By Duncan                                             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.  Amend Section 27.001 (4), Property Code, to read
    1-5  as follows:
    1-6              (4)  "Residence" means a single-family house, duplex,
    1-7  triplex, or quadruplex or a unit in a multiunit residential
    1-8  structure in which title to the individual units is transferred to
    1-9  the owners under a condominium or cooperative system and the real
   1-10  property upon which the improvements are affixed.
   1-11        SECTION 2.  Amend Section 27.002, Property Code, to read as
   1-12  follows:
   1-13        This chapter applies to any action to recover damages,
   1-14  including consequential damages, mental anguish and loss of value,
   1-15  proximately caused by <resulting from> a construction defect,
   1-16  except an action for personal injury, survival, or wrongful death
   1-17  or for damage to goods.  To the extent of conflict between this
   1-18  chapter and any other law, including the Deceptive Trade
   1-19  Practices-Consumer Protection Act (Subchapter E, Chapter 17,
   1-20  Business & Commerce Code), this chapter prevails.
   1-21        SECTION 3.  Amend Section 27.003, Property Code, to read as
   1-22  follows:
   1-23        (a)  In an action to recover damages proximately caused by
    2-1  <resulting from> a construction defect, a contractor is not liable
    2-2  for damages, or an percentage of damages, caused by:
    2-3              (1)  negligence of a person other than the contractor
    2-4  or an agent, employee, or subcontractor of the contractor;
    2-5              (2)  failure of a person other than the contractor or
    2-6  an agent, employee, or subcontractor of the contractor to take
    2-7  reasonable action to mitigate the damages or failure to maintain
    2-8  the residence;
    2-9              (3)  normal wear, tear, <or> deterioration or failure
   2-10  to maintain the residence; <or>
   2-11              (4)  normal shrinkage due to drying or settlement of
   2-12  construction components within the tolerance of building standards;
   2-13  or
   2-14              (5)  written information relating to the residence
   2-15  obtained from official government records if the written
   2-16  information was false or inaccurate and the contractor did not know
   2-17  and could not reasonably have known of the falsity or inaccuracy of
   2-18  the information.
   2-19        (b)  Except as provided herein, this chapter does not limit
   2-20  or bar any other defense or defensive matter or other defensive
   2-21  cause of action applicable to an action to recover damages
   2-22  resulting from a construction defect.
   2-23        SECTION 4.  Amend Section 27.004, Property Code, to read as
   2-24  follows:
   2-25        (a)  Before the 60th day preceding the date a claimant
    3-1  seeking from a contractor damages arising from a construction
    3-2  defect files suit, the claimant shall give written notice to the
    3-3  contractor, at the contractor's last known address, specifying in
    3-4  reasonable detail the construction defects that are the subject of
    3-5  the complaint and that the claimant intends to file suit.  During
    3-6  the 60<21>-day period after the date the contractor receives the
    3-7  notice, the contractor shall be given a reasonable opportunity to
    3-8  inspect and have inspected the property that is the subject of the
    3-9  complaint to determine the nature and cause of the defect and the
   3-10  nature and extent of repairs necessary to remedy the defect.  The
   3-11  contractor may take reasonable steps to document the defect.
   3-12        (b)  Within the 60<31>-day period after the date the
   3-13  contractor receives the notice, the contractor may make a written
   3-14  offer of settlement to the claimant.  The offer may include an
   3-15  agreement by the contractor to repair or have repaired by an
   3-16  independent contractor at the contractor's expense any construction
   3-17  defect described in the notice and shall describe in reasonable
   3-18  detail the kind of repairs which will be made.  The repairs shall
   3-19  be made within the 45-day period after the date the contractor
   3-20  receives written notice of acceptance of the settlement offer,
   3-21  unless completion is delayed by the claimant or by other events
   3-22  beyond the control of the contractor.  For the purposes of this
   3-23  section, "independent contractor" means a person who is independent
   3-24  of the contractor and did not perform any of the work complained of
   3-25  in the claimant's notice.
