subcontractor payment

Texas Construction Trust Fund Act: Why Paying Yourself Before Paying Subs Can Be a Crime

Under the Texas Construction Trust Fund Act (Chapter 162 of the Texas Property Code), construction payments received by a contractor are held in trust for subcontractors and suppliers. Diverting trust funds to other uses — paying other projects, paying yourself, paying unrelated debts — is a statutory violation with civil and criminal consequences. Texas contractors facing cash flow pressure can find themselves accused of "trust fund violation," which in many cases exposes owners and officers to personal liability.