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A BILL TO BE ENTITLED
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AN ACT
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relating to the abolition of the Texas Residential Construction |
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Commission. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. (a) The Texas Residential Construction |
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Commission is abolished effective February 1, 2010. |
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(b) The following statutes are repealed: |
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(1) Section 214.906, Local Government Code; |
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(2) Title 16, Property Code; |
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(3) Section 5.016, Property Code, as added by Section |
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1, Chapter 843 (H.B. 1038), Acts of the 80th Legislature, Regular |
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Session, 2007; and |
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(4) Sections 27.001(3) and (9), 27.004(l), and |
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27.007(c), Property Code. |
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SECTION 2. (a) The Texas Facilities Commission shall take |
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custody of the property, records, or other assets of the Texas |
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Residential Construction Commission unless the governor designates |
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another appropriate governmental entity to take custody of the |
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property, records, or other assets. |
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(b) If the Texas Residential Construction Commission has a |
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continuing valid and enforceable obligation, including bonded |
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indebtedness, Section 325.017(f), Government Code, applies in |
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relation to the continuing obligation of the commission. |
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SECTION 3. Sections 59.011(a) and (c), Finance Code, are |
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amended to read as follows: |
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(a) For purposes of Chapter 27, Property Code, [and Title
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16, Property Code,] a federally insured financial institution |
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regulated under this code is not a builder. |
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(c) A builder hired by a lender to complete the construction |
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of a foreclosed home is not liable for any construction defects of |
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which the builder had no knowledge that existed prior to the |
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acquisition of the home by the lender, but the builder is subject to |
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Chapter 27, Property Code, [and Title 16, Property Code,] for work |
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performed for the lender subsequent to the acquisition of the home |
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by the lender. |
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SECTION 4. Sections 27.001(4), (5), and (8), Property Code, |
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are amended to read as follows: |
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(4) "Construction defect" [has the meaning assigned by
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Section 401.004 for an action to which Subtitle D, Title 16, applies
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and for any other action] means a matter concerning the design, |
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construction, or repair of a new residence, of an alteration of or |
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repair or addition to an existing residence, or of an appurtenance |
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to a residence, on which a person has a complaint against a |
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contractor. The term may include any physical damage to the |
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residence, any appurtenance, or the real property on which the |
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residence and appurtenance are affixed proximately caused by a |
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construction defect. |
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(5) "Contractor": |
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(A) means: |
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(i) a person [builder, as defined by
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Section 401.003,] contracting with an owner for the construction or |
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repair of a new residence, for the repair or alteration of or an |
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addition to an existing residence, or for the construction, sale, |
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alteration, addition, or repair of an appurtenance to a new or |
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existing residence; |
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(ii) any person contracting with a |
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purchaser for the sale of a new residence constructed by or on |
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behalf of that person; or |
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(iii) a person contracting with an owner or |
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the developer of a condominium for the construction of a new |
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residence, for an alteration of or an addition to an existing |
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residence, for repair of a new or existing residence, or for the |
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construction, sale, alteration, addition, or repair of an |
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appurtenance to a new or existing residence; and |
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(B) includes: |
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(i) an owner, officer, director, |
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shareholder, partner, or employee of the contractor; and |
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(ii) a risk retention group registered |
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under Chapter 2201 [Article 21.54], Insurance Code, that insures |
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all or any part of a contractor's liability for the cost to repair a |
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residential construction defect. |
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(8) "Structural failure" [has the meaning assigned by
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Section 401.002 for an action to which Subtitle D, Title 16, applies
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and for any other action] means actual physical damage to the |
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load-bearing portion of a residence caused by a failure of the |
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load-bearing portion. |
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SECTION 5. Section 27.002(b), Property Code, is amended to |
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read as follows: |
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(b) To [Except as provided by this subsection, to] the |
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extent of conflict between this chapter and any other law, |
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including the Deceptive Trade Practices-Consumer Protection Act |
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(Subchapter E, Chapter 17, Business & Commerce Code) or a common law |
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cause of action, this chapter prevails. [To the extent of conflict
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between this chapter and Title 16, Title 16 prevails.] |
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SECTION 6. Section 27.003(a), Property Code, is amended to |
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read as follows: |
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(a) In an action to recover damages or other relief arising |
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from a construction defect: |
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(1) a contractor is not liable for any percentage of |
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damages caused by: |
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(A) negligence of a person other than the |
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contractor or an agent, employee, or subcontractor of the |
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contractor; |
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(B) failure of a person other than the contractor |
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or an agent, employee, or subcontractor of the contractor to: |
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(i) take reasonable action to mitigate the |
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damages; or |