    4-1        (c)  If the giving of the notice under Subsections (a) and
    4-2  (b) within the period prescribed by those subsections is
    4-3  impracticable because of the necessity of filing suit at an earlier
    4-4  date to prevent expiration of the statute of limitations or if the
    4-5  complaint is asserted as a counterclaim, that notice is not
    4-6  required.  However, the suit or counterclaim shall specify in
    4-7  reasonable detail each construction defect that is the subject of
    4-8  the complaint, and the inspection provided for by Subsection (a)
    4-9  may be made during the 60<21>-day period following the date of
   4-10  service of the suit or counterclaim on the contractor, and the
   4-11  offer provided for by Subsection (b) may be made within the
   4-12  60<31>-day period following the date of service.  If, while a suit
   4-13  subject to this chapter is pending, the statute of limitations for
   4-14  the cause of action would have expired and it is determined that
   4-15  the provisions of Subsection (a) were not properly followed, the
   4-16  suit shall be abated for up to 75 days in order to allow compliance
   4-17  with Subsections (a), (b), and (f).
   4-18        (d)  If a claimant unreasonably rejects an offer made as
   4-19  provided by this section or does not permit the contractor or
   4-20  independent contractor a reasonable opportunity to repair the
   4-21  defect pursuant to an accepted offer of settlement, the claimant
   4-22  may not recover an amount in excess of the reasonable cost of
   4-23  repairs which are necessary to cure the construction defect and
   4-24  which are the responsibility of contractor <and may recover only
   4-25  the amount of reasonable and necessary attorney's fees and costs
    5-1  incurred before the offer was rejected or considered rejected>.
    5-2        (e)  If a claimant reasonably rejects an offer, a contractor
    5-3  fails to make an offer under this section, or a contractor fails to
    5-4  repair the defects within the time allowed by this section in a
    5-5  good and workmanlike manner, the limitations on damages and
    5-6  defenses to liability provided for in this section shall not apply.
    5-7        (f)  If suit is filed after a contractor makes repairs as
    5-8  provided by this section, the claimant may not be awarded damages
    5-9  arising from the construction defect, attorney's fees, or costs
   5-10  unless trier of fact finds that the attempt to repair was not made
   5-11  in good faith and did not cure the construction defect described in
   5-12  the notice.
   5-13        (g)  An offer of settlement made under this section that is
   5-14  not accepted before the 25th day after the date the offer is
   5-15  received by the claimant is considered rejected.
   5-16        (h)  An affidavit certifying rejection of a settlement offer
   5-17  under this section may be filed with the court.  The affidavit may
   5-18  not be offered into evidence or referred to by a party in the
   5-19  presence of the jury on trial of the case.  It shall be
   5-20  unreasonable to reject an offer to repair made under this section
   5-21  solely because the repairs are to be made by the contractor rather
   5-22  than an independent contractor.  The court shall determine the
   5-23  reasonableness of the rejection of an offer of settlement made
   5-24  under this section.
   5-25        (i)  A contractor who makes or provides for repairs under
    6-1  this section is entitled to take reasonable steps to document the
    6-2  repair and to have it inspected.
    6-3        (j)  Notwithstanding Subsections (a), (b), and (c), a
    6-4  contractor who receives written notice of a construction defect
    6-5  resulting from work performed by the contractor or an agent,
    6-6  employee, or subcontractor of the contractor and creating an
    6-7  imminent threat to the health and safety of the inhabitants of the
    6-8  residence shall take reasonable steps to cure the defect as soon as
    6-9  practicable.  If the contractor fails to cure the defect in a
   6-10  reasonable time, the owner of the residence may have the defect
   6-11  cured and may recover from the contractor the reasonable cost of
   6-12  the repairs plus attorney's fees and costs in addition to any other
   6-13  damages recoverable under any law not inconsistent with the
   6-14  provisions of this chapter.
   6-15        (k)  This section does not preclude a contractor from making
   6-16  a monetary settlement offer.
   6-17        (l)  The inspection and repair provisions of this chapter are
   6-18  in addition to any rights of inspection and settlement provided by
   6-19  common law or by another statute, including Section 17.505,
   6-20  Business & Commerce Code.
   6-21        SECTION 5.  Amend Chapter 27, Property Code, by adding new
   6-22  Section 27.006 as follows:
   6-23        Section 27.006.  Limitations on Damages.
   6-24        In an action to recover damages caused by a construction
   6-25  defect the damages awarded to the claimant shall not exceed the
    7-1  amount paid by the claimant to purchase the residence which is
    7-2  found to have a construction defect.
    7-3        SECTION 6.  The importance of this legislation and the
    7-4  crowded condition of the calendars in both houses create an
    7-5  emergency and an imperative public necessity that the
    7-6  constitutional rule requiring bills to be read on three several
    7-7  days in each house be suspended, and this rule is hereby suspended.