1 | 1 | | 81R4908 BEF-F |
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2 | 2 | | By: Farrar H.B. No. 2095 |
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3 | 3 | | |
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4 | 4 | | |
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5 | 5 | | A BILL TO BE ENTITLED |
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6 | 6 | | AN ACT |
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7 | 7 | | relating to the regulation of and claims against residential home |
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8 | 8 | | builders. |
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9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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10 | 10 | | ARTICLE 1. CHANGES TO TEXAS RESIDENTIAL |
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11 | 11 | | CONSTRUCTION COMMISSION ACT |
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12 | 12 | | SECTION 1.01. Section 401.003(a), Property Code, is amended |
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13 | 13 | | to read as follows: |
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14 | 14 | | (a) In this title, "builder" means any person who, for a |
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15 | 15 | | fixed price, commission, fee, wage, or other compensation, sells, |
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16 | 16 | | constructs, or supervises or manages the construction of, or |
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17 | 17 | | contracts for the construction of or the supervision or management |
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18 | 18 | | of the construction of: |
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19 | 19 | | (1) a new home; |
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20 | 20 | | (2) a material improvement to a home, other than an |
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21 | 21 | | improvement solely to replace or repair a roof of an existing home; |
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22 | 22 | | or |
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23 | 23 | | (3) an improvement to the interior of an existing home |
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24 | 24 | | [when the cost of the work exceeds $10,000]. |
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25 | 25 | | SECTION 1.02. Chapter 401, Property Code, is amended by |
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26 | 26 | | adding Section 401.008 to read as follows: |
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27 | 27 | | Sec. 401.008. HOMEOWNER FEES NOT REQUIRED. A homeowner may |
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28 | 28 | | not be charged a fee in connection with: |
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29 | 29 | | (1) filing a complaint with the commission; |
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30 | 30 | | (2) a state-sponsored inspection or dispute |
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31 | 31 | | resolution process; |
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32 | 32 | | (3) an arbitration required by this title; or |
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33 | 33 | | (4) a complaint, request, or other proceeding under |
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34 | 34 | | Chapter 409 or Subtitle D or E. |
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35 | 35 | | SECTION 1.03. Section 406.001(a), Property Code, is amended |
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36 | 36 | | to read as follows: |
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37 | 37 | | (a) The Texas Residential Construction Commission consists |
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38 | 38 | | of nine members appointed by the governor with the advice and |
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39 | 39 | | consent of the senate as follows: |
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40 | 40 | | (1) four members must be builders who each hold a |
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41 | 41 | | certificate of registration under Chapter 416; |
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42 | 42 | | (2) three members must be representatives of the |
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43 | 43 | | general public who have consistently shown an interest in consumer |
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44 | 44 | | protection; |
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45 | 45 | | (3) one member must be a licensed professional |
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46 | 46 | | engineer who practices in the area of residential construction; and |
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47 | 47 | | (4) one member must be either a licensed architect who |
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48 | 48 | | practices in the area of residential construction or a building |
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49 | 49 | | inspector who meets the requirements set forth in Chapter 427 and |
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50 | 50 | | practices in the area of residential construction. |
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51 | 51 | | SECTION 1.04. Section 416.004, Property Code, is amended by |
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52 | 52 | | amending Subsections (a) and (b), and adding Subsection (a-1) to |
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53 | 53 | | read as follows: |
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54 | 54 | | (a) The commission shall charge and collect: |
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55 | 55 | | (1) a filing fee for an application for an original |
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56 | 56 | | certificate of registration of at least [that does not exceed] |
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57 | 57 | | $500; |
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58 | 58 | | (2) a fee for renewal of a certificate of registration |
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59 | 59 | | of at least [that does not exceed] $300; and |
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60 | 60 | | (3) a late fee that does not exceed the amount of the |
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61 | 61 | | fee due if payment of a registration application or renewal fee due |
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62 | 62 | | under this title is late. |
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63 | 63 | | (a-1) A fee charged under Subsection (a) applies to each |
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64 | 64 | | builder, including a corporation, limited liability company, |
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65 | 65 | | partnership, limited partnership, limited liability partnership, |
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66 | 66 | | sole proprietor, and any subsidiary of those persons. |
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67 | 67 | | (b) The commission shall establish a fee schedule that takes |
