Construction projects—whether residential, commercial, or industrial—require clear, legally binding agreements to ensure smooth execution and prevent disputes. In Texas, construction contracts must comply with state laws while addressing key project details like scope, payment terms, and liability. Whether you’re a contractor, property owner, or developer, understanding the essentials of a Texas construction contract can help protect your rights and interests.
Key Elements of a Texas Construction Contract
A well-drafted construction contract should include:
1. Scope of Work
Clearly define the project details, including materials, labor, and services to be provided. A vague scope can lead to disputes over what was promised versus what was delivered.
2. Payment Terms
Specify:
- The total project cost and payment schedule (e.g., lump sum, progress payments, or cost-plus pricing).
- Any retainage (typically up to 10%), which Texas law allows owners to withhold until project completion.
- The process for change orders if additional work is required.
3. Deadlines & Project Timeline
Define start and completion dates and outline any penalties for delays. Texas law allows for “liquidated damages” clauses, which set pre-agreed penalties for missed deadlines.
4. Mechanic’s Liens & Payment Protection
Texas law permits contractors, subcontractors, and suppliers to file mechanic’s liens if they don’t receive payment. A good contract should address lien waivers and protection clauses to avoid disputes.
5. Warranties & Quality Standards
Specify any warranties for workmanship or materials and clarify the timeframe for defect repairs. Texas law requires certain warranties for residential construction projects.
6. Dispute Resolution & Legal Remedies
Include provisions for mediation, arbitration, or litigation to handle contract disputes efficiently. Texas favors binding arbitration for many construction disputes.
Common Legal Issues in Texas Construction Contracts
1. Contractor Licensing Requirements – While Texas does not have a statewide licensing requirement for general contractors, specialized trades like electricians and plumbers must be licensed.
2. Statute of Limitations – Legal claims for breach of contract must be filed within four years in Texas.
3. Texas Prompt Payment Act – Protects contractors and subcontractors by requiring timely payments and setting penalties for delays.
4. Force Majeure Clauses – Allows delays for unforeseen events like extreme weather or supply chain disruptions.
Need Help Drafting or Reviewing a Construction Contract?
A well-crafted contract can prevent costly disputes and protect your interests. Whether you’re a contractor or a property owner, consulting with a Texas construction law attorney can ensure your agreement is legally sound.
Contact us today for expert legal guidance on your construction contract.