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(ii) take reasonable action to maintain the |
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residence; |
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(C) normal wear, tear, or deterioration; |
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(D) normal shrinkage due to drying or settlement |
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of construction components within the tolerance of building |
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standards; or |
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(E) the contractor's reliance on written |
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information relating to the residence, appurtenance, or real |
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property on which the residence and appurtenance are affixed that |
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was obtained from official government records, if the written |
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information was false or inaccurate and the contractor did not know |
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and could not reasonably have known of the falsity or inaccuracy of |
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the information; and |
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(2) if an assignee of the claimant or a person |
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subrogated to the rights of a claimant fails to provide the |
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contractor with the written notice and opportunity to inspect and |
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offer to repair required by Section 27.004 [or fails to request
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state-sponsored inspection and dispute resolution under Chapter
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428, if applicable,] before performing repairs, the contractor is |
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not liable for the cost of any repairs or any percentage of damages |
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caused by repairs made to a construction defect at the request of an |
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assignee of the claimant or a person subrogated to the rights of a |
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claimant by a person other than the contractor or an agent, |
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employee, or subcontractor of the contractor. |
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SECTION 7. Sections 27.004(a), (b), (c), and (d), Property |
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Code, are amended to read as follows: |
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(a) Before [In a claim not subject to Subtitle D, Title 16,
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before] the 60th day preceding the date a claimant seeking from a |
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contractor damages or other relief arising from a construction |
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defect initiates an action, the claimant shall give written notice |
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by certified mail, return receipt requested, to the contractor, at |
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the contractor's last known address, specifying in reasonable |
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detail the construction defects that are the subject of the |
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complaint. On the request of the contractor, the claimant shall |
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provide to the contractor any evidence that depicts the nature and |
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cause of the defect and the nature and extent of repairs necessary |
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to remedy the defect, including expert reports, photographs, and |
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videotapes, if that evidence would be discoverable under Rule 192, |
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Texas Rules of Civil Procedure. During the 35-day period after the |
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date the contractor receives the notice, and on the contractor's |
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written request, the contractor shall be given a reasonable |
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opportunity to inspect and have inspected the property that is the |
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subject of the complaint to determine the nature and cause of the |
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defect and the nature and extent of repairs necessary to remedy the |
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defect. The contractor may take reasonable steps to document the |
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defect. [In a claim subject to Subtitle D, Title 16, a contractor
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is entitled to make an offer of repair in accordance with Subsection
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(b). A claimant is not required to give written notice to a
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contractor under this subsection in a claim subject to Subtitle D,
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Title 16.] |
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(b) Not [later than the 15th day after the date of a final,
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unappealable determination of a dispute under Subtitle D, Title 16,
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if applicable, or not] later than the 45th day after the date the |
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contractor receives the notice [under this section, if Subtitle D,
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Title 16, does not apply], the contractor may make a written offer |
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of settlement to the claimant. The offer must be sent to the |
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claimant at the claimant's last known address or to the claimant's |
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attorney by certified mail, return receipt requested. The offer |
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may include either an agreement by the contractor to repair or to |
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have repaired by an independent contractor partially or totally at |
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the contractor's expense or at a reduced rate to the claimant any |
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construction defect described in the notice and shall describe in |
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reasonable detail the kind of repairs which will be made. The |
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repairs shall be made not later than the 45th day after the date the |
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contractor receives written notice of acceptance of the settlement |
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offer, unless completion is delayed by the claimant or by other |
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events beyond the control of the contractor. If a contractor makes |
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a written offer of settlement that the claimant considers to be |
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unreasonable: |
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(1) on or before the 25th day after the date the |
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claimant receives the offer, the claimant shall advise the |
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contractor in writing and in reasonable detail of the reasons why |
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the claimant considers the offer unreasonable; and |
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(2) not later than the 10th day after the date the |
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contractor receives notice under Subdivision (1), the contractor |
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may make a supplemental written offer of settlement to the claimant |
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by sending the offer to the claimant or the claimant's attorney. |
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(c) If [compliance with Subtitle D, Title 16, or] the giving |
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of the notice under Subsections (a) and (b) within the period |
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prescribed by those subsections is impracticable because of the |
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necessity of initiating an action at an earlier date to prevent |
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expiration of the statute of limitations or if the complaint is |
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asserted as a counterclaim, [compliance with Subtitle D, Title 16,
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or] the notice is not required. However, the action or counterclaim |
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shall specify in reasonable detail each construction defect that is |
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the subject of the complaint. The [If Subtitle D, Title 16, applies
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to the complaint, simultaneously with the filing of an action by a
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claimant, the claimant must submit a request under Section 428.001.
