Advocacy Update: Texas BOMA Progress on Trust Fund & Retainage Bills

Texas BOMA has actively engaged in reviewing, testifying on, and negotiating proposed lien law
legislation introduced by Chairman Keith Bell during the 89th Legislative Session. The original versions of 
the four bills raised major concerns for commercial property owners and managers, particularly around
criminal liability, loss of contractual flexibility, and premature retainage release.

Below is a summary outlining the progress and current status of the trust fund and retainage bills (HB 3287, 3288, 3289, and 3290), with a high-level overview of where each bill began, how Texas BOMA engaged throughout the process, and the final changes reflected in the agreed-upon language.

Ultimately, we made meaningful progress in securing improvements to each bill and successfully advocated for HB 3289 to be dropped entirely.

Texas BOMA is grateful to Chairman Bell and his staff for their willingness to listen, collaborate, and
improve these bills. Through open dialogue and thoughtful amendments, we believe the final legislation
better balances payment protections with practical construction realities, safeguarding the interests of
both subcontractors and commercial property owners across Texas.

While these bills have cleared committee, it remains uncertain whether they will reach the House floor. We will keep members informed as developments occur.

HB 3287 – "Trust Fund" Retainage Bill

Original Concern: Reclassified retainage as trust funds, exposing owners to potential felony liability.
Outcome: Revised to limit trust fund status to perfected liens and exclude lender-controlled funds.
Texas BOMA Position: Moved from opposed to neutral following those changes.

HB 3288 – "Trust Fund Diversion" Bill

Original Concern: Created criminal penalties for withholding retainage across contracts, even in good
faith.
Outcome: Amended to clearly exempt owners and limit liability to misuse by non-owner trustees.
Texas BOMA Position: Moved from opposed to neutral after confirming owner protection.

HB 3289 – "Good Faith Dispute" Bill

Original Concern: Restricted the ability to manage disputes across multiple contracts with the same
vendor, eliminating practical set-off rights.
Outcome: Chairman Bell withdrew HB 3289, determining its concerns were adequately addressed in
the other bills.
Texas BOMA Position: Supports the decision to withdraw the bill.

HB 3290 / CSHB 3290 – Retainage Timeline Bill

Original Concern: Required retainage release within 61 days of a CO or first use, regardless of project
completion, and overrode contractual timelines.
Amendments Secured:

• (a-1): Modified to require substantial completion before triggering retainage release.
• (a-2): Allows timeline extension with written notice of incomplete work.
• (a-3): Adds an industry-standard definition of “substantial completion.”

Texas BOMA Position: Supports the final version of CSHB 3290 with these agreed-upon amendments.

Full bill language can be found in the document below: