76R11716 PAM-F
By Goodman H.B. No. 1455
Substitute the following for H.B. No. 1455:
By Goodman C.S.H.B. No. 1455
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to suits to recover damages resulting from construction
1-3 defects; providing a civil penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 27.001(2) and (3), Property Code, are
1-6 amended to read as follows:
1-7 (2) "Construction defect" means a matter concerning
1-8 the design, construction, or repair of a new residence, of an
1-9 alteration of or repair or addition to an existing residence, or of
1-10 an appurtenance to a residence, on which a person has a complaint
1-11 against a contractor. The term ["construction defect"] may include
1-12 any physical damage to the residence, any appurtenance, or the real
1-13 property on which the residence and appurtenance are affixed
1-14 proximately caused by a construction defect.
1-15 (3) "Contractor" means a person contracting with an
1-16 owner for the construction or sale of a new residence constructed
1-17 by that person or of an alteration of or addition to an existing
1-18 residence, repair of a new or existing residence, or construction,
1-19 sale, alteration, addition, or repair of an appurtenance to a new
1-20 or existing residence. The term ["contractor" also] includes:
1-21 (A) an owner, officer, director, shareholder,
1-22 partner, or employee of the contractor; and
1-23 (B) a risk retention group registered under
1-24 Article 21.54, Insurance Code, that insures all or any part of a
2-1 contractor's liability for the cost to repair a residential
2-2 construction defect.
2-3 SECTION 2. Section 27.002, Property Code, is amended to read
2-4 as follows:
2-5 Sec. 27.002. APPLICATION OF CHAPTER. (a) This chapter
2-6 applies to:
2-7 (1) any action to recover damages resulting from a
2-8 construction defect, except a claim for personal injury, survival,
2-9 or wrongful death or for damage to goods; and
2-10 (2) any subsequent purchaser of a residence who files
2-11 a claim against a contractor.
2-12 (b) To the extent of conflict between this chapter and any
2-13 other law, including the Deceptive Trade Practices-Consumer
2-14 Protection Act (Subchapter E, Chapter 17, Business & Commerce
2-15 Code), this chapter prevails.
2-16 (c) [(b)] In this section:
2-17 (1) "Goods" does not include a residence.
2-18 (2) "Personal injury" does not include mental anguish.
2-19 SECTION 3. Section 27.003(a), Property Code, is amended to
2-20 read as follows:
2-21 (a) In an action to recover damages resulting from a
2-22 construction defect:
2-23 (1)[,] a contractor is not liable for any percentage
2-24 of damages caused by:
2-25 (A) [(1)] negligence of a person other than the
2-26 contractor or an agent, employee, or subcontractor of the
2-27 contractor;
3-1 (B) [(2)] failure of a person other than the
3-2 contractor or an agent, employee, or subcontractor of the
3-3 contractor to:
3-4 (i) [(A)] take reasonable action to
3-5 mitigate the damages; or
3-6 (ii) [(B)] take reasonable action to
3-7 maintain the residence;
3-8 (C) [(3)] normal wear, tear, or deterioration;
3-9 (D) [(4)] normal shrinkage due to drying or
3-10 settlement of construction components within the tolerance of
3-11 building standards; or
3-12 (E) [(5)] the contractor's reliance on written
3-13 information relating to the residence, appurtenance, or real
3-14 property on which the residence and appurtenance are affixed that
3-15 was obtained from official government records, if the written
3-16 information was false or inaccurate and the contractor did not know
3-17 and could not reasonably have known of the falsity or inaccuracy of
3-18 the information; or
3-19 (2) if an assignee of the claimant or a person
3-20 subrogated to the rights of a claimant fails to provide the written
3-21 notice to the contractor required by Section 27.004(a) before
3-22 performing repairs, the contractor is not liable for the cost of
3-23 any repairs or any percentage of damages caused by repairs made to
3-24 a construction defect at the request of an assignee of the claimant
3-25 or a person subrogated to the rights of a claimant by a person
3-26 other than the contractor or an agent, employee, or subcontractor
3-27 of the contractor.
4-1 SECTION 4. Chapter 27, Property Code, is amended by adding
4-2 Section 27.0031 to read as follows:
4-3 Sec. 27.0031. FRIVOLOUS SUIT; HARASSMENT. A party who files
4-4 a suit under this chapter that is groundless and brought in bad
4-5 faith or for purposes of harassment is liable to the defendant for
4-6 reasonable and necessary attorney's fees and court costs.
