81R2723 UM-D
By: Smith of Tarrant H.B. No. 1635
A BILL TO BE ENTITLED
AN ACT
relating to the abolition of the Texas Residential Construction
Commission.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) The Texas Residential Construction
Commission is abolished effective February 1, 2010.
(b) The following statutes are repealed:
(1) Section 214.906, Local Government Code;
(2) Title 16, Property Code;
(3) Section 5.016, Property Code, as added by Section
1, Chapter 843 (H.B. 1038), Acts of the 80th Legislature, Regular
Session, 2007; and
(4) Sections 27.001(3) and (9), 27.004(l), and
27.007(c), Property Code.
SECTION 2. (a) The Texas Facilities Commission shall take
custody of the property, records, or other assets of the Texas
Residential Construction Commission unless the governor designates
another appropriate governmental entity to take custody of the
property, records, or other assets.
(b) If the Texas Residential Construction Commission has a
continuing valid and enforceable obligation, including bonded
indebtedness, Section 325.017(f), Government Code, applies in
relation to the continuing obligation of the commission.
SECTION 3. Sections 59.011(a) and (c), Finance Code, are
amended to read as follows:
(a) For purposes of Chapter 27, Property Code, [and Title
16, Property Code,] a federally insured financial institution
regulated under this code is not a builder.
(c) A builder hired by a lender to complete the construction
of a foreclosed home is not liable for any construction defects of
which the builder had no knowledge that existed prior to the
acquisition of the home by the lender, but the builder is subject to
Chapter 27, Property Code, [and Title 16, Property Code,] for work
performed for the lender subsequent to the acquisition of the home
by the lender.
SECTION 4. Sections 27.001(4), (5), and (8), 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.
(8) "Structural failure" [has the meaning assigned by
Section 401.002 for an action to which Subtitle D, Title 16, applies
and for any other action] means actual physical damage to the
load-bearing portion of a residence caused by a failure of the
load-bearing portion.
SECTION 5. Section 27.002(b), Property Code, is amended to
read as follows:
(b) To [Except as provided by this subsection, to] the
extent of conflict between this chapter and any other law,
including the Deceptive Trade Practices-Consumer Protection Act
(Subchapter E, Chapter 17, Business & Commerce Code) or a common law
cause of action, this chapter prevails. [To the extent of conflict
between this chapter and Title 16, Title 16 prevails.]
SECTION 6. Section 27.003(a), Property Code, is amended to
read as follows:
(a) In an action to recover damages or other relief arising
from a construction defect:
(1) a contractor is not liable for any percentage of
damages caused by:
(A) negligence of a person other than the
contractor or an agent, employee, or subcontractor of the
contractor;
(B) failure of a person other than the contractor
or an agent, employee, or subcontractor of the contractor to:
(i) take reasonable action to mitigate the
damages; or
(ii) take reasonable action to maintain the
residence;
(C) normal wear, tear, or deterioration;
(D) normal shrinkage due to drying or settlement
of construction components within the tolerance of building
standards; or
(E) the contractor's reliance on written
information relating to the residence, appurtenance, or real
property on which the residence and appurtenance are affixed that
was obtained from official government records, if the written
information was false or inaccurate and the contractor did not know
and could not reasonably have known of the falsity or inaccuracy of
the information; and
(2) if an assignee of the claimant or a person
subrogated to the rights of a claimant fails to provide the
contractor with the written notice and opportunity to inspect and
offer to repair required by Section 27.004 [or fails to request
state-sponsored inspection and dispute resolution under Chapter
428, if applicable,] before performing repairs, the 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 an
assignee of the claimant or a person subrogated to the rights of a
claimant by a person other than the contractor or an agent,
employee, or subcontractor of the contractor.
