Enrolled Bill Summary

House Bill 2022	House Author:  Leach et al.
Effective:  9-1-23	Senate Sponsor:  King

            House Bill 2022 amends the Residential Construction Liability Act, Property Code, to do the following:

·        require a claimant to prove that a construction defect was latent at the time the residence was completed or title was conveyed and has rendered the residence unsuitable for its intended use as a home for purposes of maintaining a claim of breach of warranty of habitability;

·        require a claimant to prove that a construction defect existed at the time of the completion of the construction, alteration, or repair, in addition to the damages being proximately caused by the defect, for purposes of recovering damages;

·        limit contractor liability to the extent that a defective condition proximately causes actual physical damage to a residence, actual failure or lack of capability of a building component to perform its intended function or purpose, or verifiable danger to occupants;

·        exempt a contractor from liability for damages caused by the failure of a person other than the contractor or an agent, employee, or subcontractor of the contractor to timely notify the contractor of a construction defect;

·        exempt a contractor from liability for damages relating to a contractor's reliance on certain written information that was modified and the contractor did not know and could not have reasonably known of the modification;

·        specify that the liability exemption for damages caused by normal shrinkage due to drying or settlement of construction components applies with respect to normal cracking or shrinkage cracking due to that drying or settlement; and

·        change the liability exemption for damages caused by the failure of a person other than the contractor or the contractor's agent to take reasonable action to mitigate the damages or maintain the residence to apply to the failure of such a person instead to mitigate damages or maintain the residence.

House Bill 2022 revises provisions relating to the requisite notice and offer of settlement before initiating an action for damages arising from a construction defect as follows:

·        requires a claimant to provide video or audio recordings relating to the defect and necessary repairs to the contractor and removes the condition that the provision of any evidence relating to the defect and necessary repairs be at the contractor's request;

·        provides for the contractor to be given the opportunity to conduct up to three inspections during a specified period after the date of notice;

·        extends the deadline by which a contractor may make a written settlement offer and by which repairs must be made under certain conditions; and

·        requires the contractor to include in the settlement offer the time for the completion of construction defect repairs if more than 60 days.

The bill also authorizes an applicable court or tribunal in a residential construction liability action to order that a settlement offer made by the contractor after the prescribed time is considered timely if the contractor is prejudiced in the contractor's opportunity to inspect a construction defect or make an offer due to events beyond the contractor's control or because the claimant failed to provide certain evidence in the claimant's possession, custody, or control to the contractor or amended a claim to add a new alleged defect. The bill provides for reasonable and necessary arbitration filing fees and the claimant's share of arbitrator compensation that are proximately caused by construction defect as economic damages that a claimant in a residential construction liability action may recover.

House Bill 2022 establishes that the submission of a residential construction liability action to arbitration has the same effect on the running of a limitations period as a filing in a court in Texas and that an attempted waiver of statutory provisions regarding residential construction liability actions in an applicable contract is void. The bill also repeals a provision limiting a contractor's authority to elect to purchase a residence as an alternative to the economic damages.