Texas Residential Construction Contract

What a Texas residential construction contract is for

Texas regulates residential construction mainly through lien law. There is no state licence for general contractors, but the Property Code gives unpaid subcontractors and suppliers the right to lien the owner's home, and it gives the owner a set of protections that only work if the paperwork is right. The contractor has to hand the owner a disclosure statement before the owner signs. The owner has to hold back 10% for 30 days after completion. The contractor has to give a bills-paid affidavit before final payment. And if the job is on the family homestead and anyone is taking a lien to secure payment, the Texas Constitution adds formalities that, if missed, make the lien void.

This template puts all of that in one package. The disclosure statement comes first, with an acknowledgment for the owner to sign. Then the contract: scope, fixed-price or cost-plus pricing, allowances, schedule, draws tied to inspected stages, retainage, trust funds, change orders, insurance, warranty, the Chapter 27 defect notice, termination and disputes. A homestead addendum, a change order form, the bills-paid affidavit, a subcontractor list and an owner's payment log follow.

When to use it

Use it for remodels, additions, garage conversions, outdoor kitchens and similar projects on a Texas home, and for a custom home built on the owner's lot. It works for contractors who want a compliant standard contract and for owners who want to propose fair terms or check a contractor's draft against what Texas requires.

Use the homestead addendum whenever the house is the owner's homestead and the contractor or a lender will take a lien to secure payment, which is common for financed remodels. Production builders selling a house and lot together, commercial projects, and public works need different documents.

What's inside

The full list of sections and fields in this template, in the order they appear.

1. Disclosure Statement

   • Conveyance not required
   • Know your contractor
   • Get it in writing
   • Financial risks and retainage
   • Borrowing
   • Owner's acknowledgment

2. Parties and the Work

   • Contractor and trade licences
   • Owner and spouse
   • Property and legal description
   • Homestead or not
   • Scope
   • Exclusions
   • Promises in writing

3. Price and schedule

   • Fixed price or cost plus fee with guaranteed maximum
   • Allowances
   • Sales tax
   • Start and completion
   • Substantial completion
   • Delay damages

4. Payment and retainage

   • Draws tied to inspected stages
   • Conditional releases with each draw
   • 10% retainage for 30 days
   • Trust funds
   • Final bills-paid affidavit

5. Changes and responsibilities

   • Signed change orders
   • Concealed conditions
   • Owner's duties
   • Permits and inspections
   • Licensed trades
   • Subcontractor list
   • Site
   • Lead-safe work

6. Insurance and warranty

   • Liability and workers' compensation or non-subscriber
   • Builder's risk
   • Workmanship and structural warranty
   • Exclusions

7. Chapter 27 notice, termination and disputes

   • Statutory construction defect notice
   • Termination by either party
   • Mediation
   • Optional arbitration
   • Attorney's fees

8. General terms and signatures

   • No conveyance
   • Entire agreement
   • Notices
   • Venue
   • Copies

9. Homestead Addendum

   • Important Notice
   • Spouse's signature
   • 5-day wait after credit application
   • 3-day rescission
   • Place of signing
   • Filing
   • Lien grant
   • Acknowledgment

10. Schedules A to F

    • Plans and selections
    • Labour rates
    • Change order
    • Final bills-paid affidavit
    • Subcontractor and supplier list
    • Owner's payment log

11. Contract Checklist

    • 10 checks before signing

Preview pages

How to complete the contract

1. Deliver the disclosure statement first. Hand Part 1 to the owner before they sign anything and have them sign the acknowledgment.
2. Enter the parties and the property. Include both spouses for a homestead, the legal description, and the licences held by the electrician, plumber and HVAC contractor.
3. Describe the work. Refer to the plans and specifications in Schedule A, list exclusions, and write down every promise made during sales.
4. Choose the pricing. Fixed price, or cost plus fee with an optional guaranteed maximum; list allowances with selection dates.
5. Build the draw schedule. Tie each draw to a completed, inspected stage, and show the 10% retainage held to 30 days after completion.
6. Set insurance and warranty. State workers' compensation coverage or non-subscriber status, who carries builder's risk, and the warranty periods.
7. Complete the homestead addendum if it applies. Observe the 5-day wait, the 3-day rescission period and the place of signing, then file it with the county clerk.
8. Run the checklist and sign. Give the owner a signed copy, then the subcontractor list before work begins.
9. Use the schedules during the job. Change orders before extra work, the payment log at each draw, and the bills-paid affidavit at the end.

Example: draws and retainage on a remodel

A fictional contractor, Live Oak Renovations LLC, agrees with Jordan and Casey Pruitt to add a 420-square-foot primary suite to their San Antonio homestead for a fixed price of $148,000. The work is not financed with a lien, so the homestead addendum is not used.

Deposit: $10,000. Draw 1 (foundation passed): $22,200. Draw 2 (dry-in, framing passed): $29,600. Draw 3 (rough-ins passed, insulation): $29,600. Draw 4 (drywall, trim, cabinets): $22,200. Draw 5 (substantial completion, final inspection): $19,600. Retainage: $14,800 (10%), held until 30 days after completion. Total: $148,000.

In month three, the Pruitts receive a notice of claim from the tile supplier for $3,450. They check it against Schedule E, withhold $3,450 from Draw 4, and release it once the supplier's conditional release arrives with proof of payment. The retainage is paid on day 31 after completion, against the bills-paid affidavit.

Texas rules to know

• Disclosure statement (Property Code section 53.255). Delivered before the owner signs; substantially in the statutory form.
• Retainage (section 53.101). 10% held until 30 days after completion, termination or abandonment.
• Notices of claim (section 53.252). Residential subcontractors and suppliers must notify the owner by the 15th day of the second month after the month they furnished work or materials.
• Homestead liens (section 53.254 and Constitution article XVI, section 50). Written, signed by both spouses before work, filed with the county clerk, with the Important Notice; extra conditions apply when credit finances new improvements.
• Bills-paid affidavit (section 53.259). A condition of final payment.
• Waivers and releases (sections 53.281 to 53.284). Effective only in the statutory forms.
• Chapter 27 notice (section 27.007). Required in the contract in bold; 60 days' certified-mail notice before suing over a defect.
• Trust funds (chapter 162). Payments are held in trust for the people who supplied labour and materials.

How Texas owners end up paying twice

The classic Texas story is an owner who paid the contractor in full, on time, and then got a lien from a supplier the contractor never paid. It usually happens because the owner paid the last 10% at completion instead of holding it for 30 days, ignored a notice of claim that arrived in the mail, or made the final payment without a bills-paid affidavit. On the contractor's side, the common failures are skipping the disclosure statement, starting work on a financed homestead job before the rescission period ended, and losing a lien because the spouse never signed. The retainage clause, payment log, subcontractor list and homestead addendum are built to prevent each one.