CHANGE ORDER

State of Texas — Contract Modification Instrument

Change Order No.: [____]
Date of Issuance: [__/__/____]
Master Agreement Reference: [________________________________]
Project Identification: [________________________________]
County of Performance: [________________________________], Texas

Section 1 — Identification of Parties

1.1 Owner / Contracting Authority.

Name: [________________________________]
Type: ☐ Private Entity ☐ State Agency ☐ County / Municipality ☐ School District ☐ Special District
Address: [________________________________]
City, County, State, ZIP: [________________________________], [________________________________] County, TX [____]
Authorized Representative: [________________________________]
Email: [________________________________]
Phone: [________________________________]

1.2 Contractor.

Legal Name: [________________________________]
Texas Secretary of State Filing No.: [________________________________]
Trade Licenses Held (plumbing, electrical, HVAC, etc.): [________________________________]
Address: [________________________________]
City, County, State, ZIP: [________________________________], [________________________________] County, TX [____]
Authorized Representative: [________________________________]
Email: [________________________________]
Phone: [________________________________]

Note: Texas does not require a state-level general contractor's license. Specific trades (plumbing — TSBPE; electrical — TDLR; HVAC — TDLR) require state licensure. Municipalities may impose additional requirements.

1.3 Subcontractor(s) Affected by This Change Order (if any).

Section 2 — Recitals and Legal Basis

2.1 WHEREAS, Owner and Contractor entered into a Master Agreement dated [__/__/____];

2.2 WHEREAS, the Parties desire to modify the scope, cost, or schedule;

2.3 WHEREAS, this Change Order is issued in compliance with the Master Agreement and applicable Texas law, including:

(a) Tex. Prop. Code Ch. 28, which establishes mandatory prompt payment requirements for private construction that cannot be modified by contract, requiring Owner to pay within 35 days and Contractor to pay subcontractors within 7 days;

(b) Tex. Prop. Code § 28.002, which grants contractors and subcontractors a statutory right to refuse owner-directed additional work if the aggregate value of all unexecuted change orders exceeds 10% of the original contract amount (effective September 1, 2023);

(c) Tex. Gov't Code Ch. 2251 (Prompt Payment Act for government contracts);

(d) Tex. Bus. & Com. Code § 2.209 (permitting modification of goods contracts without additional consideration);

(e) Tex. Bus. & Com. Code § 26.01 (Statute of Frauds);

2.4 WHEREAS, the modification described herein is necessary for the reason(s) set forth in Section 4;

NOW, THEREFORE, for good and valuable consideration, the Parties agree as follows:

Section 3 — Definitions

3.1 "Contract Price" means the total compensation payable under the Master Agreement as adjusted by all prior Change Orders.

3.2 "Contract Time" means the duration allowed for completion of the Work, as adjusted.

3.3 "Original Contract Amount" means the Contract Price stated in the Master Agreement (or subcontract, as applicable) prior to any Change Orders, used to calculate the 10% threshold under Tex. Prop. Code § 28.002.

3.4 "Work" means all labor, materials, equipment, and services required under the Master Agreement as modified by this Change Order.

Section 4 — Description and Justification of Change

4.1 Nature of Change. Check all that apply:

☐ Additive Change (additional scope and/or cost)
☐ Deductive Change (reduced scope and/or credit)
☐ Time Extension Only
☐ Cost Adjustment Only
☐ Combined Scope, Cost, and Time Change

4.2 Reason for Change. Check all that apply:

☐ Owner-Directed Scope Modification
☐ Design Error or Omission
☐ Differing Site Conditions
☐ Regulatory or Code Change
☐ Force Majeure — Tornado / Severe Weather (specify): [________________________________]
☐ Force Majeure — Hurricane / Tropical Storm (specify): [________________________________]
☐ Force Majeure — Other (specify): [________________________________]
☐ Value Engineering Proposal
☐ Unforeseen Subsurface Conditions
☐ Material Unavailability / Substitution
☐ Environmental Compliance (TCEQ requirement)
☐ Utility Conflict
☐ Price Escalation (if permitted)
☐ Other: [________________________________]

4.3 Detailed Description of Changed Work.

[________________________________]
[________________________________]
[________________________________]
[________________________________]

