Texas Construction Trust Funds: What Your Pool Builder Must Do With Your Money (2026)

Short answer: in Texas, the money you pay a pool builder to build on your property is a trust fund for the subs and suppliers on your job, and on a residential contract for you as well (Property Code §§162.001–.003).^[2][3][4] The builder is a trustee of that money. On a homestead job over $5,000, it must keep the money in a bank account labeled a “construction account” and keep records of every payment out (§§162.006–.007).^[6][7] Diverting it without paying current bills, knowingly or with intent to defraud, is “misapplication” and can be a crime (§§162.031–.032).^[8][9]

How to read this page. Statute summaries are our plain-English reading of Texas Property Code chapter 162, checked against the statute text on October 29, 2026. This is not legal advice. Whether a builder broke the law depends on facts only a court or prosecutor can weigh. Talk to a Texas construction attorney; the State Bar runs a lawyer referral service.^[14] This guide names no company. We run a pool service company (see the footer). We don't build pools or handle payment disputes.

Why this matters on pool jobs

Pool contracts are often paid in large draws: dig, steel and gunite, plumbing and electrical, tile and coping, plaster and start-up. Each draw is supposed to pay the people who did that phase. When subs go unpaid, homeowners end up facing liens even though they paid the builder. In a 2024 r/Construction post, an owner who said they had paid “$90,000+ already to the pool contractor” wrote that the gunite supplier sent a notice about an unpaid $16,000 bill.^[12] In a 2022 r/legaladvice post about a Texas pool job, owners wrote that a tile sub “showed up at our door and gave us a bill.”^[13] These are the posters' own accounts; we haven't verified them, and neither post names a company. Chapter 162 is the part of Texas law about where that draw money was supposed to go.

The rules in one table

Rule	What the statute says	Statute
Your payments are trust funds	Construction payments made to a contractor or subcontractor (or its officer, director or agent) under a construction contract to improve specific real property in Texas. Loan money borrowed to improve the property and secured by a lien on it is also trust funds.^[2]	§162.001(a), (b)
The builder is a trustee	A contractor, subcontractor or owner, or its officer, director or agent, who receives or controls trust funds is a trustee.^[3]	§162.002
Who the money is for	Laborers, subcontractors and suppliers who furnish labor or material for the improvement. On a residential construction contract, the property owner is also a beneficiary.^[4]	§162.003
Builder's fee exception	A fee is not trust funds if there is a written cost-plus-fee contract signed before work starts and the fee is earned as the contract provides.^[2]	§162.001(c)
Separate account (homestead, over $5,000)	A contractor with a written contract with the owner to build improvements to a residential homestead for more than $5,000 must deposit the trust funds in a construction account. The bank statement must call it a “construction account.”^[6]	§162.006
Account records	Source, amount and date of each deposit; date, amount and payee of each disbursement; current balance; direct and indirect costs charged to the owner; supporting invoices. Kept until at least the first anniversary of completion.^[7]	§162.007
Misapplication	Intentionally or knowingly, or with intent to defraud, keeping, using, paying out or diverting trust funds without first fully paying current or past-due obligations to the beneficiaries. Commingling doesn't end the trust.^[8]	§162.031(a), (d)
“Current or past due obligations”	Labor or materials furnished for the job before the trustee received the trust funds, and due no later than 30 days after it received them.^[5]	§162.005(2)
Penalties	Misapplying $500 or more: Class A misdemeanor; with intent to defraud: third-degree felony. Failing to keep the required construction account or record: Class A misdemeanor.^[9]	§162.032

What counts as “intent to defraud”

Section 162.005 says a trustee acts with intent to defraud when it uses or diverts trust funds and either (A) intends to deprive the beneficiaries of them, (B) didn't set up or keep the required construction account or account record, or (C) was paid in reliance on a bills-paid affidavit (§53.085) that falsely said current or past-due bills were paid.^[5] Point (C) is one reason to collect a bills-paid affidavit with each draw; see our lien waiver and bills-paid affidavit guide.

