In addition to two other newly enacted Texas laws coming out of the most recent legislative session affecting the construction industry, Governor Greg Abbott also signed HB 2960, providing updates to Texas’ “home-rule” construction statute.
Under Texas Business and Commerce Code Chapter 272, provisions in construction contracts concerning real property located in Texas or agreements collateral to or affecting the construction contract making the contract subject to another state’s law, litigation in the courts of another state, or arbitration in another state are voidable. The intent of Chapter 272 is to protect contractors from being forced to litigate disputes out of state and incur additional legal costs or be subject to another state’s law. However, since the language of Chapter 272 stated that such provisions were “voidable” and not “against public policy,” “void,” or “unenforceable,” at least one Texas Court of Appeals held that a party’s right to void such clauses could be contractually waived (see In re MVP Terminalling, LLC, No. 14-21-00399-CV, 2022 WL 3592303, at *7 (Tex. App. Aug. 23, 2022).
HB 2960 was drafted to address this uncertainty by changing the previous language in Chapter 272, stating that such provisions were “voidable” to now stating that such provisions are “void as against public policy.” HB 2960 goes on to provide that to the extent a venue provision in a construction contract is void, unless the parties stipulate to another venue after the dispute arises, an action arising out of the contract “shall be brought only in this state [Texas] in the county in which the property that is the subject of the litigation is located.”
HB 2960 goes into effect on September 1, 2025, and only applies to contracts that are entered into or renewed after that date.
