By: Turner S.B. No. 1471
A BILL TO BE ENTITLED
AN ACT
1-1 relating to residential construction liability.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
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.