4.4 Work Added.

4.5 Work Deleted.

4.6 Work Modified.

4.7 Supporting Documentation.

☐ Revised construction drawings (Exhibit A)
☐ Revised technical specifications
☐ Contractor's cost proposal
☐ Subcontractor quotations
☐ Architect's / Engineer's recommendation
☐ Geotechnical report
☐ Environmental report (TCEQ)
☐ Photographs / site investigation report
☐ Other: [________________________________]

Section 5 — Impact Assessment

5.1 Schedule Impact.

5.2 Cost Impact.

5.3 Risk Assessment.

Section 6 — Cost Adjustment

6.1 Pricing Methodology.

☐ Negotiated Lump Sum
☐ Unit Prices (per Master Agreement schedule of values)
☐ Time and Materials with Not-to-Exceed Cap of $[________]
☐ Cost of Work Plus Fee ([____]%)
☐ Other: [________________________________]

6.2 Detailed Cost Breakdown. (See also Exhibit A.)

6.3 Markup Schedule.

6.4 Contract Price Summary.

Section 7 — 10% Threshold Analysis (Tex. Prop. Code § 28.002)

7.1 Statutory Right to Refuse Additional Work.

Under Tex. Prop. Code § 28.002 (effective September 1, 2023), a general contractor or subcontractor has the statutory right to refuse to perform owner-directed additional work if:

(a) The contractor does not have a written and fully executed change order for the additional work; AND

(b) The aggregate value of all unexecuted change orders for owner-directed additional work exceeds 10% of the contractor's (or subcontractor's) original contract (or subcontract) amount.

A contractor exercising this right is not liable for damages associated with the refusal. This right cannot be waived by contract.

7.2 Current Threshold Calculation.

7.3 Contractor's Election.

☐ The 10% threshold is NOT exceeded. Contractor proceeds with the Change Order Work.
☐ The 10% threshold IS exceeded. Contractor elects to:
☐ Proceed with the additional work voluntarily
☐ Decline to perform the additional work pursuant to Tex. Prop. Code § 28.002

7.4 Subcontractor Impact. If this Change Order flows down to subcontractors, each affected subcontractor has an independent right under § 28.002 based on their subcontract amount. Subcontractor elections:

Section 8 — Schedule Adjustment

8.1 Milestone Revisions.

8.2 Revised Completion.

8.3 Liquidated Damages. Computed from revised dates. Any modification: [________________________________].

Section 9 — Payment Terms and Statutory Compliance

9.1 Payment for Change Order Work.

☐ Per Master Agreement payment schedule
☐ Lump sum upon completion: $[________]
☐ Progress payments at [____]% of CO Work completed
☐ Milestone payments:

9.2 Retainage. Texas does not impose a statutory cap on retainage for private construction. Retainage is per the Master Agreement: [____]%. For public works, retainage is per the governmental entity's requirements.

9.3 Prompt Payment — Private Works (Tex. Prop. Code Ch. 28).

The following statutory requirements are mandatory and non-waivable:

(a) Owner to Prime Contractor. Owner shall pay within 35 days of receipt of a proper invoice (Tex. Prop. Code § 28.002).

(b) Prime to Subcontractor. Contractor shall pay subcontractors within 7 days of receipt of payment from Owner (Tex. Prop. Code § 28.002).

(c) Sub to Sub-Subcontractor. First-tier subcontractors shall pay second-tier subcontractors within 7 days of receipt.

(d) Interest Rate. Unpaid amounts begin accruing interest the day after payment is due at the rate of 1.5% per month (1% per month plus the prime rate as published in the Wall Street Journal on the first business day of each month in which the interest accrues) (Tex. Prop. Code § 28.004).

(e) Dispute Withholding. For disputes over conforming work, the withholding party may withhold no more than 100% of the difference between the value of the work claimed to be nonconforming and the contract price (non-residential), or 110% of such difference (residential) (Tex. Prop. Code § 28.002).

(f) Contractual Waiver Prohibited. Any provision purporting to waive, modify, or extend the statutory payment deadlines is void and unenforceable.

9.4 Prompt Payment — Government Contracts (Tex. Gov't Code Ch. 2251).

(a) Payment Deadline. The governmental entity shall pay within 30 days of the later of: (i) receipt of goods or services, or (ii) receipt of an invoice.

(b) Interest Rate. Overdue payments accrue interest at 1% per month beginning on the 31st day (Tex. Gov't Code § 2251.025).

(c) Subcontractor Payments. Contractor shall pay subcontractors within 10 days of receipt of payment from the governmental entity.

