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SchwertnerX |
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A BILL TO BE ENTITLED
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AN ACT
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relating to residential construction liability. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 27.001, Property Code, is amended to |
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read as follows: |
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Sec. 27.001. DEFINITIONS. In this chapter: |
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(1) "Action" means a court or judicial proceeding or |
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an arbitration. |
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(2) "Appurtenance" means any garage, outbuilding, |
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retaining wall, or other structure or recreational facility that is |
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constructed by a contractor in connection with the construction or |
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alteration of a residence, regardless of whether it is attached to |
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or [appurtenant to a residence but is not] a part of the dwelling |
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unit. |
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(3) ["Commission" means the Texas Residential |
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Construction Commission. |
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[(4)] "Construction defect" [has the meaning assigned |
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by Section 401.004 for an action to which Subtitle D, Title 16, |
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applies and for any other action] means a deficiency in [matter |
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concerning] the design, construction, or repair of a new residence, |
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of an alteration of or repair or addition to an existing residence, |
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or of an appurtenance to a residence, on which a person has a |
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complaint against a contractor. [The term may include any physical |
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damage to the residence, any appurtenance, or the real property on |
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which the residence and appurtenance are affixed proximately caused |
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by a construction defect.] |
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(4) [(5)] "Contractor": |
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(A) means: |
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(i) a builder [, as defined by Section |
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401.003,] contracting with an owner for the construction or repair |
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of a new residence, for the repair or alteration of or an addition |
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to an existing residence, or for the construction, sale, |
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alteration, addition, or repair of an appurtenance to a new or |
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existing residence; |
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(ii) any person contracting [with a |
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purchaser] for the sale or construction of a new residence |
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constructed by or on behalf of that person; or |
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(iii) a person contracting with an owner or |
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the developer of a condominium or other housing project for the |
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construction or sale of one or more [a] new residences [residence], |
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for an alteration of or an addition to an existing residence, for |
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repair of a new or existing residence, or for the construction, |
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sale, alteration, addition, or repair of an appurtenance to a new or |
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existing residence; and |
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(B) includes: |
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(i) an owner, officer, director, |
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shareholder, partner, or employee of the contractor; and |
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(ii) a risk retention group registered |
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under Chapter 2201 [Article 21.54], Insurance Code, that insures |
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all or any part of a contractor's liability for the cost to repair a |
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residential construction defect. |
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(5) [(6)] "Economic damages" means compensatory |
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damages for pecuniary loss proximately caused by a construction |
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defect. The term does not include exemplary damages or damages for |
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bodily or personal injury, physical pain and mental anguish, loss |
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of consortium, disfigurement, physical impairment, or loss of |
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companionship and society. |
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(6) [(7)] "Residence" means the real property and |
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improvements for a detached one-family or two-family dwelling, a |
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townhouse not more than three stories above grade plane in height |
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with a separate means of egress, an accessory structure not more |
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than three stories above grade plane in height, or a [single-family |
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house,] duplex, triplex, or quadruplex or a unit and the common |
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elements in a multiunit residential structure in which [title to] |
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the individual units are sold [is transferred] to the owners under a |
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condominium or cooperative system. |
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(7) [(8)] "Structural failure" [has the meaning |
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assigned by Section 401.002 for an action to which Subtitle D, Title |
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16, applies and for any other action] means actual physical damage |
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to the load-bearing portion of a residence caused by a failure of |
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the load-bearing portion. |
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(8) [(9) "Third-party inspector" has the meaning |
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assigned by Section 401.002. |
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[(10)] "Developer of a condominium" means a declarant, |
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as defined by Section 82.003, of a condominium consisting of one or |
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more residences. |
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(9) "Townhouse" means a single-family dwelling unit |
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constructed in a group of three or more attached units in which each |
