if the person does not have a direct

contractual relationship with the person requesting information

that relates to the public work.

(e) A person who fails to provide information required by this

section is liable to the requesting person for that person's

reasonable and necessary costs incurred in getting the requested

information.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 2001, 77th Leg., ch. 380, Sec. 2, eff.

Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.123, eff. September 1, 2005.

Sec. 2253.025. INFORMATION FROM PAYMENT BOND BENEFICIARY. (a)

A payment bond beneficiary, not later than the 30th day after the

date the beneficiary receives a written request from the prime

contractor or a surety on a bond on which a claim is made, shall

provide to the contractor or surety:

(1) a copy of any applicable written agreement or purchase

order; and

(2) any statement or payment request of the beneficiary that

shows the amount claimed and the work performed by the

beneficiary for which the claim is made.

(b) If requested, the payment bond beneficiary shall provide the

estimated amount due for each calendar month in which the

beneficiary performed public work labor or provided public work

material.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.026. COPY OF PAYMENT BOND AND CONTRACT. (a) A

governmental entity shall furnish the information required by

Subsection (d) to any person who applies for the information and

who submits an affidavit that the person:

(1) has supplied public work labor or material for which the

person has not been paid;

(2) has contracted for specially fabricated material for which

the person has not been paid; or

(3) is being sued on a payment bond.

(b) The copy of the payment bond or public work contract is

prima facie evidence of the content, execution, and delivery of

the original.

set by the governmental entity for the actual cost of preparation

of the copies.

(d) A governmental entity shall furnish the following

information to a person who makes a request under Subsection (a):

(1) a certified copy of a payment bond and any attachment to the

bond;

(2) the public work contract for which the bond was given; and

(3) the toll-free telephone number maintained by the Texas

Department of Insurance under Subchapter B, Chapter 521,

Insurance Code, for obtaining information concerning licensed

insurance companies.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 2001, 77th Leg., ch. 380, Sec. 3, eff.

Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.124, eff. September 1, 2005.

Sec. 2253.027. LIABILITY OF GOVERNMENTAL ENTITY. (a) If a

governmental entity fails to obtain from a prime contractor a

payment bond as required by Section 2253.021:

(1) the entity is subject to the same liability that a surety

would have if the surety had issued a payment bond and if the

entity had obtained the bond; and

(2) a payment bond beneficiary is entitled to a lien on money

due to the prime contractor in the same manner and to the same

extent as if the public work contract were subject to Subchapter

J, Chapter 53, Property Code.

(b) To recover in a suit under Subsection (a), the only notice a

payment bond beneficiary is required to provide to the

governmental entity is a notice provided in the same manner as

described by Subchapter C. The notice must be provided as if the

governmental entity were a surety.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 2003, 78th Leg., ch. 515, Sec. 1, eff.

Sept. 1, 2003.

SUBCHAPTER C. NOTICE REQUIREMENTS

Sec. 2253.041. NOTICE REQUIRED FOR CLAIM FOR PAYMENT FOR LABOR

OR MATERIAL. (a) To recover in a suit under Section 2253.073 on

a payment bond for a claim for payment for public work labor

performed or public work material delivered, a payment bond

beneficiary must mail to the prime contractor and the surety

written notice of the claim.

(b) The notice must be mailed on or before the 15th day of the

third month after each month in which any of the claimed labor

was performed or any of the claimed material was delivered.

account that states in substance:

(1) the amount claimed is just and correct; and

(2) all just and lawful offsets, payments, and credits known to

the affiant have been allowed.