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68 | 68 | | into consideration the unit volume or dollar volume of potential |
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69 | 69 | | applicants. The commission may raise registration and renewal fees |
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70 | 70 | | as necessary to provide public service in connection with |
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71 | 71 | | investigations of construction defect complaints filed by |
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72 | 72 | | homeowners under this title. |
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73 | 73 | | SECTION 1.05. Section 416.005, Property Code, is amended to |
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74 | 74 | | read as follows: |
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75 | 75 | | Sec. 416.005. GENERAL ELIGIBILITY REQUIREMENTS. A person |
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76 | 76 | | may not receive a certificate of registration under this chapter |
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77 | 77 | | unless: |
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78 | 78 | | (1) the person, at the time of the application: |
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79 | 79 | | (A) is at least 18 years of age; [and] |
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80 | 80 | | (B) is a citizen of the United States or a |
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81 | 81 | | lawfully admitted alien; and |
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82 | 82 | | (C) provides proof of financial responsibility |
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83 | 83 | | as required by Section 416.013; and |
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84 | 84 | | (2) the commission is satisfied with the person's |
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85 | 85 | | honesty, trustworthiness, and integrity based on information |
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86 | 86 | | supplied or discovered in connection with the person's application. |
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87 | 87 | | SECTION 1.06. Section 416.010(c), Property Code, is amended |
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88 | 88 | | to read as follows: |
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89 | 89 | | (c) If a builder operates under any name other than the name |
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90 | 90 | | that is set forth on the builder's certificate of registration, the |
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91 | 91 | | builder shall, within 20 [45] days of operating under this other |
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92 | 92 | | name, disclose this other name to the commission. |
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93 | 93 | | SECTION 1.07. Sections 416.011(a) and (b), Property Code, |
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94 | 94 | | are amended to read as follows: |
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95 | 95 | | (a) The commission shall establish rules and procedures for |
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96 | 96 | | a program through which a builder can be designated as a "Texas Star |
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97 | 97 | | Builder." A builder's participation in the program is mandatory |
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98 | 98 | | [voluntary] and is [not] a requirement for holding and renewing |
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99 | 99 | | [the issuance of] a certificate of registration required under this |
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100 | 100 | | chapter. |
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101 | 101 | | (b) A builder shall [who participates in this program will |
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102 | 102 | | be allowed to] represent to the public that the builder is a "Texas |
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103 | 103 | | Star Builder" and meets all of the requirements and qualifications |
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104 | 104 | | that are set forth by the commission for the program. |
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105 | 105 | | SECTION 1.08. Chapter 416, Property Code, is amended by |
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106 | 106 | | adding Sections 416.013 and 416.014 to read as follows: |
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107 | 107 | | Sec. 416.013. INSURANCE REQUIREMENTS. (a) To be eligible |
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108 | 108 | | for an original or renewal certificate of registration under this |
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109 | 109 | | chapter, a builder must provide proof of financial responsibility |
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110 | 110 | | to the commission by maintaining a general liability insurance |
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111 | 111 | | policy with a limit of at least $500,000. |
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112 | 112 | | (b) The commission may increase the insurance requirements |
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113 | 113 | | based on the builder's unit or dollar volume. |
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114 | 114 | | Sec. 416.014. BOND REQUIREMENT. A builder shall maintain a |
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115 | 115 | | surety bond for each construction project described by Section |
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116 | 116 | | 401.003. The bond must: |
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117 | 117 | | (1) guarantee the builder's performance under the |
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118 | 118 | | builder's contract with the owner; and |
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119 | 119 | | (2) be issued in an amount not less than the fair |
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120 | 120 | | market value of the completed project if the project had no defects. |
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121 | 121 | | SECTION 1.09. Section 418.001, Property Code, is amended to |
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122 | 122 | | read as follows: |
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123 | 123 | | Sec. 418.001. GROUNDS FOR DISCIPLINARY ACTION. A person, |
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124 | 124 | | including a builder or a person who is designated as a builder's |
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125 | 125 | | agent under Section 416.006, or a person who owns or controls a |
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126 | 126 | | majority ownership interest in the builder is subject to |
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127 | 127 | | disciplinary action under this chapter for: |
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128 | 128 | | (1) fraud or deceit in obtaining a registration or |
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129 | 129 | | certification under this subtitle; |
