SRC-DBM S.B. 506 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 506
76R6045  PAM-FBy: Harris
Technology & Business Growth
3/25/1999
As Filed


DIGEST 

Currently, the Residential Construction Liability Act (RCLA) requires
homeowners asserting that their home contains construction defects to
provide notice regarding specific complaints to the builder.  The builder
then has 45 days to inspect the alleged defects and to make an offer to
repair or settle in court. If the parties proceed with a suit without
repairs, the type of damages recoverable depend on the reasonableness of
the builder's original offer. S.B. 506 would authorize suits to recover
damages resulting from construction defects and to modify problems in
earlier acts. 

PURPOSE

As proposed, S.B. 506 authorizes suits to recover damages resulting from
construction defects. 

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 Sections 27.001(2) and (3), Property Code, to redefine
"construction defect" and "contractor."  Makes conforming changes. 

SECTION 2.  Amends Section 27.002, Property Code, to provide that this
chapter applies to any action to recover damages resulting in whole or in
part from a construction defect and any subsequent purchaser of a residence
who files a claim against a contractor.  Makes conforming changes. 

SECTION 3.  Amends Section 27.003(a), Property Code, to provide that in an
action to recover damages resulting from a construction defect,  a
contractor is not liable for the cost of any repairs or any percentage of
damages caused by repairs made to a construction defect at the request of
the claimant, if the claimant fails to provide the written notice to the
contractor required by Section 27.004(a).  Makes conforming changes. 

SECTION 4.  Amends Chapter 27, Property Code, by adding Section 27.0031, as
follows: 

Sec.  27.0031.  FRIVOLOUS SUIT; HARASSMENT.  Provides that a party who
files a suit that is groundless or brought  in bad faith, or for the
purposes of harassment, is liable to the defendant for reasonable
attorney's fees and court costs. 

SECTION 5.  Amends Sections 27.004(a), (d), (f), (g), (i), and (k),
Property Code, as follows:  

(a)  Requires a claimant to include with the notice any evidence that
depicts the nature and cause of  the defect and the nature and extent of
repairs necessary to remedy the defect, if that evidence would be
discoverable in a suit filed under this chapter.  

(d)  Requires the court to abate a suit governed by this chapter, rather
than section, if Subsection (c) does not apply and after a hearing, the
court finds that the contractor is entitled to an abatement because the
claimant failed to provide, rather than was not provided,  the notice or
failed to give the contractor a reasonable opportunity to inspect the
property as required. Makes a confirming change.   

(f)  Provides that the claimant may not recover an amount in excess of the
reasonable cost of the  offered repairs or the amount of a reasonable
monetary settlement offer made under   Subsection (n).  Makes conforming
changes. 

   (g)  Makes conforming changes.

 (i)  Prohibits total damages  awarded in a suit subject to this chapter
from exceeding the greater of  the claimant's purchase price for the
residence or the current fair market value of the residence without the
construction defect.   

 (k)  Makes conforming changes.

SECTION 6.  Amends Chapter 27, Property Code, by adding Section 27.0041, as
follows: 

 Sec. 27.0041.  MEDIATION.  Authorizes a claimant or contractor to file a
motion to compel mediation in a dispute, if a claimant files suit seeking
damages from a contractor arising from a construction defect in an amount
greater than $7,500.  Requires the motion to be filed no later than the
90th day after the date the suit is filed.  Requires the court to order
parties to mediate a dispute no later than the 30th day after the date a
motion is filed under Subsection (a).   Requires the court to appoint a
mediator, if the parties cannot agree on the appointment of a mediator.
Requires the court to order the parties to begin mediation of a dispute not
later than the 30th day after the date the court enters its order under
Subsection  (b), unless the parties agree otherwise or the court determines
additional time is required.  Authorizes the court to order the parties to
begin mediation of a dispute no later than the 60th day after the date the
court enters its order under Subsection (b), if the court determines that
additional time is required.  Requires each party to participate in the
mediation and contribute equally to the cost of mediation, unless each
party has appeared in the suit filed agrees otherwise.  Provides that
Section 154.023, Civil Practice and Remedies Code, and Subchapters C and D,
Chapter 154, Civil Practice and Remedies Code, applies to a mediation under
this section to the extent those laws do not conflict with this section. 

SECTION 7.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 8.Emergency clause.