By:  Turner                                           S.B. No. 1471
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to residential construction liability.
    1-3        SECTION 1.  Section 27.001 (3), Property Code, is amended to
    1-4  read as follows:
    1-5        (3)  "Contractor" means:
    1-6        (a)  a person or entity contracting with an owner for the
    1-7  construction or sale of a new residence constructed by that person
    1-8  or of an alteration of or addition to an existing residence, repair
    1-9  of a new or existing residence, or construction, sale, alteration,
   1-10  addition, or repair of an appurtenance to a new or existing
   1-11  residence;
   1-12        (b)  a risk retention group registered under Article 21.54,
   1-13  Insurance Code, that insures all or any part of a contractor's
   1-14  liability for the cost to repair a residential construction defect
   1-15  and shall also include any person or entity, including a warranty
   1-16  service company, that such risk retention group uses to carry out
   1-17  its duties to its members;
   1-18        (c)  the person or entity who makes the improvements to real
   1-19  property on which the residence or appurtenance is affixed; and
   1-20        (d)  all officers, directors, shareholders, and employees, of
   1-21  the contractor.
   1-22        SECTION 2.  27.004, Property Code, is amended to read as
   1-23  follows:
    2-1        Sec. 27.004.  Notice and Offer of Settlement.  (a)  Before
    2-2  the 60th day preceding the date a claimant seeking from a
    2-3  contractor damages arising from a construction defect files suit,
    2-4  the claimant shall give written notice by certified mail, return
    2-5  receipt requested, to the contractor, at the contractor's last
    2-6  known address, specifying in reasonable detail the construction
    2-7  defects that are the subject of the complaint.  If more than one
    2-8  notice is sent, the notice with the latest date shall control with
    2-9  regard to the deadlines in this section.  During the 35-day period
   2-10  after the date the contractor receives the notice, and on the
   2-11  contractor's written request, the contractor shall be given a
   2-12  reasonable opportunity to inspect and have inspected the property
   2-13  that is the subject of the complaint to determine the nature and
   2-14  cause of the defect and the nature and extent of repairs necessary
   2-15  to remedy the defect.  The contractor may take reasonable steps to
   2-16  document the defect.
   2-17        (b)  Within the 45-day period after the date the contractor
   2-18  receives the notice, the contractor may make a written offer of
   2-19  settlement to the claimant.  The offer may include either an
   2-20  agreement by the contractor to repair or to have repaired by an
   2-21  independent contractor at the contractor's expense any construction
   2-22  defect described in the notice and shall describe in reasonable
   2-23  detail the kind of repairs which will be made.  The repairs shall
   2-24  be made within the 45-day period after the date the contractor
   2-25  receives written notice of acceptance of the settlement offer,
    3-1  unless completion is delayed by the claimant or by other events
    3-2  beyond the control of the contractor.  The written offer of
    3-3  settlement, written acceptance of the settlement offer, and an
    3-4  affidavit of completion of repairs shall be filed with the deed
    3-5  records of the county in which the residence is located.  For the
    3-6  purposes of this section, "independent contractor" means a person
    3-7  who is independent of the contractor and did not perform any of the
    3-8  work complained of in the claimant's notice.  The claimant and the
    3-9  contractor may agree in writing to extend the periods described by
   3-10  this subsection.
   3-11        (c)  If the giving of the notice under Subsections (a) and
   3-12  (b) within the period prescribed by those subsections is
   3-13  impracticable because of the necessity of filing suit at an earlier
   3-14  date to prevent expiration of the statute of limitations or if the
   3-15  complaint is asserted as a counterclaim, that notice is not
   3-16  required.  However, the suit or counterclaim shall specify in
   3-17  reasonable detail each construction defect that is the subject of
   3-18  the complaint, and the inspection provided for by Subsection (a)
   3-19  may be made during the 60-day period following the date of service
   3-20  of the suit or counterclaim on the contractor, and the offer
   3-21  provided for by Subsection (b) may be made within the 60-day period
   3-22  following the date of service.  If, while a suit subject to this
   3-23  chapter is pending, the statute of limitations for the cause of
   3-24  action would have expired and it is determined that the provisions
   3-25  of Subsection (a) were not properly followed, the suit shall be
    4-1  abated for up to 75 days in order to allow compliance with
    4-2  Subsections (a) and (b).