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130 | 130 | | (2) misappropriation or misapplication of trust funds |
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131 | 131 | | in the practice of residential construction, including a violation |
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132 | 132 | | of Chapter 32, Penal Code, or Chapter 162, if found by a final |
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133 | 133 | | nonappealable court judgment; |
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134 | 134 | | (3) naming false consideration in a contract to sell a |
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135 | 135 | | new home or in a construction contract; |
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136 | 136 | | (4) discriminating on the basis of race, color, |
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137 | 137 | | religion, sex, national origin, or ancestry; |
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138 | 138 | | (5) publishing a false or misleading advertisement; |
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139 | 139 | | (6) failure to honor, within a reasonable time, a |
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140 | 140 | | check issued to the commission, or any other instrument of payment, |
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141 | 141 | | including a credit or debit card or electronic funds transfer, |
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142 | 142 | | after the commission has sent by certified mail a request for |
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143 | 143 | | payment to the person's last known business address, according to |
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144 | 144 | | commission records; |
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145 | 145 | | (7) failure to pay an administrative penalty assessed |
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146 | 146 | | by the commission under Chapter 419 or a fee due under Chapter 426; |
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147 | 147 | | (8) failure to pay a final nonappealable court |
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148 | 148 | | judgment arising from a construction defect or other transaction |
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149 | 149 | | between the person and a homeowner; |
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150 | 150 | | (9) failure to register a home as required by Section |
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151 | 151 | | 426.003; |
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152 | 152 | | (10) failure to remit the fee for registration of a |
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153 | 153 | | home under Section 426.003; |
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154 | 154 | | (11) failure to reimburse a homeowner the amount |
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155 | 155 | | ordered by the commission as provided by Section 428.004(d); |
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156 | 156 | | (12) engaging in statutory or common-law fraud or |
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157 | 157 | | misappropriation of funds, as determined by the commission after a |
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158 | 158 | | hearing under Section 418.003; |
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159 | 159 | | (13) a repeated failure to participate in the |
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160 | 160 | | state-sponsored inspection and dispute resolution process if |
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161 | 161 | | required by this title; |
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162 | 162 | | (14) failure to register as a builder as required |
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163 | 163 | | under Chapter 416; |
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164 | 164 | | (15) using or attempting to use a certificate of |
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165 | 165 | | registration that has expired or that has been revoked; |
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166 | 166 | | (16) falsely representing that the person holds a |
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167 | 167 | | certificate of registration issued under Chapter 416; |
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168 | 168 | | (17) acting as a builder using a name other than the |
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169 | 169 | | name or names disclosed to the commission; |
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170 | 170 | | (18) aiding, abetting, or conspiring with a person who |
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171 | 171 | | does not hold a certificate of registration to evade the provisions |
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172 | 172 | | of this title or rules adopted under this title, if found by a final |
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173 | 173 | | nonappealable court judgment; |
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174 | 174 | | (19) allowing the person's certificate of registration |
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175 | 175 | | to be used by another person; |
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176 | 176 | | (20) acting as an agent, partner, or associate of a |
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177 | 177 | | person who does not hold a certificate of registration with the |
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178 | 178 | | intent to evade the provisions of this title or rules adopted under |
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179 | 179 | | this title; |
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180 | 180 | | (21) a failure to reasonably perform on an accepted |
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181 | 181 | | offer to repair or a repeated failure to make an offer to repair |
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182 | 182 | | based on: |
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183 | 183 | | (A) the recommendation of a third-party |
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184 | 184 | | inspector under Section 428.004; or |
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185 | 185 | | (B) the final holding of an appeal under Chapter |
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186 | 186 | | 429; |
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187 | 187 | | (22) a repeated failure to respond to a commission |
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188 | 188 | | request for information; |
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189 | 189 | | (23) a failure to obtain a building permit required by |
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190 | 190 | | a political subdivision before constructing a new home or an |
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191 | 191 | | improvement to an existing home; |
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192 | 192 | | (24) abandoning, without justification, any home |
