83R8864 PMO-D

By: Rodriguez of Travis H.B. No. 2527

A BILL TO BE ENTITLED

AN ACT

relating to disclosure of the nature and remediation of construction defects in residences that certain contractors repurchase because of the defects and subsequently resell.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 27.001(4) and (5), Property Code, are amended to read as follows:

(4) "Construction defect" [has the meaning assigned by Section 401.004 for an action to which Subtitle D, Title 16, applies and for any other action] means a matter concerning the design, construction, or repair of a new residence, of an alteration of or repair or addition to an existing residence, or of an appurtenance to a residence, on which a person has a complaint against a contractor. The term may include any physical damage to the residence, any appurtenance, or the real property on which the residence and appurtenance are affixed proximately caused by a construction defect.

(5) "Contractor":

(A) means:

(i) a person [builder, as defined by Section 401.003,] contracting with an owner for the construction or repair of a new residence, for the repair or alteration of or an addition to an existing residence, or for the construction, sale, alteration, addition, or repair of an appurtenance to a new or existing residence;

(ii) any person contracting with a purchaser for the sale of a new residence constructed by or on behalf of that person; or

(iii) a person contracting with an owner or the developer of a condominium for the construction of a new residence, for an alteration of or an addition to an existing residence, for repair of a new or existing residence, or for the construction, sale, alteration, addition, or repair of an appurtenance to a new or existing residence; and

(B) includes:

(i) an owner, officer, director, shareholder, partner, or employee of the contractor; and

(ii) a risk retention group registered under Chapter 2201 [Article 21.54], Insurance Code, that insures all or any part of a contractor's liability for the cost to repair a residential construction defect.

SECTION 2. Chapter 27, Property Code, is amended by adding Section 27.008 to read as follows:

Sec. 27.008. REQUIRED FULL DISCLOSURE CONCERNING DEFECTIVE RESIDENCE REPURCHASED AND RESOLD BY CONTRACTOR. (a) This section applies only to a contractor described by Sections 27.001(5)(A)(i) and (iii).

(b) Before a contract may be executed or money exchanged between a contractor and a buyer for purchase of a residence that, because of one or more construction defects in the residence, the contractor repurchased from a person who had previously bought the residence from the contractor, the contractor must provide to the buyer a document that fully discloses the nature of and the contractor's remediation of each of those construction defects.

(c) In addition to disclosing the nature of each construction defect and the remediation work performed, the disclosure under Subsection (b) must include information disclosing:

(1) any product installed in the residence relating to the remediation;

(2) the care and component warranty of each remedial product;

(3) building standards used in performing the remediation; and

(4) any risk or hazard of the residence after remediation.

SECTION 3. Section 27.008, Property Code, as added by this Act, applies only to a contract executed by a contractor and a buyer as described by Section 27.008, Property Code, as added by this Act, on or after the effective date of this Act. A contract executed before the effective date of this Act is governed by the law in effect when the contract was executed, and the former law is continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2013.