73R6955 LJD-F
          By Duncan                                             H.B. No. 1395
          Substitute the following for H.B. No. 1395:
          By Corte                                          C.S.H.B. No. 1395
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to residential construction liability.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Section 27.001(2), Property Code, is amended to
    1-5  read as follows:
    1-6              (2)  "Construction defect" means a matter concerning
    1-7  the design, construction, or repair of a new residence, of an
    1-8  alteration of or addition to an existing residence, or of an
    1-9  appurtenance to a residence, on which a person has a complaint
   1-10  against a contractor.  The term "construction defect" may include
   1-11  any physical damage to the residence, <or> any appurtenance, or the
   1-12  real property on which the residence and appurtenance are affixed
   1-13  proximately caused by a construction defect.
   1-14        SECTION 2.  Section 27.002, Property Code, is amended to read
   1-15  as follows:
   1-16        Sec. 27.002.  Application of Chapter.  (a)  This chapter
   1-17  applies to any action to recover damages resulting from a
   1-18  construction defect, except a claim <an action> for personal
   1-19  injury, survival, or wrongful death or for damage to goods.  To the
   1-20  extent of conflict between this chapter and any other law,
   1-21  including the Deceptive Trade Practices-Consumer Protection Act
   1-22  (Subchapter E, Chapter 17, Business & Commerce Code), this chapter
   1-23  prevails.
    2-1        (b)  In this section:
    2-2              (1)  "Goods" does not include a residence.
    2-3              (2)  "Personal injury" does not include mental anguish.
    2-4        SECTION 3.  Section 27.003, Property Code, is amended to read
    2-5  as follows:
    2-6        Sec. 27.003.  Liability.  (a)  In an action to recover
    2-7  damages resulting from a construction defect, a contractor is not
    2-8  liable for damages, or any percentage of damages, caused by:
    2-9              (1)  negligence of a person other than the contractor
   2-10  or an agent, employee, or subcontractor of the contractor;
   2-11              (2)  failure of a person other than the contractor or
   2-12  an agent, employee, or subcontractor of the contractor to:
   2-13                    (A)  take reasonable action to mitigate the
   2-14  damages; or
   2-15                    (B)  maintain the residence;
   2-16              (3)  normal wear, tear, or deterioration; <or>
   2-17              (4)  normal shrinkage due to drying or settlement of
   2-18  construction components within the tolerance of building standards;
   2-19  or
   2-20              (5)  the contractor's reliance on written information
   2-21  relating to the residence, appurtenance, or real property on which
   2-22  the residence and appurtenance are affixed that was obtained from
   2-23  official government records, if the written information was false
   2-24  or inaccurate and the contractor did not know and could not
   2-25  reasonably have known of the falsity or inaccuracy of the
    3-1  information.
    3-2        (b)  Except as provided herein, this chapter does not limit
    3-3  or bar any other defense or defensive matter or other defensive
    3-4  cause of action applicable to an action to recover damages
    3-5  resulting from a construction defect.
    3-6        SECTION 4.  Section 27.004, Property Code, is amended by
    3-7  amending Subsections (a)-(c) and (e) and adding Subsection (m) to
    3-8  read as follows:
    3-9        (a)  Before the 60th day preceding the date a claimant
   3-10  seeking from a contractor damages arising from a construction
   3-11  defect files suit, the claimant shall give written notice to the
   3-12  contractor, at the contractor's last known address, specifying in
   3-13  reasonable detail the construction defects that are the subject of
   3-14  the complaint and that the claimant intends to file suit.  During
   3-15  the <21-day> period between <after> the date the contractor
   3-16  receives the notice and the date on which the claimant is entitled
   3-17  to file suit, the contractor shall be given a reasonable
   3-18  opportunity to inspect and have inspected the property that is the
   3-19  subject of the complaint to determine the nature and cause of the
   3-20  defect and the nature and extent of repairs necessary to remedy the
   3-21  defect.  The contractor may take reasonable steps to document the
   3-22  defect.
   3-23        (b)  Within the <31-day> period between <after> the date the
   3-24  contractor receives the notice and the date on which the claimant
   3-25  is entitled to file suit, the contractor may make a written offer
    4-1  of settlement to the claimant.  The offer may include an agreement
    4-2  by the contractor to repair or have repaired by an independent
    4-3  contractor at the contractor's expense any construction defect
    4-4  described in the notice and shall describe in reasonable detail the
    4-5  kind of repairs which will be made.  The repairs shall be made
    4-6  within the 45-day period after the date the contractor receives
    4-7  written notice of acceptance of the settlement offer, unless
    4-8  completion is delayed by the claimant or by other events beyond the
    4-9  control of the contractor.  For the purposes of this section,
   4-10  "independent contractor" means a person who is independent of the
   4-11  contractor and did not perform any of the work complained of in the
   4-12  claimant's notice.
   4-13        (c)  If the giving of the notice under Subsections (a) and
   4-14  (b) within the period prescribed by those subsections is
   4-15  impracticable because of the necessity of filing suit at an earlier
   4-16  date to prevent expiration of the statute of limitations or if the
   4-17  complaint is asserted as a counterclaim, that notice is not
   4-18  required.  However, the suit or counterclaim shall specify in
   4-19  reasonable detail each construction defect that is the subject of
   4-20  the complaint, and the inspection provided for by Subsection (a)
   4-21  may be made during the 60-day <21-day> period following the date of
   4-22  service of the suit or counterclaim on the contractor, and the
   4-23  offer provided for by Subsection (b) may be made within the 60-day
   4-24  <31-day> period following the date of service.  If, while a suit
   4-25  subject to this chapter is pending, the statute of limitations for
    5-1  the cause of action would have expired and it is determined that
    5-2  the provisions of Subsection (a) were not properly followed, the
    5-3  suit shall be abated for up to 75 days in order to allow compliance
    5-4  with Subsections (a), (b), and (f).
    5-5        (e)  If a claimant reasonably rejects an offer, a contractor
    5-6  fails to make an offer under this section, or a contractor fails to
    5-7  repair the defects within the time allowed by this section in a
    5-8  good and workmanlike manner, the limitations on damages and
    5-9  defenses to liability provided for in this chapter <section> shall
   5-10  not apply.
   5-11        (m)  It is presumed to be unreasonable to reject an offer to
   5-12  repair made under this section solely because the repairs are to be
   5-13  made by the contractor rather than an independent contractor.  The
   5-14  court shall determine the reasonableness of a rejection of an offer
   5-15  of settlement made under this section.
   5-16        SECTION 5.  Chapter 27, Property Code, is amended by adding
   5-17  Section 27.006 to read as follows:
   5-18        Sec. 27.006.  CAUSATION.  In an action to recover damages
   5-19  resulting from a construction defect, the claimant must prove that
   5-20  the damages were proximately caused by the construction defect.
   5-21        SECTION 6.  The change in law made by this Act applies to an
   5-22  action for residential construction liability filed on or after the
   5-23  effective date of this Act.  An action filed before the effective
   5-24  date of this Act is governed by the law in effect at the time of
   5-25  filing, and the prior law is continued in effect for that purpose.
    6-1        SECTION 7.  The importance of this legislation and the
    6-2  crowded condition of the calendars in both houses create an
    6-3  emergency and an imperative public necessity that the
    6-4  constitutional rule requiring bills to be read on three several
    6-5  days in each house be suspended, and this rule is hereby suspended,
    6-6  and that this Act take effect and be in force from and after its
    6-7  passage, and it is so enacted.