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193 | 193 | | improvement contract or new home construction project engaged in or |
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194 | 194 | | undertaken by the person, if found to have done so by a final, |
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195 | 195 | | nonappealable court judgment; |
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196 | 196 | | (25) a repeated failure to comply with the |
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197 | 197 | | requirements of Subtitle F; [or] |
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198 | 198 | | (26) failure by the builder to complete a home under |
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199 | 199 | | the contract terms with a homeowner; |
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200 | 200 | | (27) failure by the builder to correct a failure to |
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201 | 201 | | comply with building codes or standards; |
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202 | 202 | | (28) failure by the builder to comply with |
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203 | 203 | | architectural drawings specified in a contract to build or purchase |
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204 | 204 | | a home; |
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205 | 205 | | (29) failure by the builder to comply with an |
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206 | 206 | | engineering design of a home, including the home's foundation; |
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207 | 207 | | (30) failure by the builder to satisfy a court |
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208 | 208 | | judgment or a judgment in a binding arbitration; or |
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209 | 209 | | (31) otherwise violating this title or a commission |
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210 | 210 | | rule adopted under this title. |
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211 | 211 | | SECTION 1.10. Section 426.001(b), Property Code, is amended |
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212 | 212 | | to read as follows: |
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213 | 213 | | (b) This subtitle does not apply to a dispute arising out |
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214 | 214 | | of: |
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215 | 215 | | (1) an alleged violation of Section 27.01, Business & |
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216 | 216 | | Commerce Code; or |
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217 | 217 | | (2) [a builder's wrongful abandonment of an |
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218 | 218 | | improvement project before completion; or |
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219 | 219 | | [(3)] a violation of Chapter 162. |
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220 | 220 | | SECTION 1.11. Sections 428.001(a), (b), and (d), Property |
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221 | 221 | | Code, are amended to read as follows: |
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222 | 222 | | (a) If a dispute between a homeowner and a builder arises |
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223 | 223 | | out of an alleged construction defect, the homeowner [or the |
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224 | 224 | | builder] may submit to the commission a written request for |
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225 | 225 | | state-sponsored inspection and dispute resolution. |
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226 | 226 | | (b) The request must: |
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227 | 227 | | (1) specify in reasonable detail each alleged |
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228 | 228 | | construction defect that is a subject of the request; |
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229 | 229 | | (2) state the amount of any known out-of-pocket |
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230 | 230 | | expenses and engineering or consulting fees incurred by the |
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231 | 231 | | homeowner in connection with each alleged construction defect; and |
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232 | 232 | | (3) [include any evidence that depicts the nature and |
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233 | 233 | | cause of each alleged construction defect and the nature and extent |
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234 | 234 | | of repairs necessary to remedy the construction defect, including, |
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235 | 235 | | if available, expert reports, photographs, and videotapes, if that |
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236 | 236 | | evidence would be discoverable under Rule 192, Texas Rules of Civil |
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237 | 237 | | Procedure; |
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238 | 238 | | [(4) be accompanied by the fees required under Section |
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239 | 239 | | 426.004; and |
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240 | 240 | | [(5)] state the name of any person who has, on behalf |
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241 | 241 | | of the homeowner [requestor], inspected the home in connection with |
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242 | 242 | | an alleged construction defect. |
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243 | 243 | | (d) At the time a person submits a request under this |
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244 | 244 | | section, the person must send by certified mail, return receipt |
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245 | 245 | | requested, a copy of the request[, including evidence submitted |
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246 | 246 | | with the request,] to each other party involved in the dispute. |
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247 | 247 | | SECTION 1.12. Section 428.002(a), Property Code, is amended |
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248 | 248 | | to read as follows: |
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249 | 249 | | (a) In addition to the right of inspection provided by |
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250 | 250 | | Section 428.001(c), [at any time] before the conclusion of the |
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251 | 251 | | state-sponsored inspection and dispute resolution process and on |
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252 | 252 | | the builder's written request, the builder shall be given |
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253 | 253 | | reasonable opportunity to inspect the home that is the subject of |
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254 | 254 | | the request or have the home inspected to determine the nature and |
