Texas Construction Trust Funds

The link provided will take you to a short article I had published in Texas Contractor Magazine about the Texas Trust Fund Statute.  That stature is the subject of current debate amongst legal practitioners. In many cases where I represent general contracors against subcontractors on payment and performance disputes, I see plaintiff’s counsel attempt to assert violations of the Trust Fund Staute as an affirmative cause of action.  However, when one reads the statute, it doe snot provide for civil penalties or damages.  The law is written as a criminal statute.

The linked article discusses the requirements of the statute and the possible criminal penalties for commercial contractors.

As a best practices tip, regardless of how the courts ultimately decide the debate about civil liability for Trust Fund violations, contractors should ensure their CFOs and other accounting personnel review the statute (it si quite short) and understand compliance issues to avoid the potential for violations.