SECTION 7. Sections 27.004(a), (b), (c), and (d), Property
Code, are amended to read as follows:
(a) Before [In a claim not subject to Subtitle D, Title 16,
before] the 60th day preceding the date a claimant seeking from a
contractor damages or other relief arising from a construction
defect initiates an action, the claimant shall give written notice
by certified mail, return receipt requested, to the contractor, at
the contractor's last known address, specifying in reasonable
detail the construction defects that are the subject of the
complaint. On the request of the contractor, the claimant shall
provide to the contractor any evidence that depicts the nature and
cause of the defect and the nature and extent of repairs necessary
to remedy the defect, including expert reports, photographs, and
videotapes, if that evidence would be discoverable under Rule 192,
Texas Rules of Civil Procedure. During the 35-day period after the
date the contractor receives the notice, and on the contractor's
written request, the contractor shall be given a reasonable
opportunity to inspect and have inspected the property that is the
subject of the complaint to determine the nature and cause of the
defect and the nature and extent of repairs necessary to remedy the
defect. The contractor may take reasonable steps to document the
defect. [In a claim subject to Subtitle D, Title 16, a contractor
is entitled to make an offer of repair in accordance with Subsection
(b). A claimant is not required to give written notice to a
contractor under this subsection in a claim subject to Subtitle D,
Title 16.]
(b) Not [later than the 15th day after the date of a final,
unappealable determination of a dispute under Subtitle D, Title 16,
if applicable, or not] later than the 45th day after the date the
contractor receives the notice [under this section, if Subtitle D,
Title 16, does not apply], the contractor may make a written offer
of settlement to the claimant. The offer must be sent to the
claimant at the claimant's last known address or to the claimant's
attorney by certified mail, return receipt requested. The offer
may include either an agreement by the contractor to repair or to
have repaired by an independent contractor partially or totally at
the contractor's expense or at a reduced rate to the claimant any
construction defect described in the notice and shall describe in
reasonable detail the kind of repairs which will be made. The
repairs shall be made not later than the 45th day after the date the
contractor receives written notice of acceptance of the settlement
offer, unless completion is delayed by the claimant or by other
events beyond the control of the contractor. If a contractor makes
a written offer of settlement that the claimant considers to be
unreasonable:
(1) on or before the 25th day after the date the
claimant receives the offer, the claimant shall advise the
contractor in writing and in reasonable detail of the reasons why
the claimant considers the offer unreasonable; and
(2) not later than the 10th day after the date the
contractor receives notice under Subdivision (1), the contractor
may make a supplemental written offer of settlement to the claimant
by sending the offer to the claimant or the claimant's attorney.
(c) If [compliance with Subtitle D, Title 16, or] the giving
of the notice under Subsections (a) and (b) within the period
prescribed by those subsections is impracticable because of the
necessity of initiating an action at an earlier date to prevent
expiration of the statute of limitations or if the complaint is
asserted as a counterclaim, [compliance with Subtitle D, Title 16,
or] the notice is not required. However, the action or counterclaim
shall specify in reasonable detail each construction defect that is
the subject of the complaint. The [If Subtitle D, Title 16, applies
to the complaint, simultaneously with the filing of an action by a
claimant, the claimant must submit a request under Section 428.001.
If Subtitle D, Title 16, does not apply, the] inspection provided
for by Subsection (a) may be made not later than the 75th day after
the date of service of the suit, request for arbitration, or
counterclaim on the contractor, and the offer provided for by
Subsection (b) may be made [not later than the 15th day after the
date the state-sponsored inspection and dispute resolution process
is completed, if Subtitle D, Title 16, applies, or] not later than
the 60th day after the date of service [, if Subtitle D, Title 16,
does not apply]. If, while an action subject to this chapter is
pending, the statute of limitations for the cause of action would
have expired and it is determined that the provisions of Subsection
(a) were not properly followed, the action shall be abated to allow
compliance with Subsections (a) and (b).
(d) The court or arbitration tribunal shall abate an action
governed by this chapter if Subsection (c) does not apply and the
court or tribunal, after a hearing, finds that the contractor is
entitled to abatement because the claimant failed to [comply with
the requirements of Subtitle D, Title 16, if applicable, failed to]
provide the notice or failed to give the contractor a reasonable
opportunity to inspect the property as required by Subsection (a),
or failed to follow the procedures specified by Subsection (b). An
action is automatically abated without the order of the court or
tribunal beginning on the 11th day after the date a motion to abate
is filed if the motion:
(1) is verified and alleges that the person against
whom the action is pending did not receive the written notice
required by Subsection (a), the person against whom the action is
pending was not given a reasonable opportunity to inspect the
property as required by Subsection (a), or the claimant failed to
follow the procedures specified by Subsection (b) [or Subtitle D,
Title 16]; and
(2) is not controverted by an affidavit filed by the
claimant before the 11th day after the date on which the motion to
abate is filed.