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255 | 255 | | cause of the construction defect and the nature and extent of |
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256 | 256 | | repairs necessary to remedy the construction defect. |
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257 | 257 | | SECTION 1.13. Sections 428.004(b) and (d), Property Code, |
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258 | 258 | | are amended to read as follows: |
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259 | 259 | | (b) If the dispute involves a structural matter in the home, |
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260 | 260 | | the commission shall appoint an approved engineer to be the |
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261 | 261 | | third-party inspector. The third-party inspector shall inspect the |
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262 | 262 | | home not later than the 15th [30th] day after the date the request |
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263 | 263 | | is submitted and issue a recommendation not later than the 30th |
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264 | 264 | | [60th] day after the date the third-party inspector receives the |
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265 | 265 | | assignment from the commission[, unless additional time is |
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266 | 266 | | requested by the third-party inspector or a party to the dispute. |
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267 | 267 | | The commission shall adopt rules governing the extension of time |
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268 | 268 | | under this subsection]. |
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269 | 269 | | (d) Except as provided by this subsection, the third-party |
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270 | 270 | | inspector's recommendation may not include payment of any monetary |
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271 | 271 | | consideration. [If the inspector finds for the party who submitted |
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272 | 272 | | the request, the commission may order the other party to reimburse |
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273 | 273 | | all or part of the fees and inspection expenses paid by the |
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274 | 274 | | requestor under Section 426.004.] |
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275 | 275 | | SECTION 1.14. Section 429.001(c), Property Code, is amended |
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276 | 276 | | to read as follows: |
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277 | 277 | | (c) The panel shall: |
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278 | 278 | | (1) review the recommendation for compliance with this |
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279 | 279 | | title as required by rules adopted by the commission; |
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280 | 280 | | (2) approve, reject, or modify the recommendation of |
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281 | 281 | | the third-party inspector or remand the dispute for further action |
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282 | 282 | | by the third-party inspector; and |
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283 | 283 | | (3) issue written findings of fact and a ruling on the |
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284 | 284 | | appeal not later than the 15th [30th] day after the date the notice |
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285 | 285 | | of appeal is filed with the commission. |
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286 | 286 | | SECTION 1.15. Section 430.001(b), Property Code, is amended |
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287 | 287 | | to read as follows: |
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288 | 288 | | (b) The warranty periods shall be: |
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289 | 289 | | (1) two years [one year] for workmanship and |
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290 | 290 | | materials; |
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291 | 291 | | (2) two years for plumbing, electrical, heating, and |
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292 | 292 | | air-conditioning delivery systems; and |
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293 | 293 | | (3) 10 years for major structural components of the |
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294 | 294 | | home. |
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295 | 295 | | SECTION 1.16. Chapter 430, Property Code, is amended by |
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296 | 296 | | adding Section 430.0075 to read as follows: |
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297 | 297 | | Sec. 430.0075. FULL DISCLOSURE WITH INFORMED CONSENT. (a) |
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298 | 298 | | Before a contract may be executed between a builder and seller and a |
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299 | 299 | | buyer for construction of a new home and before money may be |
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300 | 300 | | exchanged between the parties to the contract, the builder and |
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301 | 301 | | seller must provide to the buyer a full disclosure and informed |
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302 | 302 | | consent document that meets the following requirements: |
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303 | 303 | | (1) the buyer must receive from the builder and seller |
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304 | 304 | | full disclosure of product installation, care and component |
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305 | 305 | | warranties, building standards, risks, and hazards of the |
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306 | 306 | | particular property and home to be purchased; |
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307 | 307 | | (2) the buyer must receive from the builder and seller |
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308 | 308 | | full disclosure in understandable terms of any mandatory |
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309 | 309 | | alternative dispute resolution provisions, including mandatory |
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310 | 310 | | binding arbitration, and the associated costs of the various |
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311 | 311 | | processes; and |
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312 | 312 | | (3) the buyer must consent in writing to accept the |
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313 | 313 | | terms of the builder's and seller's disclosures and provisions for |
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314 | 314 | | new home construction by signing and dating the consent document. |
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315 | 315 | | (b) The builder and seller shall fully disclose in writing: |
