Texas residential paperwork, in job order

This explains the Texas Property Code in plain terms. It is not legal advice. For a specific job or dispute, talk to a Texas construction attorney.

A Texas residential job comes with a set of papers the law expects, in a set order.

A disclosure before the owner signs. A list of subs and suppliers before work starts. A disbursement statement and a lien waiver each time you ask for money. A bills-paid affidavit and a final waiver at the end.

None of it is hard. Most of it is easy to forget. Here's the whole set, in the order the job needs it, with the statute for each and a one-page checklist at the bottom.

This page covers residential jobs: building or remodeling a home. Commercial rules are different, and we don't cover them here.

Before the client signs

The disclosure statement (53.255)

Before the owner signs a residential construction contract, you give them a statement the law writes out word for word. It starts with "KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW." (53.255).

It tells the owner, in plain terms, what to expect from you: a written contract, a list of subs and suppliers, a disbursement statement with each payment request, and a bills-paid affidavit before final payment.

It also tells them to hold back 10% during the job and for 30 days after.

Read it once yourself. It's the owner's checklist for you. Everything else on this page is the other side of it.

Use the statute's wording, not a summary. The current form is the one amended for contracts from January 1, 2022.

A written contract

The disclosure tells the owner to get a written agreement that covers four things: the work, the time to complete it, the cost or how it's figured, and how and when payment happens, including the 10% reserve and the conditions for final payment.

That's a good checklist for your own proposal. If a promise isn't in the written agreement, the disclosure warns the owner it may not be enforceable.

Homestead jobs (53.254)

If the home is the owner's homestead, Texas has extra rules for a lien to hold. In short: a written contract signed before any labor or materials go in, signed by both spouses if the owner is married, and filed with the county clerk. The section also sets notice wording; see 53.254 for it.

If the owner lives in the house, it's likely their homestead. If you skip these steps, you may not have a lien to fall back on if the owner doesn't pay. Ask a Texas construction attorney to look at your contract once.

The 3-day right to cancel

For many sales made at the buyer's home, federal and Texas law give the buyer three business days to cancel. The federal rule is the FTC's Cooling-Off Rule (16 CFR 429).

The Texas version is in the Business and Commerce Code, chapter 601, and section 601.054 says using the FTC's forms satisfies the Texas notice rules (601.054).

The buyer can cancel until midnight of the third business day after the sale. A business day is any day except Sunday and federal holidays. The contract has to tell them so, with a notice of cancellation form attached.

Which sales are covered, any dollar minimum, and the exceptions are set out in the rules themselves: see 16 CFR 429 and Business and Commerce Code chapter 601.

If you sign proposals at the kitchen table, assume it applies and attach the notice.

Before work starts

The list of subcontractors and suppliers (53.256)

Before construction starts, you give the owner a written list of each sub and supplier you intend to use, with name, address and phone. Add or drop one, and the owner gets an updated list within 15 days (53.256).

The list carries a notice in capital letters saying it may not be final. The owner can waive the list in writing, using the statute's wording, and can't take the waiver back later.

Full details: the Texas subcontractor list.

Every time you ask for money

Disbursement statement (53.258)

Each time you ask the owner or their lender for payment, you give a statement naming the subs or suppliers you intend to pay from that money, with their name and address (53.258). The owner's disclosure tells them to review it and make sure the money is going where it should.

A false or misleading statement in one, made intentionally, knowingly or recklessly, is a misdemeanor (53.258(f)).

The easy habit: put it on the invoice. It travels with the payment request, so it's never separate paperwork.

Lien waiver (53.284)

Owners and lenders will ask for a lien waiver with each payment. Texas has four statutory forms: conditional and unconditional, progress and final (53.284). During the job, it's the progress forms.

Sign the conditional form until the money is in your account.

The unconditional form is only for money you already have. The unconditional forms carry a notice saying no one may require you to sign one if you haven't been paid. Section 53.283 backs that up: no one may require an unconditional waiver for an amount you haven't received in good funds. For contracts from 2022 on, the forms don't need a notary.

Full details: Texas lien waivers.

The owner's 10% reserve (53.101)

Texas has the owner hold back 10% of the contract price, or of the value of the work, during the job and for 30 days after it's complete (53.101).

It protects the owner if a sub or supplier makes a valid claim. The disclosure warns owners that if they don't hold it back, they may be personally liable up to that amount.

What it means for you: an owner or lender who follows the rule may hold back 10% until 30 days after the work is complete. Plan your cash for it, and talk about it before you sign.

More on building it into your schedule: contractor payment schedules.

At final payment

Bills-paid affidavit (53.259)

At final payment, you give the owner an affidavit saying everyone who furnished labor or materials has been paid in full, or listing each one still owed, with the amount and their name, address and phone if known (53.259).

A false or misleading one is a misdemeanor, and the signer is personally liable for loss caused by false or incorrect information in it (53.259(c) and (d)). Take it seriously.

Full details: the Texas bills-paid affidavit.

Final lien waiver (53.284)

The final waiver goes with the final payment. Conditional until the money clears, unconditional once it has. The unconditional final form gives up your lien rights for the whole job, so it's the last thing you sign.

When a lender is paying

If a bank or renovation loan is paying, the lender pays out in draws and sets its own rules. They usually want, with each draw:

• The invoice for that payment
• The disbursement statement
• A lien waiver
• The signed contract and approved change orders
• The subs list
• Photos or an inspection of the work

At the final draw, add the bills-paid affidavit and the final waiver. Ask for the lender's draw schedule before you write your payment schedule, and match it.

The disclosure also tells the owner they're entitled to see the loan closing papers at least one business day before closing. That's between them and the lender, but it's why lender jobs often start a few days later than you'd like.

The one-page checklist

Sources

• Texas Property Code, chapter 53, sections 53.001, 53.101, 53.254, 53.255, 53.256, 53.258, 53.259, 53.283 and 53.284: statutes.capitol.texas.gov
• Texas Business and Commerce Code, chapter 601 (cancellation of certain consumer transactions), section 601.054: statutes.capitol.texas.gov
• FTC Cooling-Off Rule, 16 CFR part 429: ecfr.gov
• Hinshaw & Culbertson, "A Primer on Changes Made to the Texas Mechanic's and Materialman's Liens Act, Effective January 1, 2022": hinshawlaw.com

This explains the Texas Property Code in plain terms. It is not legal advice. For a specific job or dispute, talk to a Texas construction attorney. Residential jobs only; commercial rules differ.