4-7 SECTION 5. Section 27.004, Property Code, is amended by
4-8 amending Subsections (a), (b), (d), (f), (h), (i), and (k) and
4-9 adding Subsection (p) to read as follows:
4-10 (a) Before the 60th day preceding the date a claimant
4-11 seeking from a contractor damages arising from a construction
4-12 defect files suit, the claimant shall give written notice by
4-13 certified mail, return receipt requested, to the contractor, at the
4-14 contractor's last known address, specifying in reasonable detail
4-15 the construction defects that are the subject of the complaint. On
4-16 the request of the contractor, the claimant shall provide to the
4-17 contractor any evidence that depicts the nature and cause of the
4-18 defect and the nature and extent of repairs necessary to remedy the
4-19 defect, including expert reports, photographs, and videotapes, if
4-20 that evidence would be discoverable under Rule 192, Texas Rules of
4-21 Civil Procedure. During the 35-day period after the date the
4-22 contractor receives the notice, and on the contractor's written
4-23 request, the contractor shall be given a reasonable opportunity to
4-24 inspect and have inspected the property that is the subject of the
4-25 complaint to determine the nature and cause of the defect and the
4-26 nature and extent of repairs necessary to remedy the defect. The
4-27 contractor may take reasonable steps to document the defect.
5-1 (b) Within the 45-day period after the date the contractor
5-2 receives the notice, the contractor may make a written offer of
5-3 settlement to the claimant. The offer must be sent to the claimant
5-4 at the claimant's last known address or to the claimant's attorney
5-5 by certified mail, return receipt requested. The offer may include
5-6 either an agreement by the contractor to repair or to have repaired
5-7 by an independent contractor at the contractor's expense any
5-8 construction defect described in the notice and shall describe in
5-9 reasonable detail the kind of repairs which will be made. The
5-10 repairs shall be made within the 45-day period after the date the
5-11 contractor receives written notice of acceptance of the settlement
5-12 offer, unless completion is delayed by the claimant or by other
5-13 events beyond the control of the contractor. For the purposes of
5-14 this section, "independent contractor" means a person who is
5-15 independent of the contractor and did not perform any of the work
5-16 complained of in the claimant's notice. The claimant and the
5-17 contractor may agree in writing to extend the periods described by
5-18 this subsection.
5-19 (d) The court shall abate a suit governed by this chapter
5-20 [section] if Subsection (c) does not apply and the court, after a
5-21 hearing, finds that the contractor is entitled to an abatement
5-22 because the claimant failed to provide the notice or failed to give
5-23 the contractor a reasonable opportunity to inspect the property
5-24 [was not provided] as required by Subsection (a). A suit is
5-25 automatically abated without the order of the court beginning on
5-26 the 11th day after the date a plea in abatement is filed if the
5-27 plea in abatement:
6-1 (1) is verified and alleges that the person against
6-2 whom the suit is pending did not receive the written notice or was
6-3 not given a reasonable opportunity to inspect the property as
6-4 required by Subsection (a); and
6-5 (2) is not controverted by an affidavit filed by the
6-6 claimant before the 11th day after the date on which the plea in
6-7 abatement is filed.
6-8 (f) If a claimant unreasonably rejects an offer made as
6-9 provided by this section or does not permit the contractor or
6-10 independent contractor a reasonable opportunity to repair the
6-11 defect pursuant to an accepted offer of settlement, the claimant:
6-12 (1) may not recover an amount in excess of:
6-13 (A) the reasonable cost of the offered repairs
6-14 which are necessary to cure the construction defect and which are
6-15 the responsibility of the contractor; or
6-16 (B) the amount of a reasonable monetary
6-17 settlement offer made under Subsection (n); and
6-18 (2) may recover only the amount of reasonable and
6-19 necessary attorney's fees and costs incurred before the offer was
6-20 rejected or considered rejected.
6-21 (h) Except as provided by Subsection (f), in a suit subject
6-22 to this chapter the claimant may recover only the following damages
6-23 proximately caused by a construction defect:
6-24 (1) the reasonable cost of repairs necessary to cure
6-25 any construction defect, including any engineering or consulting
6-26 fees required to evaluate and cure the construction defect, that
6-27 the contractor is responsible for repairing under this chapter
7-1 [failed to cure];
7-2 (2) the reasonable expenses of temporary housing
7-3 reasonably necessary during the repair period;
7-4 (3) the reduction in market value, if any, to the
7-5 extent the reduction is due to structural failure; and
7-6 (4) reasonable and necessary attorney's fees.
7-7 (i) The total damages awarded in a suit subject to this
7-8 chapter may not exceed the greater of the claimant's purchase price
7-9 for the residence or the current fair market value of the residence
7-10 without the construction defect.