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unit extends from foundation to roof and with a yard or public way |
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on not less than two sides. |
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SECTION 2. Section 27.002(b), Property Code, is amended to |
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read as follows: |
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(b) To [Except as provided by this subsection, to] the |
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extent of conflict between this chapter and any other law, |
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including the Deceptive Trade Practices-Consumer Protection Act |
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(Subchapter E, Chapter 17, Business & Commerce Code) or a common law |
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cause of action, this chapter prevails. [To the extent of conflict |
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between this chapter and Title 16, Title 16 prevails.] |
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SECTION 3. Section 27.003, Property Code, is amended by |
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amending Subsection (a) and adding Subsection (c) to read as |
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follows: |
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(a) In an action subject to this chapter [to recover damages |
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or other relief] arising from a construction defect: |
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(1) a contractor is liable only to the extent a |
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defective condition proximately causes: |
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(A) actual physical damage to the residence; |
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(B) an actual failure or lack of capability of a |
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building component to perform its intended function or purpose; or |
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(C) a verifiable danger to the safety of the |
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occupants of the residence; |
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(2) a contractor is not liable for [any percentage of] |
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damages caused by: |
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(A) negligence of a person other than the |
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contractor or an agent, employee, or subcontractor of the |
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contractor; |
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(B) failure of a person other than the contractor |
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or an agent, employee, or subcontractor of the contractor to: |
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(i) [take reasonable action to] mitigate |
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the damages; [or] |
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(ii) [take reasonable action to] maintain |
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the residence; or |
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(iii) timely notify a contractor of a |
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construction defect; |
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(C) normal wear, tear, or deterioration; |
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(D) normal cracking or shrinkage cracking due to |
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drying or settlement of construction components within the |
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tolerance of building standards; or |
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(E) the contractor's reliance on written |
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information relating to the residence, appurtenance, or real |
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property on which the residence and appurtenance are affixed that |
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was obtained from official government records, if the written |
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information was false, modified, or inaccurate and the contractor |
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did not know and could not reasonably have known of the falsity, |
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modification, or inaccuracy of the information; and |
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(3) [(2)] if an assignee of the claimant or a person |
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subrogated to the rights of a claimant fails to provide the |
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contractor with the written notice and opportunity to inspect and |
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offer to repair required by Section 27.004 [or fails to request |
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state-sponsored inspection and dispute resolution under Chapter |
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428, if applicable,] before performing repairs, the contractor is |
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not liable for the cost of any repairs or any percentage of damages |
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caused by repairs made to a construction defect at the request of an |
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assignee of the claimant or a person subrogated to the rights of a |
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claimant by a person other than the contractor or an agent, |
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employee, or subcontractor of the contractor. |
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(c) To maintain a claim of breach of a warranty of |
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habitability, a claimant must establish that a construction defect: |
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(1) was latent at the time the residence was completed |
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or title was conveyed to the original purchaser; and |
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(2) has rendered the residence unsuitable for its |
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intended use as a home. |
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SECTION 4. Section 27.004, Property Code, is amended by |
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amending Subsections (a), (b), (c), (d), and (g) and adding |
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Subsection (g-1) to read as follows: |
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(a) Before [In a claim not subject to Subtitle D, Title 16, |
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before] the 60th day preceding the date a claimant seeking from a |
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contractor damages or other relief arising from a construction |
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defect initiates an action, the claimant shall give written notice |
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by certified mail, return receipt requested, to the contractor, at |
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the contractor's last known address, specifying in reasonable |
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detail the construction defects that are the subject of the |
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complaint. The [On the request of the contractor, the] claimant |
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shall provide to the contractor any evidence that depicts the |
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nature and cause of the defect and the nature and extent of repairs |
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necessary to remedy the defect, including any expert reports, |