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If Subtitle D, Title 16, does not apply, the] inspection provided |
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for by Subsection (a) may be made not later than the 75th day after |
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the date of service of the suit, request for arbitration, or |
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counterclaim on the contractor, and the offer provided for by |
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Subsection (b) may be made [not later than the 15th day after the
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date the state-sponsored inspection and dispute resolution process
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is completed, if Subtitle D, Title 16, applies, or] not later than |
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the 60th day after the date of service [, if Subtitle D, Title 16,
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does not apply]. If, while an action subject to this chapter is |
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pending, the statute of limitations for the cause of action would |
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have expired and it is determined that the provisions of Subsection |
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(a) were not properly followed, the action shall be abated to allow |
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compliance with Subsections (a) and (b). |
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(d) The court or arbitration tribunal shall abate an action |
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governed by this chapter if Subsection (c) does not apply and the |
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court or tribunal, after a hearing, finds that the contractor is |
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entitled to abatement because the claimant failed to [comply with
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the requirements of Subtitle D, Title 16, if applicable, failed to] |
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provide the notice or failed to give the contractor a reasonable |
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opportunity to inspect the property as required by Subsection (a), |
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or failed to follow the procedures specified by Subsection (b). An |
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action is automatically abated without the order of the court or |
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tribunal beginning on the 11th day after the date a motion to abate |
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is filed if the motion: |
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(1) is verified and alleges that the person against |
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whom the action is pending did not receive the written notice |
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required by Subsection (a), the person against whom the action is |
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pending was not given a reasonable opportunity to inspect the |
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property as required by Subsection (a), or the claimant failed to |
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follow the procedures specified by Subsection (b) [or Subtitle D,
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Title 16]; and |
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(2) is not controverted by an affidavit filed by the |
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claimant before the 11th day after the date on which the motion to |
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abate is filed. |
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SECTION 8. Section 27.0042(b), Property Code, is amended to |
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read as follows: |
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(b) A contractor may not elect to purchase the residence |
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under Subsection (a) if [:
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[(1)] the residence is more than five years old at the |
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time an action is initiated [; or
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[(2)
the contractor makes such an election later than
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the 15th day after the date of a final, unappealable determination
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of a dispute under Subtitle D, Title 16, if applicable]. |
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SECTION 9. Section 41.007(a), Property Code, is amended to |
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read as follows: |
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(a) A contract for improvements to an existing residence |
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described by Section 41.001(b)(3) must contain[:
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[(1)
the contractor's certificate of registration
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number from the Texas Residential Construction Commission if the
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contractor is required to register as a builder with the
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commission;
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[(2)
the address and telephone number at which the
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owner may file a complaint with the Texas Residential Construction
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Commission about the conduct of the contractor if the contractor is
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required to register as a builder with the commission; and
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[(3)] the following warning conspicuously printed, |
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stamped, or typed in a size equal to at least 10-point bold type or |
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computer equivalent: |
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"IMPORTANT NOTICE: You and your contractor are responsible |
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for meeting the terms and conditions of this contract. If you sign |
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this contract and you fail to meet the terms and conditions of this |
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contract, you may lose your legal ownership rights in your |
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home. KNOW YOUR RIGHTS AND DUTIES UNDER THE LAW." |
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SECTION 10. (a) The repeal by this Act of Section 5.016, |
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Property Code, as added by Section 1, Chapter 843 (H.B. 1038), Acts |
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of the 80th Legislature, Regular Session, 2007, applies only to a |
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transfer of residential property that occurs on or after the |
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effective date of this Act. A transfer of residential property that |
