Trust Officer Liability

Did you know that in Texas, company officers that misuse trust funds can be held personally liable? The Texas Trust Fund Statute (Texas Property Code Section 162) imposes both civil and criminal liability on any individual officer who violates it.

The new law enforces payment to contractors and subcontractors for labor and materials used in construction projects – and it’s a big win for subs. Too often, they are unable to collect payment for services rendered because funds have been inappropriately handled (whether intentionally or unintentionally).

The fact that officers and directors can be both personally sued in civil court AND prosecuted by the state makes it much more likely that subcontractors will be better protected in the future, but it should not prevent or dissuade subcontractors from securing a lien on any project property – they should certainly not rely solely on the statute for protection.

For more information, please download the original article from Lexology.com