Defenses the statute gives the builder

An unpaid sub alone doesn't prove misapplication. Section 162.031 makes it an affirmative defense that the unpaid money was:^[8]

spent on the builder's actual expenses directly related to the job;
held back, after notice to the sub that asked for payment, because the builder reasonably believed the sub wasn't entitled to it;
retained as authorized or required by chapter 53 (for example, retainage); or
paid in full to the beneficiaries within 30 days after written notice of a criminal complaint or pending criminal investigation.

What to ask for before and during the build

Ask where your deposit will go. On a homestead pool over $5,000, ask the builder to confirm in writing that your payments go into a construction account under §162.006.^[6]
Ask for the account record for your job when you're asked for a big draw: what was deposited and what was paid out, to whom (§162.007).^[7] The statute requires the builder to keep it; it doesn't spell out an owner's right to inspect it, so ask for it in the contract.
Tie each draw to paperwork: the disbursement statement and conditional waivers from the subs for the phase being paid. See pool payment schedules & Texas lien law.
Keep your records: contract, change orders, every check or transfer and its memo line, the builder's invoices and texts. Prosecutors trace funds through bank records, starting with the victim's own.^[10]

If you think your draw money was diverted

Protect yourself under chapter 53 first. If a sub sends a notice of claim, withhold that amount from the builder. See what to do when a sub says the builder didn't pay. If a lien is already filed, see how to check and remove a mechanic's lien.
If the builder stopped working, follow the stopped-work steps: document the site, send written notice, and don't pay ahead of the work.
Talk to a Texas construction attorney about civil options. The §162.031 defenses apply to “prosecution or other action,” so the chapter isn't only criminal.^[8][14]
Consider a complaint to your county's district attorney. In Dallas County, the DA's Specialized Crime Division includes a Fraud Unit that prosecutes financial crimes.^[11] Writing in a statewide prosecutors' journal, a Tarrant County assistant criminal district attorney said complaints about the quality of the work are likely civil. What makes a contractor case criminal is intent to deprive the owner of the money. He said contractor-fraud indictments often include theft and misapplication of fiduciary property, and that in his experience contractors rarely comply with §162.006.^[10] That is one prosecutor's view, not a rule.

FAQ

Is the money I pay my pool builder a trust fund in Texas?

Under Texas Property Code section 162.001(a), construction payments are trust funds if they are made to a contractor or subcontractor under a construction contract to improve specific real property in Texas. A pool built on your lot fits that description. Section 162.002 makes the contractor who receives or controls the money a trustee, and section 162.003 makes the subs and suppliers on the job, and on a residential contract the owner too, beneficiaries.

Does my pool builder need a separate bank account for my money?

Section 162.006 says a contractor who signs a written contract with a property owner to build improvements to a residential homestead for more than $5,000 must deposit the trust funds in a construction account at a financial institution, and the bank's statement must call it a "construction account." Section 162.007 requires an account record showing deposits, each disbursement and who got it, and the balance, kept until at least one year after the job is finished. Failing to keep the account or record is a Class A misdemeanor under section 162.032(c). A Tarrant County prosecutor wrote in 2019 that, in his experience, contractors rarely comply with this rule.

Is it a crime if my builder didn't pay the subs?

Not automatically. Section 162.031 defines misapplication as a trustee intentionally or knowingly, or with intent to defraud, keeping, using or diverting trust funds without first paying current or past-due obligations to the beneficiaries. It lists defenses, including spending the money on actual expenses of the job, withholding it in a reasonable good-faith dispute, and paying in full within 30 days after written notice of a criminal complaint. Misapplying $500 or more is a Class A misdemeanor, or a third-degree felony with intent to defraud (section 162.032). Whether that fits a particular builder is for a prosecutor or court.

Who do I report it to in Dallas County?

The Dallas County District Attorney's Specialized Crime Division has a Fraud Unit that prosecutes financial crimes. Other DFW counties have their own district or criminal district attorney. Prosecutors draw a line between poor-quality work, which is usually civil, and taking money with the intent to deprive, which can be criminal. Talk to a Texas attorney about civil options too.

Related: how to vet a DFW pool builder · builder directory. Something wrong or out of date? Tell us. How we source claims: methodology.

Texas construction trust funds: what your pool builder must do with your money (2026)