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316 | 316 | | (1) the products that are installed in the home; |
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317 | 317 | | (2) care and component warranties; |
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318 | 318 | | (3) building standards; and |
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319 | 319 | | (4) risks and hazards of the home. |
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320 | 320 | | SECTION 1.17. Section 430.008(a), Property Code, is amended |
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321 | 321 | | to read as follows: |
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322 | 322 | | (a) The commission may approve as a third-party warranty |
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323 | 323 | | company for the purposes of Section 430.009: |
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324 | 324 | | (1) [an entity that has operated warranty programs in |
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325 | 325 | | this state for at least five years; |
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326 | 326 | | [(2)] a company whose performance is insured by an |
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327 | 327 | | insurance company authorized to engage in the business of insurance |
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328 | 328 | | in this state; or |
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329 | 329 | | (2) [(3)] an insurance company that insures the |
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330 | 330 | | warranty obligations of a builder under the statutory warranty and |
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331 | 331 | | building and performance standards. |
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332 | 332 | | SECTION 1.18. Section 430.010, Property Code, is amended to |
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333 | 333 | | read as follows: |
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334 | 334 | | Sec. 430.010. MINIMUM STANDARDS FOR DETERMINATION OF |
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335 | 335 | | DEFECT. A third-party warranty company shall use defect inspection |
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336 | 336 | | procedures substantially similar to the procedures adopted by the |
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337 | 337 | | commission under this subtitle. A warranty company may adopt |
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338 | 338 | | warranty standards in addition to the standards adopted by the |
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339 | 339 | | commission. A third-party warranty company may not reduce the |
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340 | 340 | | limited statutory warranty and building and performance |
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341 | 341 | | standards[, except that a third-party warranty company shall not be |
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342 | 342 | | required to provide a warranty of habitability]. |
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343 | 343 | | SECTION 1.19. Section 430.011(c), Property Code, is amended |
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344 | 344 | | to read as follows: |
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345 | 345 | | (c) Breach of a limited statutory warranty adopted by the |
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346 | 346 | | commission or breach of the statutory warranty of habitability is |
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347 | 347 | | [shall not, by itself, constitute] a violation of the Deceptive |
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348 | 348 | | Trade Practices-Consumer Protection Act (Subchapter E, Chapter 17, |
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349 | 349 | | Business & Commerce Code). |
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350 | 350 | | SECTION 1.20. Sections 416.011(c), 426.004, 426.007, |
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351 | 351 | | 426.008(b), 428.004(e), and 430.009(e), Property Code, are |
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352 | 352 | | repealed. |
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353 | 353 | | SECTION 1.21. (a) On the effective date of this Act, the |
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354 | 354 | | terms of the three public members of the Texas Residential |
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355 | 355 | | Construction Commission serving on that date expire. |
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356 | 356 | | (b) Not later than the 30th day after the effective date of |
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357 | 357 | | this Act, the governor shall appoint three members to the Texas |
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358 | 358 | | Residential Construction Commission to comply with Section |
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359 | 359 | | 406.001(a), Property Code, as amended by this article, as follows: |
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360 | 360 | | (1) one member for a term expiring February 1, 2011; |
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361 | 361 | | (2) one member for a term expiring February 1, 2013; |
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362 | 362 | | and |
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363 | 363 | | (3) one member for a term expiring February 1, 2015. |
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364 | 364 | | SECTION 1.22. Not later than March 1, 2010, the Texas |
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365 | 365 | | Residential Construction Commission shall adopt any rules |
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366 | 366 | | necessary to implement the changes in law made by this article, |
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367 | 367 | | including Section 416.011, Property Code. |
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368 | 368 | | ARTICLE 2. CHANGES TO RESIDENTIAL CONSTRUCTION LIABILITY CHAPTER |
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369 | 369 | | SECTION 2.01. Section 27.002(d), Property Code, is amended |
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370 | 370 | | to read as follows: |
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371 | 371 | | (d) This chapter does not apply to an action to recover |
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372 | 372 | | damages that arise from: |
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373 | 373 | | (1) a violation of Section 27.01, Business & Commerce |
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374 | 374 | | Code; or |
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375 | 375 | | (2) [a contractor's wrongful abandonment of an |
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376 | 376 | | improvement project before completion; or |
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377 | 377 | | [(3)] a violation of Chapter 162. |
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378 | 378 | | SECTION 2.02. Sections 27.004(a), (b), (g), and (l), |