SECTION 8. Section 27.0042(b), Property Code, is amended to
read as follows:
(b) A contractor may not elect to purchase the residence
under Subsection (a) if [:
[(1)] the residence is more than five years old at the
time an action is initiated [; or
[(2) the contractor makes such an election later than
the 15th day after the date of a final, unappealable determination
of a dispute under Subtitle D, Title 16, if applicable].
SECTION 9. Section 41.007(a), Property Code, is amended to
read as follows:
(a) A contract for improvements to an existing residence
described by Section 41.001(b)(3) must contain[:
[(1) the contractor's certificate of registration
number from the Texas Residential Construction Commission if the
contractor is required to register as a builder with the
commission;
[(2) the address and telephone number at which the
owner may file a complaint with the Texas Residential Construction
Commission about the conduct of the contractor if the contractor is
required to register as a builder with the commission; and
[(3)] the following warning conspicuously printed,
stamped, or typed in a size equal to at least 10-point bold type or
computer equivalent:
"IMPORTANT NOTICE: You and your contractor are responsible
for meeting the terms and conditions of this contract. If you sign
this contract and you fail to meet the terms and conditions of this
contract, you may lose your legal ownership rights in your
home. KNOW YOUR RIGHTS AND DUTIES UNDER THE LAW."
SECTION 10. (a) The repeal by this Act of Section 5.016,
Property Code, as added by Section 1, Chapter 843 (H.B. 1038), Acts
of the 80th Legislature, Regular Session, 2007, applies only to a
transfer of residential property that occurs on or after the
effective date of this Act. A transfer of residential property that
occurs before the effective date of this Act is governed by the law
in effect immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
(b) The repeal by this Act of Sections 420.002 and 420.003,
Property Code, applies only to a contract for the construction of a
new home or the improvement of an existing home that is entered into
on or after the effective date of this Act. A contract for the
construction of a new home or the improvement of an existing home
that is entered into before the effective date of this Act is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
(c) Except as provided by this section, the change in law
made by this Act to Chapter 27, Property Code, and the repeal by
this Act of Sections 426.005, 426.007, and 426.008, Property Code,
apply only to an action commenced on or after the effective date of
this Act. An action commenced before the effective date of this Act
or with respect to which a request was filed under Section 428.001,
Property Code, repealed by this Act, before the effective date of
this Act, is governed by the law in effect immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
(d) The change in law made by this Act to Section
27.003(a)(2), Property Code, applies only to a repair made on or
after the effective date of this Act. A repair made before the
effective date of this Act is subject to the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
(e) The repeal by this Act of Section 428.005, Property
Code, does not apply to the receipt by a builder of a notice
described by that section before the effective date of this Act.
The receipt by a builder of a notice described by that section
before the effective date of this Act is governed by the law in
effect immediately before that date, and that law is continued in
effect for that purpose.
(f) Except as provided by this section, the repeal by this
Act of Chapter 430, Property Code, applies only to residential
construction under a contract entered into on or after the
effective date of this Act, and the repeal by this Act of Section
401.005(c), Property Code, applies only to a home or material
improvement to a home described by Section 401.005(c), Property
Code, repealed by this Act, the building or remodeling of which
commences after the effective date of this Act. Residential
construction under a contract entered into before the effective
date of this Act or a home or material improvement to a home
described by Section 401.005(c), Property Code, the building or
remodeling of which commenced before the effective date of this
Act, is subject to the warranties and building and performance
standards applicable to the construction immediately before the
effective date of this Act.
(g) The repeal by this Act of Section 436.003, Property
Code, applies only to an arbitration initiated on or after the
effective date of this Act. An arbitration initiated before the
effective date of this Act is governed by the law applicable to the
arbitration immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
(h) The repeal by this Act of Chapter 437, Property Code,
applies only to an arbitration award filed on or after the effective
date of this Act. An award filed before the effective date of this
Act is governed by the law in effect immediately before that date,
and that law is continued in effect for that purpose.
(i) The repeal by this Act of Chapter 438, Property Code,
applies only to an arbitration award issued on or after the
effective date of this Act. An award issued before the effective
date of this Act is governed by the law in effect immediately before
that date, and that law is continued in effect for that purpose.
SECTION 11. This Act takes effect September 1, 2009.