7-11 (k) An affidavit certifying rejection of a settlement offer
7-12 under this section may be filed with the court. The trier of fact
7-13 shall determine the reasonableness of [a rejection of] an offer of
7-14 settlement made under this section.
7-15 (p) If the contractor provides written notice of a claim for
7-16 damages arising from a construction defect to a subcontractor, the
7-17 contractor retains all rights of contribution from the
7-18 subcontractor if the contractor settles the claim with the
7-19 claimant.
7-20 SECTION 6. Chapter 27, Property Code, is amended by adding
7-21 Section 27.0041 to read as follows:
7-22 Sec. 27.0041. MEDIATION. (a) If a claimant files suit
7-23 seeking from a contractor damages arising from a construction
7-24 defect in an amount greater than $7,500, the claimant or contractor
7-25 may file a motion to compel mediation of the dispute. The motion
7-26 must be filed not later than the 90th day after the date the suit
7-27 is filed.
8-1 (b) Not later than the 30th day after the date a motion is
8-2 filed under Subsection (a), the court shall order the parties to
8-3 mediate the dispute. If the parties cannot agree on the appointment
8-4 of a mediator, the court shall appoint the mediator.
8-5 (c) The court shall order the parties to begin mediation of
8-6 the dispute not later than the 30th day after the date the court
8-7 enters its order under Subsection (b) unless the parties agree
8-8 otherwise or the court determines additional time is required. If
8-9 the court determines that additional time is required, the court
8-10 may order the parties to begin mediation of the dispute not later
8-11 than the 60th day after the date the court enters its order under
8-12 Subsection (b).
8-13 (d) Unless each party who has appeared in the suit filed
8-14 under this chapter agrees otherwise, each party shall participate
8-15 in the mediation and contribute equally to the cost of the
8-16 mediation.
8-17 (e) Section 154.023, Civil Practice and Remedies Code, and
8-18 Subchapters C and D, Chapter 154, Civil Practice and Remedies Code,
8-19 apply to a mediation under this section to the extent those laws do
8-20 not conflict with this section.
8-21 SECTION 7. Section 27.005, Property Code, is amended to read
8-22 as follows:
8-23 Sec. 27.005. LIMITATIONS ON EFFECT OF CHAPTER. This chapter
8-24 does not create a cause of action or derivative liability [an
8-25 implied warranty] or extend a limitations period.
8-26 SECTION 8. Chapter 27, Property Code, is amended by adding
8-27 Section 27.007 to read as follows:
9-1 Sec. 27.007. DISCLOSURE STATEMENT REQUIRED. (a) A written
9-2 contract subject to this chapter must contain next to the signature
9-3 lines in the contract a notice printed or typed in 10-point
9-4 boldface or the computer equivalent that reads substantially
9-5 similar to the following:
9-6 "This contract is subject to Chapter 27, Property Code. The
9-7 provisions of that chapter may affect your right to recover damages
9-8 arising from the performance of this contract. If you have a
9-9 complaint concerning a construction defect arising from the
9-10 performance of this contract and that defect has not been corrected
9-11 under a warranty, you must provide notice regarding the defect to
9-12 the contractor by certified mail, return receipt requested, not
9-13 later than the 60th day before the date you file suit to recover
9-14 damages in a court of law. The notice must refer to Chapter 27,
9-15 Property Code, and must describe the construction defect. If
9-16 requested by the contractor, you must provide the contractor an
9-17 opportunity to inspect and cure the defect as provided by Section
9-18 27.004, Property Code."
9-19 (b) If a contract does not contain the notice required by
9-20 this section, the claimant may recover from the contractor a civil
9-21 penalty of $500 in addition to any other remedy provided by this
9-22 chapter.
9-23 SECTION 9. (a) Except as provided by Subsection (b) of this
9-24 section, this Act takes effect September 1, 1999.
9-25 (b) Section 27.007, Property Code, as added by this Act,
9-26 takes effect September 1, 2000.
9-27 (c) The changes in law made by this Act apply only to a
10-1 contract subject to Chapter 27, Property Code, as amended by this
10-2 Act, that is entered into on or after the effective date of this
10-3 Act. A contract subject to Chapter 27, Property Code, that was
10-4 entered into before the effective date of this Act is governed by
10-5 the law in effect when the contract was entered into, and the
10-6 former law is continued in effect for that purpose.
10-7 SECTION 10. The importance of this legislation and the
10-8 crowded condition of the calendars in both houses create an
10-9 emergency and an imperative public necessity that the
10-10 constitutional rule requiring bills to be read on three several
10-11 days in each house be suspended, and this rule is hereby suspended.