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photographs, and video or audio recordings [videotapes], if that |
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evidence would be discoverable under Rule 192, Texas Rules of Civil |
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Procedure. During the 35-day period after the date the contractor |
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receives the notice, and on the contractor's written request, the |
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contractor shall be given a reasonable opportunity to inspect and |
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have inspected the property that is the subject of the complaint to |
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determine the nature and cause of the defect and the nature and |
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extent of repairs necessary to remedy the defect. To the extent |
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requested, the contractor shall be given the opportunity to conduct |
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up to three inspections during the 35-day period after the date the |
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contractor receives the notice and during any extension of that |
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inspection period provided by law or as otherwise agreed to by the |
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parties. The contractor may take reasonable steps to document the |
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|
defect. [In a claim subject to Subtitle D, Title 16, a contractor |
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|
is entitled to make an offer of repair in accordance with Subsection |
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|
(b). A claimant is not required to give written notice to a |
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contractor under this subsection in a claim subject to Subtitle D, |
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Title 16.] |
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(b) Not later than the 60th [15th day after the date of a |
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final, unappealable determination of a dispute under Subtitle D, |
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Title 16, if applicable, or not later than the 45th] day after the |
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date the contractor receives the notice under this section, [if |
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Subtitle D, Title 16, does not apply,] the contractor may make a |
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written offer of settlement to the claimant. The offer must be sent |
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to the claimant at the claimant's last known address or to the |
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claimant's attorney by certified mail, return receipt requested. |
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The offer may include either an agreement by the contractor to |
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repair or to have repaired by an independent contractor partially |
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or totally at the contractor's expense or at a reduced rate to the |
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claimant any construction defect described in the notice and shall |
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describe in reasonable detail the kind of repairs which will be made |
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and the time for completion of the repairs if more than 60 days. The |
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repairs shall be made not later than the 60th [45th] day after the |
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date the contractor receives written notice of acceptance of the |
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settlement offer, unless completion is delayed by the claimant or |
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|
by other events beyond the control of the contractor. If a |
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contractor makes a written offer of settlement that the claimant |
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|
considers to be unreasonable: |
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(1) on or before the 25th day after the date the |
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claimant receives the offer, the claimant shall advise the |
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|
contractor in writing and in reasonable detail of the reasons why |
|
|
the claimant considers the offer unreasonable; and |
|
|
(2) not later than the 10th day after the date the |
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contractor receives notice under Subdivision (1), the contractor |
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may make a supplemental written offer of settlement to the claimant |
|
|
by sending the offer to the claimant or the claimant's attorney. |
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(c) If [compliance with Subtitle D, Title 16, or] the giving |
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of the notice under Subsections (a) and (b) within the period |
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|
prescribed by those subsections is impracticable because of the |
|
|
necessity of initiating an action at an earlier date to prevent |
|
|
expiration of the statute of limitations or if the complaint is |
|
|
asserted as a counterclaim, [compliance with Subtitle D, Title 16, |
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or] the notice is not required. However, the action or counterclaim |
|
|
shall specify in reasonable detail each construction defect that is |
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the subject of the complaint. The [If Subtitle D, Title 16, applies |
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to the complaint, simultaneously with the filing of an action by a |
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claimant, the claimant must submit a request under Section 428.001. |
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If Subtitle D, Title 16, does not apply, the] inspection provided |
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|
for by Subsection (a) may be made not later than the 75th day after |
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the date of service of the suit, request for arbitration, or |
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counterclaim on the contractor, and the offer provided for by |
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Subsection (b) may be made not later than the [15th day after the |
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date the state-sponsored inspection and dispute resolution process |
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is completed, if Subtitle D, Title 16, applies, or not later than |
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the] 60th day after the date of service [, if Subtitle D, Title 16, |
|
|
does not apply]. If, while an action subject to this chapter is |
|
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pending, the statute of limitations for the cause of action would |
|
|
have expired and it is determined that the provisions of Subsection |
|
|
(a) were not properly followed, the action shall be abated to allow |
|
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compliance with Subsections (a) and (b). |
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(d) The court or arbitration tribunal shall abate an action |
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governed by this chapter if Subsection (c) does not apply and the |
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court or tribunal, after a hearing, finds that the contractor is |
|
|
entitled to abatement because the claimant [failed to comply with |
|
|