(d) The statement of account shall include the amount of any

retainage applicable to the account that has not become due under

the terms of the public work contract between the payment bond

beneficiary and the prime contractor or between the payment bond

beneficiary and a subcontractor.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.042. COPY OF AGREEMENT AS NOTICE OF CLAIM FOR UNPAID

LABOR OR MATERIAL. A payment bond beneficiary has the option to

enclose with the sworn statement of account, as the notice for a

claim under a written agreement for payment for public work labor

performed or public work material delivered, a copy of the

written agreement and a statement of the completion or the value

of partial completion of the agreement.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.043. NOTICE OF CLAIM FOR UNPAID LABOR OR MATERIAL WHEN

WRITTEN AGREEMENT DOES NOT EXIST. (a) Except as provided by

Section 2253.044, if a written agreement does not exist between

the payment bond beneficiary and the prime contractor or between

the payment bond beneficiary and the subcontractor, the notice

for a claim for unpaid bills must contain:

(1) the name of the party for whom the public work labor was

performed or to whom the public work material was delivered;

(2) the approximate date of performance or delivery;

(3) a description of the public work labor or material for

reasonable identification; and

(4) the amount due.

(b) The payment bond beneficiary must generally itemize the

claim and include with it copies of documents, invoices, or

orders that reasonably identify:

(1) the public work labor performed or public work material

delivered for which the claim is made;

(2) the job; and

(3) the destination of delivery.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.044. NOTICE OF CLAIM FOR MULTIPLE ITEMS OF LABOR OR

MATERIAL. The notice for a claim for lump-sum payment for

multiple items of public work labor or material must:

(1) describe the labor or material in a manner that reasonably

identifies the labor or material;

(2) state the name of the party for whom the labor was performed

or to whom the material was delivered;

(3) state the approximate date of performance or delivery;

(4) state whether the contract is written or oral;

(5) state the amount of the contract; and

(6) state the amount claimed.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.045. NOTICE OF CLAIM FOR UNPAID LABOR OR MATERIAL

UNDER WRITTEN UNIT PRICE AGREEMENT. The notice for a claim for

public work labor performed or public work material delivered by

a payment bond beneficiary who is a subcontractor or materialman

to the prime contractor or to a subcontractor and who has a

written unit price agreement that is wholly or partially

completed is sufficient if the beneficiary attaches to the sworn

statement of account:

(1) a list of units and unit prices set by the contract; and

(2) a statement of those completed and partially completed

units.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.046. NOTICE REQUIRED FOR CLAIM FOR PAYMENT OF

RETAINAGE. (a) To recover in a suit under Section 2253.073 on a

payment bond for a claim for payment of retainage, a payment bond

beneficiary whose contract with a prime contractor or

subcontractor provides for retainage must mail written notice of

the claim to the prime contractor and the surety on or before the

90th day after the date of final completion of the public work

contract.

(b) The notice shall consist of a statement of:

(1) the amount of the contract;

(2) any amount paid; and

(3) the outstanding balance.

if the amount claimed is part of a prior claim made under this

subchapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.047. ADDITIONAL NOTICE REQUIRED FOR PAYMENT BOND

BENEFICIARY WITHOUT DIRECT CONTRACTUAL RELATIONSHIP WITH PRIME

CONTRACTOR. (a) To recover in a suit under Section 2253.073 on

a payment bond, a payment bond beneficiary who does not have a

direct contractual relationship with the prime contractor for

public work labor or material must mail notice as required by

this section.

(b) A payment bond beneficiary who contracts with a

subcontractor for retainage must mail, on or before the 15th day

of the second month after the date of the beginning of the

delivery of public work material or the performance of public

work labor, written notice to the prime contractor that:

(1) the contract provides for retainage; and

(2) generally indicates the nature of the retainage.

contractor written notice of a claim for any unpaid public work

labor performed or public work material delivered. The notice

must be mailed on or before the 15th day of the second month

after each month in which the labor was performed or the material

was delivered. A copy of the statement sent to a subcontractor is

sufficient as notice under this subsection.

(d) The payment bond beneficiary must mail to the prime

contractor, on or before the 15th day of the second month after

the receipt and acceptance of an order for specially fabricated

material, written notice that the order has been received and

accepted.

(e) This section applies only to a payment bond beneficiary who

is not an individual mechanic or laborer and who makes a claim

for wages.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.048. MAILING NOTICE. (a) A notice required by this

subchapter to be mailed must be sent by certified or registered

mail.