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occurs before the effective date of this Act is governed by the law |
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in effect immediately before the effective date of this Act, and |
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that law is continued in effect for that purpose. |
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(b) The repeal by this Act of Sections 420.002 and 420.003, |
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Property Code, applies only to a contract for the construction of a |
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new home or the improvement of an existing home that is entered into |
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on or after the effective date of this Act. A contract for the |
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construction of a new home or the improvement of an existing home |
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that is entered into before the effective date of this Act is |
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governed by the law as it existed immediately before the effective |
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date of this Act, and that law is continued in effect for that |
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purpose. |
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(c) Except as provided by this section, the change in law |
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made by this Act to Chapter 27, Property Code, and the repeal by |
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this Act of Sections 426.005, 426.007, and 426.008, Property Code, |
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apply only to an action commenced on or after the effective date of |
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this Act. An action commenced before the effective date of this Act |
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or with respect to which a request was filed under Section 428.001, |
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Property Code, repealed by this Act, before the effective date of |
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this Act, is governed by the law in effect immediately before the |
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effective date of this Act, and that law is continued in effect for |
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that purpose. |
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(d) The change in law made by this Act to Section |
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27.003(a)(2), Property Code, applies only to a repair made on or |
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after the effective date of this Act. A repair made before the |
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effective date of this Act is subject to the law as it existed |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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(e) The repeal by this Act of Section 428.005, Property |
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Code, does not apply to the receipt by a builder of a notice |
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described by that section before the effective date of this Act. |
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The receipt by a builder of a notice described by that section |
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before the effective date of this Act is governed by the law in |
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effect immediately before that date, and that law is continued in |
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effect for that purpose. |
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(f) Except as provided by this section, the repeal by this |
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Act of Chapter 430, Property Code, applies only to residential |
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construction under a contract entered into on or after the |
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effective date of this Act, and the repeal by this Act of Section |
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401.005(c), Property Code, applies only to a home or material |
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improvement to a home described by Section 401.005(c), Property |
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Code, repealed by this Act, the building or remodeling of which |
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commences after the effective date of this Act. Residential |
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construction under a contract entered into before the effective |
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date of this Act or a home or material improvement to a home |
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described by Section 401.005(c), Property Code, the building or |
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remodeling of which commenced before the effective date of this |
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Act, is subject to the warranties and building and performance |
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standards applicable to the construction immediately before the |
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effective date of this Act. |
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(g) The repeal by this Act of Section 436.003, Property |
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Code, applies only to an arbitration initiated on or after the |
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effective date of this Act. An arbitration initiated before the |
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effective date of this Act is governed by the law applicable to the |
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arbitration immediately before the effective date of this Act, and |
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that law is continued in effect for that purpose. |
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(h) The repeal by this Act of Chapter 437, Property Code, |
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applies only to an arbitration award filed on or after the effective |
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date of this Act. An award filed before the effective date of this |
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Act is governed by the law in effect immediately before that date, |
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and that law is continued in effect for that purpose. |
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(i) The repeal by this Act of Chapter 438, Property Code, |
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applies only to an arbitration award issued on or after the |
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effective date of this Act. An award issued before the effective |
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date of this Act is governed by the law in effect immediately before |
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that date, and that law is continued in effect for that purpose. |
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SECTION 11. This Act takes effect September 1, 2009. |