    4-3        (d)  If a claimant unreasonably rejects an offer made as
    4-4  provided by this section or does not permit the contractor or
    4-5  independent contractor a reasonable opportunity to repair the
    4-6  defect pursuant to an accepted offer of settlement, the claimant
    4-7  may not recover an amount in excess of the reasonable cost of the
    4-8  repairs which are necessary to cure the construction defect and
    4-9  which are the responsibility of the contractor and may recover only
   4-10  the amount of reasonable and necessary attorney's fees and costs
   4-11  incurred before the offer was rejected or considered rejected.
   4-12        (e)  If a contractor fails to make a reasonable offer under
   4-13  this section, or fails to make a reasonable attempt to complete the
   4-14  repairs specified in an accepted offer made under this section, or
   4-15  fails to complete, in a good and workmanlike manner, the repairs
   4-16  specified in an accepted offer made under this section, the
   4-17  limitations on damages <and defenses to liability> provided for in
   4-18  <this section> Subsection (d) above shall not apply.
   4-19        (f)  Except as provided by Subsection (d), in a suit subject
   4-20  to this chapter the claimant may recover only the following damages
   4-21  proximately caused by a construction defect:
   4-22              (1)  the reasonable cost of repairs necessary to cure
   4-23  any construction defect that the contractor failed to cure;
   4-24              (2)  the reasonable expenses of temporary housing
   4-25  reasonably necessary during the repair period;
    5-1              (3)  the reduction in market value, if any, to the
    5-2  extent the reduction is due to structural failure; and
    5-3              (4)  reasonable and necessary attorney's fees.
    5-4        (g)  The total damages awarded in a suit subject to this
    5-5  chapter may not exceed the claimant's purchase price for the
    5-6  residence.
    5-7        (h)  An offer of settlement made under this section that is
    5-8  not accepted before the 25th day after the date the offer is
    5-9  received by the claimant is considered rejected.
   5-10        (i)  An affidavit certifying rejection of a settlement offer
   5-11  under this section <may> shall  be filed with the court and with the
   5-12  deed records of the county in which the residence is located.  The
   5-13  trier of fact shall determine the reasonableness of a rejection of
   5-14  an offer of settlement made under this section.
   5-15        (j)  A contractor who makes or provides for repairs under
   5-16  this section is entitled to take reasonable steps to document the
   5-17  repair and to have it inspected.
   5-18        (k)  Notwithstanding Subsections (a), (b), and (c), a
   5-19  contractor who receives written notice of a construction defect
   5-20  resulting from work performed by the contractor or an agent,
   5-21  employee, or subcontractor of the contractor and creating an
   5-22  imminent threat to the health or safety of the inhabitants of the
   5-23  residence shall take reasonable steps to cure the defect as soon as
   5-24  practicable.  If the contractor fails to cure the defect in a
   5-25  reasonable time, the owner of the residence may have the defect
    6-1  cured and may recover from the contractor the reasonable cost of
    6-2  the repairs plus attorney's fees and costs in addition to any other
    6-3  damages recoverable under any law not inconsistent with the
    6-4  provisions of this chapter.
    6-5        (l)  This section does not preclude a contractor from making
    6-6  a monetary settlement offer.  An affidavit certifying the cash
    6-7  settlement offer shall be filed with the deed records of the county
    6-8  in which the residence is located.
    6-9        (m)  The inspection and repair provisions of this chapter are
   6-10  in addition to any rights of inspection and settlement provided by
   6-11  common law or by another statute, including Section 17.505,
   6-12  Business & Commerce Code.
   6-13        (n)  The court shall grant a motion to abate the cause of
   6-14  action if the notice, inspection, offer, and acceptance provisions
   6-15  of this Section have not been met.
   6-16        (o)  Acceptance of the settlement offer shall constitute a
   6-17  release from liability for future claims for cured construction
   6-18  defects.
   6-19        SECTION 3.  The change in law made by this Act applies to an
   6-20  action for residential construction liability filed on or after the
   6-21  effective date of this Act.  An action filed before the effective
   6-22  date of this Act is governed by the law in effect at the time of
   6-23  filing, and the prior law is continued in effect for that purpose.
   6-24        SECTION 4.  The importance of this legislation and the
   6-25  crowded condition of the calendars in both houses create an
    7-1  emergency and an imperative public necessity that the
    7-2  constitutional rule requiring bills to be read on three several
    7-3  days in each house be suspended, and this rule is hereby suspended,
    7-4  and that this Act take effect and be in force from and after its
    7-5  passage, and it is so enacted.