(b) A notice required by this subchapter to be mailed to a prime

contractor must be addressed to the prime contractor at the

contractor's residence or last known business address.

relating to providing notice to the surety if the person mails

the notice by certified or registered mail to the surety:

(1) at the address stated on the bond or on an attachment to the

bond;

(2) at the address on file with the Texas Department of

Insurance; or

(3) at any other address allowed by law.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 2001, 77th Leg., ch. 380, Sec. 4, eff.

Sept. 1, 2001.

SUBCHAPTER D. CLAIMS ON BONDS; ENFORCEMENT

Sec. 2253.071. TERMINATION OR ABANDONMENT OF CONTRACT; PROCEEDS

OF CONTRACT. (a) The proceeds of a public work contract are not

payable, until all costs of completion of the contract work are

paid by the contractor or the contractor's surety, to a

contractor who furnishes a bond required by this chapter if:

(1) the contractor abandons performance of the contract; or

(2) the contractor's right to proceed with performance of the

contract is lawfully terminated by the awarding governmental

entity because of the contractor's default.

(b) The balance of the public work contract proceeds remaining

after the costs of completion are paid shall be paid according to

the contractor's and the surety's interests as may be established

by agreement or by judgment of a court.

loss under a performance bond required under this chapter has a

claim to the proceeds of the contract prior to all other

creditors of the prime contractor to the full extent of the

surety's loss. That priority does not excuse the surety from

paying an obligation under a payment bond.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.072. STATE NOT LIABLE FOR COSTS. The state is not

liable for payment of a cost or expense of a suit brought by any

party on a payment bond furnished under this chapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.073. SUIT ON PAYMENT BOND. (a) A payment bond

beneficiary who has provided public work labor or material under

a public work contract for which a payment bond is furnished

under this chapter may sue the principal or surety, jointly or

severally, on the payment bond if the claim is not paid before

the 61st day after the date the notice for the claim is mailed.

(b) Suit may be brought under Subsection (a) for:

(1) the unpaid balance of the beneficiary's claim at the time

the claim was mailed or the suit is brought; and

(2) reasonable attorney fees.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.074. COSTS AND ATTORNEY FEES. A court may award costs

and reasonable attorney fees that are equitable in a proceeding

to enforce a claim on a payment bond or to declare that any part

of a claim is invalid.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.075. ASSIGNMENT OF CLAIM. A third party to whom a

claim is assigned is in the same position as a payment bond

beneficiary if notice is given as required by this chapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.076. LIMITATIONS ON CERTAIN CLAIMS; MAXIMUM RETAINAGE.

(a) The amount of a subcontractor's claim, including previous

payments, may not exceed the proportion of the subcontract price

that the work done bears to the total of the work covered by the

subcontract.

(b) A claim for specially fabricated material that has not been

delivered or incorporated into the public work is limited to

material that conforms to and complies with the plans,

specifications, and contract documents for the material. The

amount of the claim may not exceed the reasonable cost, less the

fair salvage value, of the specially fabricated material.

not valid for an amount greater than the amount of retainage

specified in the public work contract between the payment bond

beneficiary and the prime contractor or between the payment bond

beneficiary and the subcontractor. A claim for retainage is never

valid for an amount greater than 10 percent of the amount of that

contract.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.077. VENUE. A suit under this chapter shall be

brought in a court in a county in which any part of the public

work is located.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.078. STATUTE OF LIMITATIONS. (a) A suit on a

performance bond may not be brought after the first anniversary

of the date of final completion, abandonment, or termination of

the public work contract.

(b) A suit on a payment bond may not be brought by a payment

bond beneficiary after the first anniversary of the date notice

for a claim is mailed under this chapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2253.079. CRIMINAL OFFENSE FOR FALSE AND FRAUDULENT CLAIM.

(a) A person commits an offense if the person wilfully files a

false and fraudulent claim under this chapter.

(b) An offense under this section is subject to the penalty for

false swearing.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

Loading..

Loading, Please Wait!