the requirements of Subtitle D, Title 16, if applicable,] failed to |
|
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provide the notice or failed to give the contractor a reasonable |
|
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opportunity to inspect the property as required by Subsection |
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(a)[,] or failed to follow the procedures specified by Subsection |
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(b). An action is automatically abated without the order of the |
|
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court or tribunal beginning on the 11th day after the date a motion |
|
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to abate is filed if the motion: |
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(1) is verified and alleges that the person against |
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whom the action is pending did not receive the written notice |
|
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required by Subsection (a), the person against whom the action is |
|
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pending was not given a reasonable opportunity to inspect the |
|
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property as required by Subsection (a), or the claimant failed to |
|
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follow the procedures specified by Subsection (b) [or Subtitle D, |
|
|
Title 16]; and |
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(2) is not controverted by an affidavit filed by the |
|
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claimant before the 11th day after the date on which the motion to |
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abate is filed. |
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(g) Except as provided by Subsection (e), in an action |
|
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subject to this chapter the claimant may recover only the following |
|
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economic damages proximately caused by a construction defect: |
|
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(1) the reasonable cost of repairs necessary to cure |
|
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any construction defect; |
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(2) the reasonable and necessary cost for the |
|
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replacement or repair of any damaged goods in the residence; |
|
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(3) reasonable and necessary engineering and |
|
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consulting fees; |
|
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(4) the reasonable expenses of temporary housing |
|
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reasonably necessary during the repair period; |
|
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(5) the reduction in current market value, if any, |
|
|
after the construction defect is repaired if the construction |
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defect is a structural failure; [and] |
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(6) reasonable and necessary attorney's fees; and |
|
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(7) reasonable and necessary arbitration filing fees |
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and the claimant's share of arbitrator compensation. |
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(g-1) The court or arbitration tribunal may order that an |
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offer made by the contractor after the time prescribed is |
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considered timely for purposes of Subsection (b) or (c), as |
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applicable, if the contractor is prejudiced in the contractor's |
|
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opportunity to inspect as provided for by Subsection (a) or (c) or |
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make an offer provided for by Subsection (b) or (c): |
|
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(1) because the claimant: |
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(A) failed to provide the contractor evidence |
|
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available and in the claimant's possession, custody, or control at |
|
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the time of the original notice depicting the nature and cause of |
|
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the defect and the nature and extent of repairs necessary to remedy |
|
|
the defect, including reports, photographs, videos, or any other |
|
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evidence; or |
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(B) amended a claim to add a new alleged defect; |
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or |
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(2) due to events beyond the contractor's control. |
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SECTION 5. Section 27.0042(a), Property Code, is amended to |
|
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read as follows: |
|
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(a) A written agreement between a contractor and a homeowner |
|
|
may provide that, [except as provided by Subsection (b),] if the |
|
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reasonable cost of repairs necessary to repair a construction |
|
|
defect that is the responsibility of the contractor exceeds an |
|
|
agreed percentage of the current fair market value of the |
|
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residence, as determined without reference to the construction |
|
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defects, then, in an action subject to this chapter, the contractor |
|
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may elect as an alternative to the damages specified in Section |
|
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27.004(g) that the contractor who sold the residence to the |
|
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homeowner purchase it. |
|
|
SECTION 6. Section 27.006, Property Code, is amended to |
|
|
read as follows: |
|
|
Sec. 27.006. CAUSATION. In an action to recover damages |
|
|
resulting from a construction defect, the claimant must prove that: |
|
|
(1) the construction defect existed at the time of |
|
|
completion of the construction, alteration, or repair; and |
|
|
(2) the damages were proximately caused by the |
|
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construction defect. |
|
|
SECTION 7. Chapter 27, Property Code, is amended by adding |
|
|
Sections 27.008 and 27.009 to read as follows: |
|
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Sec. 27.008. EFFECT OF ARBITRATION ON LIMITATIONS PERIOD. |
|
|
The submission of an action subject to this chapter to arbitration |
|
|
has the same effect on the running of a limitations period as a |
|
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filing in a court in this state. |
|
|
Sec. 27.009. NO WAIVER. An attempted waiver of the |
|
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provisions of this chapter in a contract subject to this chapter is |
|
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void. |
|
|
SECTION 8. The following provisions of the Property Code |
|
|
are repealed: |
|
|
(1) Section 27.004(l); |
|
|
(2) Section 27.0042(b); and |
|
|
(3) Section 27.007(c). |
|
|
SECTION 9. The changes in law made by this Act apply only to |
|
|
a cause of action that accrues on or after the effective date of |
|
|
this Act. A cause of action that accrued before the effective date |
|
|
of this Act is governed by the law as it existed immediately before |
|
|
the effective date of this Act, and that law is continued in effect |
|
|
for that purpose. |
|
|
SECTION 10. This Act takes effect September 1, 2023. |
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* * * * * |