Sec. 162.031. MISAPPLICATION OF TRUST FUNDS. (a) A trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds, has misapplied the trust funds.
(b) It is an affirmative defense to prosecution or other action brought under Subsection (a) that the trust funds not paid to the beneficiaries of the trust were used by the trustee to pay the trustee's actual expenses directly related to the construction or repair of the improvement or have been retained by the trustee, after notice to the beneficiary who has made a request for payment, as a result of the trustee's reasonable belief that the beneficiary is not entitled to such funds or have been retained as authorized or required by Chapter 53.
(c) It is also an affirmative defense to prosecution or other action brought under Subsection (a) that the trustee paid the beneficiaries all trust funds which they are entitled to receive no later than 30 days following written notice to the trustee of the filing of a criminal complaint or other notice of a pending criminal investigation.
(d) A trustee who commingles trust funds with other funds in the trustee's possession does not defeat a trust created by this chapter.
Acts 1983, 68th Leg., p. 3721, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1987, 70th Leg., ch. 578, Sec. 4, eff. Aug. 31, 1987.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 1277 (H.B. 1513), Sec. 5, eff. September 1, 2009.
Notes of Decisions
Vast Constr., LLC v. CTC Contractors, LLC, 526 S.W.3d 709 (Tex. App. 2017).
· cites it 4× “” Tex. Prop. Code § 162.031(a). 2. Application Vast adduced testimony from CTC’s Crescenzi that CTC paid attorneys’ fees for legal expenses related to the Cornish Street Project.”
Kahkeshani v. Hann (In re Hann), 544 B.R. 326 (Bankr. S.D. Tex. 2016).
· cites it 5× “for breach of fiduciary duty arising from Pledger’s misapplication of funds as described in the Texas Construction Trust Fund Statute, Tex. Property Code § 162.031 because Pledger’s use of the funds was covered by the statutory affirmative defense.”
Ehrhardt v. State, 334 S.W.3d 849 (Tex. App. 2011).
· cites it 2× “Misappropriation of funds paid for improvements to real property is a criminal offense under the Texas Property Code. Tex. Prop.Code Ann. § 162.”
Taylor Pipeline Constr., Inc. v. Directional Road Boring, Inc., 438 F. Supp. 2d 696 (E.D. Tex. 2006).
· cites it 2× “Pursuant to the Trust Fund Act, “[any] trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to…”
Holladay v. CW & A, INC., 60 S.W.3d 243 (Tex. App. 2001).
· cites it 3× “See Tex. PROp.Code Ann. § 162.031(a) (Vernon 1995).”
Dealers Elec. Supply Co. v. Scoggins Constr. Co., 292 S.W.3d 650 (Tex. 2009).
“Third, the Trust Fund Act provides an affirmative defense when the trust funds not paid to a laborer or materialman were used to pay the trustee’s “actual expenses directly related to the construction or repair of the improvement.”
— Tex. Prop. Code § 162.031(a) — 23 cases
Vast Constr., LLC v. CTC Contractors, LLC, 526 S.W.3d 709 (Tex. App. 2017).
“” Tex. Prop. Code § 162.031(a). 2. Application Vast adduced testimony from CTC’s Crescenzi that CTC paid attorneys’ fees for legal expenses related to the Cornish Street Project.”
— Tex. Prop. Code § 162.031(b) — 19 cases
Vast Constr., LLC v. CTC Contractors, LLC, 526 S.W.3d 709 (Tex. App. 2017).
“” Tex. Prop. Code § 162.031(a). 2. Application Vast adduced testimony from CTC’s Crescenzi that CTC paid attorneys’ fees for legal expenses related to the Cornish Street Project.”
Dealers Elec. Supply Co. v. Scoggins Constr. Co., 292 S.W.3d 650 (Tex. 2009).
“Third, the Trust Fund Act provides an affirmative defense when the trust funds not paid to a laborer or materialman were used to pay the trustee’s “actual expenses directly related to the construction or repair of the improvement.”
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