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379 | 379 | | Property Code, are amended to read as follows: |
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380 | 380 | | (a) In a claim not subject to Subtitle D, Title 16, before |
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381 | 381 | | the 60th day preceding the date a claimant seeking from a contractor |
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382 | 382 | | damages or other relief arising from a construction defect |
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383 | 383 | | initiates an action, the claimant shall give written notice by |
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384 | 384 | | certified mail, return receipt requested, to the contractor, at the |
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385 | 385 | | contractor's last known address, specifying in reasonable detail |
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386 | 386 | | the construction defects that are the subject of the complaint. [On |
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387 | 387 | | the request of the contractor, the claimant shall provide to the |
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388 | 388 | | contractor any evidence that depicts the nature and cause of the |
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389 | 389 | | defect and the nature and extent of repairs necessary to remedy the |
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390 | 390 | | defect, including expert reports, photographs, and videotapes, if |
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391 | 391 | | that evidence would be discoverable under Rule 192, Texas Rules of |
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392 | 392 | | Civil Procedure.] During the 20-day [35-day] period after the date |
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393 | 393 | | the contractor receives the notice, [and on the contractor's |
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394 | 394 | | written request,] the contractor shall be given a reasonable |
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395 | 395 | | opportunity to inspect and have inspected the property that is the |
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396 | 396 | | subject of the complaint to determine the nature and cause of the |
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397 | 397 | | defect and the nature and extent of repairs necessary to remedy the |
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398 | 398 | | defect. The contractor may take reasonable steps to document the |
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399 | 399 | | defect. In a claim subject to Subtitle D, Title 16, a contractor is |
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400 | 400 | | entitled to make an offer of repair in accordance with Subsection |
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401 | 401 | | (b). A claimant is not required to give written notice to a |
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402 | 402 | | contractor under this subsection in a claim subject to Subtitle D, |
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403 | 403 | | Title 16. |
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404 | 404 | | (b) Not later than the 15th day after the date of a final, |
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405 | 405 | | unappealable determination of a dispute under Subtitle D, Title 16, |
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406 | 406 | | if applicable, or not later than the 45th day after the date the |
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407 | 407 | | contractor receives the notice under this section, if Subtitle D, |
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408 | 408 | | Title 16, does not apply, the contractor may make a written offer of |
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409 | 409 | | settlement to the claimant. The offer must be sent to the claimant |
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410 | 410 | | at the claimant's last known address or to the claimant's attorney |
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411 | 411 | | by certified mail, return receipt requested. The offer may include |
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412 | 412 | | either an agreement by the contractor to repair or to have repaired |
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413 | 413 | | by an independent contractor partially or totally at the |
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414 | 414 | | contractor's expense or at a reduced rate to the claimant any |
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415 | 415 | | construction defect described in the notice and shall describe in |
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416 | 416 | | reasonable detail the kind of repairs which will be made. The |
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417 | 417 | | repairs shall be made not later than the 20th [45th] day after the |
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418 | 418 | | date the contractor receives written notice of acceptance of the |
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419 | 419 | | settlement offer, unless completion is delayed by the claimant or |
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420 | 420 | | by other events beyond the control of the contractor. If a |
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421 | 421 | | contractor makes a written offer of settlement that the claimant |
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422 | 422 | | considers to be unreasonable: |
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423 | 423 | | (1) on or before the 25th day after the date the |
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424 | 424 | | claimant receives the offer, the claimant shall advise the |
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425 | 425 | | contractor in writing and in reasonable detail of the reasons why |
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426 | 426 | | the claimant considers the offer unreasonable; and |
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427 | 427 | | (2) not later than the 10th day after the date the |
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428 | 428 | | contractor receives notice under Subdivision (1), the contractor |
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429 | 429 | | may make a supplemental written offer of settlement to the claimant |
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430 | 430 | | by sending the offer to the claimant or the claimant's attorney. |
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431 | 431 | | (g) In [Except as provided by Subsection (e), in] an action |
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432 | 432 | | subject to this chapter the claimant may recover only the following |
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433 | 433 | | economic damages proximately caused by a construction defect: |
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434 | 434 | | (1) the reasonable cost of repairs necessary to cure |
