By Bosse H.B. No. 1742
75R4290 CAS-F
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. Section 27.001(3), Property Code, is amended to
1-5 read as follows:
1-6 (3) "Contractor" means:
1-7 (A) a person contracting with an owner for the
1-8 construction or sale of a new residence constructed by that
1-9 person;
1-10 (B) a person contracting with an owner for the
1-11 [or of an] alteration or repair of or addition to an existing
1-12 residence;
1-13 (C) a person contracting with an owner for the
1-14 [, repair of a new or existing residence, or] construction, [sale,]
1-15 alteration, addition, or repair of an appurtenance to a new or
1-16 existing residence;
1-17 (D) a person providing a warranty covering
1-18 defects in a residence or a person administering the warranty on
1-19 behalf of the person providing the warranty;
1-20 (E) a person insuring [. The term "contractor"
1-21 also includes a risk retention group registered under Article
1-22 21.54, Insurance Code, that insures] all or any part of a
1-23 contractor's liability for the cost to repair a residential
1-24 construction defect; or
2-1 (F) an officer, director, shareholder, or
2-2 employee of the contractor or a subcontractor or design
2-3 professional hired by the contractor to perform the construction,
2-4 alteration, addition, or repair.
2-5 SECTION 2. Section 27.002(a), Property Code, is amended to
2-6 read as follows:
2-7 (a) This chapter applies to any action to recover damages
2-8 resulting from a construction defect, except a claim for personal
2-9 injury, survival, or wrongful death or for damage to goods, by an
2-10 owner of a residence, including an owner subsequent to the owner
2-11 contracting with the contractor. To the extent of conflict between
2-12 this chapter and any other law, including the Deceptive Trade
2-13 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
2-14 Business & Commerce Code), this chapter prevails.
2-15 SECTION 3. Section 27.003(a), Property Code, is amended to
2-16 read as follows:
2-17 (a) In an action to recover damages resulting from a
2-18 construction defect, a contractor is not liable for any percentage
2-19 of damages caused by:
2-20 (1) negligence of a person other than the contractor
2-21 or an agent[, employee, or subcontractor] of the contractor;
2-22 (2) failure of a person other than the contractor or
2-23 an agent[, employee, or subcontractor] of the contractor to:
2-24 (A) take reasonable action to mitigate the
2-25 damages; or
2-26 (B) take reasonable action to maintain the
2-27 residence;
3-1 (3) normal wear, tear, or deterioration;
3-2 (4) normal shrinkage due to drying or settlement of
3-3 construction components within the tolerance of building standards;
3-4 or
3-5 (5) the contractor's reliance on written information
3-6 relating to the residence, appurtenance, or real property on which
3-7 the residence and appurtenance are affixed that was obtained from
3-8 official government records, if the written information was false
3-9 or inaccurate and the contractor did not know and could not
3-10 reasonably have known of the falsity or inaccuracy of the
3-11 information.
3-12 SECTION 4. Section 27.004, Property Code, is amended by
3-13 amending Subsections (f), (g), (i), and (m) and adding Subsection
3-14 (p) to read as follows:
3-15 (f) If a claimant [unreasonably] rejects a reasonable [an]
3-16 offer made as provided by this section or does not permit the
3-17 contractor or independent contractor a reasonable opportunity to
3-18 repair the defect pursuant to an accepted offer of settlement, the
3-19 claimant may not recover an amount in excess of the reasonable cost
3-20 of the repairs which are necessary to cure the construction defect
3-21 and which are the responsibility of the contractor and may recover
3-22 only the amount of reasonable and necessary attorney's fees and
3-23 costs incurred before the offer was rejected or considered
3-24 rejected.
3-25 (g) If a contractor fails to make a reasonable offer under
3-26 this section, or fails to make a reasonable attempt to complete the
3-27 repairs specified in an accepted offer made under this section, or
4-1 fails to complete, in a good and workmanlike manner, the repairs
4-2 specified in an accepted offer made under this section, the
4-3 limitations on damages and defenses to liability provided for in
4-4 Subsection (f) [this section] shall not apply.
4-5 (i) The total damages awarded in a suit subject to this
4-6 chapter may not exceed the greater of the claimant's purchase price
4-7 for the residence or the fair market value of the residence without
4-8 the construction defect.
4-9 (m) Notwithstanding Subsections (a), (b), and (c), a
4-10 contractor who receives written notice of a construction defect
4-11 resulting from work performed by the contractor or an agent[,
4-12 employee, or subcontractor] of the contractor and creating an
4-13 imminent threat to the health or safety of the inhabitants of the
4-14 residence shall take reasonable steps to cure the defect as soon as
4-15 practicable. If the contractor fails to cure the defect in a
4-16 reasonable time, the owner of the residence may have the defect
4-17 cured and may recover from the contractor the reasonable cost of
4-18 the repairs plus attorney's fees and costs in addition to any other
4-19 damages recoverable under any law not inconsistent with the
4-20 provisions of this chapter.
4-21 (p) A contractor or the claimant may request mediation not
4-22 later than the 90th day after the date of service of a written
4-23 notice of defects under Subsection (a). Not later than the 30th
4-24 day after the date on which the request is made, the contractor and
4-25 claimant shall attempt in good faith to select a mediator and
4-26 participate in mediation. If the contractor and claimant do not
4-27 participate in mediation and suit is filed, the court shall compel
5-1 mediation in response to a properly filed motion to compel
5-2 mediation. The court may award attorney's fees against a
5-3 contractor or claimant who refuses to cooperate or participate in
5-4 mediation under this subsection. Notwithstanding any other
5-5 provisions of this subsection, a contractor or claimant may not be
5-6 required to participate in mediation or be penalized for failing to
5-7 participate in mediation if the economic damages claimed are less
5-8 than $15,000.
5-9 SECTION 5. The changes in law made by this Act apply only to
5-10 an action for residential construction liability filed on or after
5-11 the effective date of this Act. An action filed before the
5-12 effective date of this Act is governed by the law in effect at the
5-13 time of filing, and the prior law is continued in effect for that
5-14 purpose.
5-15 SECTION 6. This Act takes effect September 1, 1997.
5-16 SECTION 7. The importance of this legislation and the
5-17 crowded condition of the calendars in both houses create an
5-18 emergency and an imperative public necessity that the
5-19 constitutional rule requiring bills to be read on three several
5-20 days in each house be suspended, and this rule is hereby suspended.