SRC-AAA S.B. 867 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 867
By: Cain
Jurisprudence
3-21-97
As Filed


DIGEST 

Recently, a Fort Worth court of civil appeals decision suggested that the
language of the Residential Construction Liability Act (RCLA) damage
limitation was not clearly stated. The cap on damages is limited to the
purchase price of the home. RCLA does not take into account older homes
with improvements.  This bill would clarify the damage provision, so that
the second owners would receive the same benefits and obligations of the
first owner, clearly state that subcontractors and design professionals
are included under RCLA, clarify that the test for contractors and owners
is consistent, and add an arbitration clause to reflect the growing legal
trend. 
  
PURPOSE

As proposed, S.B. 867 amends the Residential Construction Liability Act
(RCLA) regarding residential construction liability to clarify the damage
provision, so that the second owners would receive the same benefits and
obligations of the first owner, clearly state that subcontractors and
design professionals are included under RCLA, clarify that the test for
contractors and owners are consistent, and add an arbitration clause to
reflect the growing legal trend. 
  
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." 

SECTION 2. Amends Section 27.002(a), Property Code, to provide that this
section applies to certain actions to recover damages from a construction
defect except by an owner of a residence, including an owner subsequent to
the owner contracting with the contractor. 

SECTION 3. Amends Section 27.003(a), Property Code, to delete a provision
that a contractor is not liable for damages caused by the negligence of a
person other than the contractor or an employee or subcontractor.  Makes a
conforming change.  

SECTION 4. Amends Section 27.004, Property Code, by amending Subsections
(f), (g), (i), and (m) and adding Subsection (p), as follows:  

 (f)  Provides that  if a claimant rejects a reasonable amount the
claimant may not recover damages in excess of certain reasonable cost of
repairs. 

(g)  Provides that in certain instances, the limitations on damages and
defenses to liability provided for in Subsection (f), rather than this
section, do not apply. 

(i)   Prohibits total damages in a suit under this chapter 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. 

(m)  Makes a conforming change. 

 (p)  Sets forth requirements for mediation.

SECTION 5. Makes application of this Act prospective.

SECTION 6. Effective date: September 1, 1997.

SECTION 7. Emergency clause.