9.5 Disputed Amounts. Pay undisputed amounts per statutory deadlines. Provide written notice with reasons for any dispute.

Section 10 — Effect on Master Agreement

10.1 Modified Provisions.

10.2 Unmodified Provisions. All provisions not expressly modified remain in full force and effect.

10.3 Order of Precedence.

1. This Change Order No. [____]
2. Prior Change Orders (reverse chronological order)
3. Master Agreement and all exhibits
4. Original scope of work / plans and specifications

10.4 Cumulative Change Summary.

Section 11 — Representations, Warranties, and Covenants

11.1 Contractor Representations.

(a) Contractor holds all trade licenses required by Texas law (TSBPE for plumbing, TDLR for electrical and HVAC) and any applicable municipal licenses.

(b) The cost proposal is accurate, complete, and submitted in good faith.

(c) Change Order Work will comply with all applicable codes and laws.

(d) Contractor has disclosed all known conditions affecting cost or schedule.

(e) This Change Order represents the full adjustment for the changes described herein.

11.2 Owner Representations.

(a) The signatory has authority to bind Owner.

(b) Sufficient funds have been appropriated or budgeted.

(c) Owner will provide timely access, information, and approvals.

Section 12 — Additional Texas Legal Provisions

12.1 Statute of Frauds (Tex. Bus. & Com. Code § 26.01). An agreement that by its terms is not to be performed within one year from its making must be in writing and signed by the person to be charged. This Change Order satisfies the writing requirement.

12.2 Mechanic's Lien (Tex. Prop. Code Ch. 53).

(a) Change Order Work is subject to mechanic's lien rights. For non-homestead commercial property, subcontractors and suppliers must send notice to Owner and prime contractor no later than the 15th day of the second month following the month in which labor or materials were provided.

(b) For residential homestead property, additional requirements apply, including statutory notices and contract provisions under Tex. Prop. Code Ch. 53, Subchapter I.

(c) A lien must be filed no later than the 15th day of the fourth month (for non-homestead) or the 15th day of the third month (for homestead) after the month in which the indebtedness accrued.

12.3 Payment Bond — Public Works (Tex. Gov't Code § 2253.021).

Change Order Work on public projects is covered by the statutory payment bond. Subcontractors and suppliers must provide notice to the prime contractor within the time required by Tex. Gov't Code § 2253.041 to preserve bond claims.

12.4 Anti-Indemnity Statute (Tex. Ins. Code § 151.102).

For construction contracts, a provision requiring a party to indemnify another against claims arising from the indemnitee's sole or partial negligence is void to the extent it requires indemnification for the indemnitee's percentage of negligence. This Change Order does not create indemnity obligations that violate this statute.

12.5 Anti-Assignment. Assignment requires prior written consent per the Master Agreement. Assignment of payment rights to a commercial lending institution is permitted unless expressly prohibited.

12.6 Interest Rates Summary.

Section 13 — Authorization and Approval

13.1 Required Approvals.

13.2 Third-Party Approvals.

Section 14 — Governing Law and Forum

14.1 This Change Order is governed by the laws of the State of Texas.

14.2 Exclusive jurisdiction and venue shall be in the state or federal courts located in [________________________________] County, Texas.

14.3 Disputes shall be resolved per the Master Agreement.

Section 15 — Execution

This Change Order is effective as of [__/__/____] upon execution by all required signatories.

OWNER / CONTRACTING AUTHORITY:

Signature: _________________________________________
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

CONTRACTOR:

Signature: _________________________________________
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

ARCHITECT / ENGINEER (if required):

Signature: _________________________________________
Printed Name: [________________________________]
Title: [________________________________]
TX License No.: [________________________________]
Date: [__/__/____]

Exhibit A — Cost Breakdown Worksheet

Exhibit B — Revised Schedule

☐ Updated CPM schedule attached as Exhibit B-1

Exhibit C — Scope Change Details

Narrative:

[________________________________]
[________________________________]
[________________________________]

Revised Drawings:

Revised Specifications:

This template is provided for informational purposes only and does not constitute legal advice. Texas law regarding construction change orders, the right to refuse additional work (Tex. Prop. Code § 28.002), non-waivable prompt payment requirements, mechanic's liens, and the anti-indemnity statute is complex and subject to change. Have this document reviewed by a Texas-licensed attorney before use.