Given the cost of construction projects, it is not surprising that disagreements over performance often escalate quickly. In these situations, property owners often have a significant natural advantage, because they usually have the ability to withhold final payment from the individual or business that did the work. To alleviate this imbalance, the Texas Prompt Pay Act (TPPA) requires owners to provide the agreed-upon compensation within a given time period, usually 35 days after project completion. A version of this rule also applies to relationships between contractors and subcontractors, usually with a seven-day timeframe from when the contractor is paid.
Not every building or repair job proceeds exactly as predicted though. Requested revisions to project terms can make existing contracts obsolete. There are also instances where property owners and contractors make excessive change requests in an effort to avoid their obligations under the original deal.
In response to the problems and confusion caused by proposed revisions, state legislators amended the TPPA to restrict change requests on both public and private construction projects. Under the law passed in 2023, contractors and subcontractors have the right to reject a client when they ask for something different than what was in the existing contract unless the parties have fully executed a change order. This applies to any revision where the value of the additional work exceeds 10 percent of the current project amount.
Ideally, this statute will encourage clients, contractors and subcontractors to engage in pre-emptive communication when considering adjustments to their original deal. Combined with the existing rule mandating prompt payment, this should relieve firms within the construction industry from feeling pressure to agree to requested revisions for fear of not being paid. Whichever side you’re on, an experienced Texas construction law attorney can keep you informed of your legal rights and work to negotiate an appropriate change order.
Hayes, Berry, White & Vanzant, LLP handles a wide range of construction law matters for Texas clients, including disputes over nonpayment and requested changes. For a consultation, please call us at 940-230-2386 or contact us online. Our offices are in Denton, Flower Mound and Gainesville.
