SRC-CDH H.B. 1742 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 1742
By: Bosse (Harris)
Jurisprudence
5-13-97
Engrossed


DIGEST 

In 1989, the Residential Construction Liability Act (RCLA) was passed in
reaction to an imbalance created by the Texas Deceptive Trade Practices
Act, which allowed homeowners much latitude in suing Texas residential
builders and remodelers.  RCLA was passed to remedy this imbalance by
providing "a fair and appropriate balance with respect to the resolution
of construction disputes between a residential contractor and an owner."
However, a recent Fort Worth Court of Appeals decision pointed out an
unclear section in RCLA which places a cap on the amount of damages
homeowners may collect, particularly in litigation involving older homes.
H.B. 1742 would allow homeowners of an older home to recover the greater
amount of the purchase price or the current fair market price of the home.
Additionally, this bill would ensure that second owners receive the same
benefits and obligations as the first owner, would clearly state that
subcontractors and design professionals are included under RCLA, and would
add a mediation clause.  

PURPOSE

As proposed, H.B. 1742 establishes provisions regarding residential
construction liability.  

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 27.001(3), Property Code, to redefine
"contractor" to mean a person contracting with an owner for the alteration
or repair of or addition to an existing residence; a person contracting
with an owner for the construction, alteration, addition, or repair of an
appurtenance to a new or existing residence; a person providing a warranty
covering defects in a residence or a person administering the warranty on
behalf of the person providing the warranty; a person insuring all or any
part of a contractor's liability for certain costs; or an officer,
director, shareholder, or employee of the contractor or a subcontractor or
design professional hired by the contractor to perform the construction,
alteration, addition, or repair.  Deletes provisions regarding repair of a
new or existing residence, sale of an appurtenance to a new or existing
residence, and certain risk retention groups. 

SECTION 2. Amends Section 27.002(a), Property Code, to provide that this
chapter applies to any action to recover damages resulting from a
construction defect, except a claim for personal injury, survival, or
wrongful death or for damage to goods by an owner of a residence,
including an owner subsequent to the owner contracting with the
contractor. 

SECTION 3. Amends Sections 27.004(g) and (i), Property Code, to prohibit
the total damages awarded in a suit subject to this chapter, excluding
reasonable and necessary attorney's fees, arbitration expenses, and
taxable costs, from exceeding the greater of the claimant's purchase price
for the residence or the fair market value of the residence without the
construction defect. 

SECTION 4. Makes application of this Act prospective.

SECTION 5. Effective date:  September 1, 1997.

 SECTION 6. Emergency clause.