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435 | 435 | | any construction defect; |
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436 | 436 | | (2) the reasonable and necessary cost for the |
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437 | 437 | | replacement or repair of any damaged goods in the residence; |
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438 | 438 | | (3) reasonable and necessary engineering and |
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439 | 439 | | consulting fees; |
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440 | 440 | | (4) the reasonable expenses of temporary housing |
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441 | 441 | | reasonably necessary during the repair period; |
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442 | 442 | | (5) the reduction in current market value, if any, |
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443 | 443 | | after the construction defect is repaired if the construction |
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444 | 444 | | defect is a structural failure; and |
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445 | 445 | | (6) reasonable and necessary attorney's fees. |
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446 | 446 | | (l) If Subtitle D, Title 16, applies to the claim and the |
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447 | 447 | | contractor's offer of repair is accepted by the claimant, the |
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448 | 448 | | contractor, on completion of the repairs and at the contractor's |
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449 | 449 | | expense, shall engage the third-party inspector who provided the |
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450 | 450 | | recommendation regarding the construction defect involved in the |
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451 | 451 | | claim to inspect the repairs and determine whether the residence, |
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452 | 452 | | as repaired, complies with the applicable limited statutory |
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453 | 453 | | warranty and building and performance standards adopted by the |
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454 | 454 | | commission. [The contractor is entitled to a reasonable period not |
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455 | 455 | | to exceed 15 days to address minor cosmetic items that are necessary |
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456 | 456 | | to fully complete the repairs.] The determination of the |
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457 | 457 | | third-party inspector of whether the repairs comply with the |
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458 | 458 | | applicable limited statutory warranty and building and performance |
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459 | 459 | | standards adopted by the commission establishes a rebuttable |
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460 | 460 | | presumption on that issue. A party seeking to dispute, vacate, or |
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461 | 461 | | overcome that presumption must establish by clear and convincing |
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462 | 462 | | evidence that the determination is inconsistent with the applicable |
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463 | 463 | | limited statutory warranty and building and performance standards. |
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464 | 464 | | SECTION 2.03. Section 27.0042(c), Property Code, is amended |
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465 | 465 | | to read as follows: |
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466 | 466 | | (c) If a contractor elects to purchase the residence under |
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467 | 467 | | Subsection (a): |
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468 | 468 | | (1) the contractor shall pay the current market value |
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469 | 469 | | [original purchase price] of the residence determined as if the |
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470 | 470 | | residence did not have the construction defects, and closing costs |
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471 | 471 | | incurred by the homeowner and the cost of transferring title to the |
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472 | 472 | | contractor under the election; |
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473 | 473 | | (2) the homeowner may recover: |
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474 | 474 | | (A) reasonable and necessary attorney's and |
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475 | 475 | | expert fees as identified in Section 27.004(g); |
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476 | 476 | | (B) reimbursement for permanent improvements the |
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477 | 477 | | owner made to the residence after the date the owner purchased the |
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478 | 478 | | residence from the builder; and |
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479 | 479 | | (C) reasonable costs to move from the residence; |
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480 | 480 | | and |
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481 | 481 | | (3) conditioned on the payment of the purchase price, |
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482 | 482 | | the homeowner shall tender a special warranty deed to the |
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483 | 483 | | contractor, free of all liens and claims to liens as of the date the |
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484 | 484 | | title is transferred to the contractor, and without damage caused |
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485 | 485 | | by the homeowner. |
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486 | 486 | | SECTION 2.04. Sections 27.004(e) and (f), Property Code, |
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487 | 487 | | are repealed. |
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488 | 488 | | SECTION 2.05. The changes in law made by this article apply |
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489 | 489 | | only to a cause of action that accrues on or after the effective |
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490 | 490 | | date of this Act. A cause of action that accrues before the |
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491 | 491 | | effective date of this Act is governed by the law in effect |
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492 | 492 | | immediately before that date, and that law is continued in effect |
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493 | 493 | | for that purpose. |
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494 | 494 | | ARTICLE 3. EFFECTIVE DATE |
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495 | 495 | | SECTION 3.01. This Act takes effect September 1, 2009. |
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