81R5458 AJA-F
By: Thompson H.B. No. 981
A BILL TO BE ENTITLED
AN ACT
relating to consumer protection for and remedies available to a
homebuyer whose home does not comply with certain warranties;
providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 16, Property Code, is amended by adding
Subtitle G to read as follows:
SUBTITLE G. HOMEOWNER REMEDIES
CHAPTER 456. NEW HOME BUYERS
Sec. 456.001. DEFINITIONS. In this chapter:
(1) "Defect" means a construction defect or any other
condition that prevents a home from conforming to an applicable
warranty.
(2) "Homebuyer" means a person who:
(A) purchased a home from a builder and is
entitled to enforce the terms of the builder's warranty with
respect to the home;
(B) is a lessor or lessee, other than a
sublessee, who purchased or leased the home from the builder; or
(C) is a transferee or assignee of a person
described by Paragraph (A) or (B) if the transferee or assignee is a
resident of this state and entitled to enforce the terms of the
builder's warranty.
(3) "Serious safety hazard" means a life-threatening
malfunction, installation defect, or nonconformity that
substantially impedes a person's ability to live in or use a home or
that creates a substantial risk of fire, explosion, or exposure to a
toxic substance.
(4) "Warranty" means the statutory warranties under
Chapter 430 and any additional warranty provided by a builder in
accordance with Sections 430.006 and 430.007.
Sec. 456.002. APPLICABILITY OF CERTAIN OTHER LAW OR
CONTRACT PROVISIONS. (a) This chapter supersedes any other law or
contract provision that conflicts with this chapter, including the
Deceptive Trade Practices-Consumer Protection Act (Subchapter E,
Chapter 17, Business & Commerce Code).
(b) The remedies provided by this chapter supersede
remedies available under Chapter 27 or the Deceptive Trade
Practices-Consumer Protection Act (Subchapter E, Chapter 17,
Business & Commerce Code).
(c) If a dispute to which this chapter applies is also
subject to Chapter 426, the homebuyer must comply with Subtitle D
before pursuing a remedy under this chapter.
(d) Except as provided by this section, this chapter does
not limit the rights or remedies otherwise available to a homebuyer
under any other law.
(e) A contract provision that excludes or modifies the
remedies provided by this chapter is prohibited and is void as
against public policy unless the exclusion or modification is
included in a settlement agreement between a homebuyer and a
builder.
Sec. 456.003. COMPLAINT. A homebuyer may seek a remedy
provided by this chapter by:
(1) providing to the builder written notice
identifying each defect in the home that is covered by the builder's
warranty; and
(2) filing a complaint with the commission that
includes a copy of the notice provided under Subdivision (1) on or
before the 30th day after the date the notice is provided.
Sec. 456.004. HEARING. (a) The commission may hold a
hearing on any allegation in a complaint that is not privately
resolved between the homebuyer and the builder.
(b) The contested case provisions of Chapter 2001,
Government Code, apply to a hearing conducted under this chapter.
Sec. 456.005. TIME FOR FILING COMPLAINT. (a) Except as
provided by Subsection (b), a homebuyer must file a complaint under
this chapter before the earlier of:
(1) the date the applicable warranty period expires;
or
(2) the 10th anniversary of the closing date.
(b) If the dispute is submitted to the state-sponsored
inspection and dispute resolution process, a complaint under this
chapter must be submitted not later than the 30th day after the date
the third-party inspector's recommendation is issued or, if the
homebuyer appeals the inspector's recommendation, the 30th day
after the date the appeals panel issues a ruling on the appeal.
Sec. 456.006. AFFIRMATIVE DEFENSE. In a hearing before the
commission under this chapter, a builder may assert as an
affirmative defense to an allegation of a defect made in a complaint
filed under this chapter that the defect is the result of abuse,
neglect, or modifications or alterations of the home made by a
person other than the builder.
Sec. 456.007. REPAIR REQUIRED. (a) Except as provided by
Section 456.009, if a defect exists, the builder shall make the
repairs necessary to conform the home to the builder's warranties
if:
(1) the homebuyer or the homebuyer's designated agent
reported the defect to the builder or the builder's agent before the
expiration of the applicable time limit under Section 456.005; or
(2) a breach of warranty on the home is established.
(b) The builder must make the repairs required under
Subsection (a) not later than the 120th day after the date the
notice of the defect required by Section 456.003 is received by the
commission.
Sec. 456.008. RETURN OR REPLACEMENT REQUIRED. (a) Except
as provided by Section 456.009, if the builder is unable to cure a
defect within the period prescribed by Section 456.007(b) and the
defect creates a serious safety hazard, substantially impairs the
use of the home, or decreases the home's market value by more than
five percent, the builder shall at the homebuyer's option:
(1) replace the home with a comparable home in the same
neighborhood; or
(2) accept return of the home from the homebuyer and
refund to the homebuyer the full purchase price and any closing
costs and reasonable moving costs.
(b) The commission may not order a remedy under this section
unless the builder has been provided at least the number of days
prescribed by Section 456.007(b) to cure the defect that is subject
to the remedy provided by this section. The period required by this
subsection is extended by the amount of time during which repair
services are not available to a homebuyer because of a war,
invasion, strike, or fire, flood, or other natural disaster.
Sec. 456.009. MOLD CONTAMINATION. (a) Not later than the
30th day after the date of a hearing examiner's order of a remedy
under this section, the builder shall accept return of the home from
the homebuyer and refund to the homebuyer the full purchase price
and any closing costs and reasonable moving costs if, in addition to
notice of a defect required by Section 456.003, a homebuyer:
(1) provides to the contractor and the commission
written results of tests that:
(A) are conducted by a mold testing laboratory
certified for the purposes of this section; and
(B) demonstrate proof of unacceptable levels of
toxic mold contamination that pose an imminent threat to the
health, safety, or welfare of the inhabitants; and
(2) establishes that the contamination arises out of
the defect.
(b) The commission by rule shall designate at least one
private organization that certifies mold testing laboratories from
whom certification is sufficient for the purposes of this section.
Sec. 456.010. REIMBURSEMENT OF EXPENSES. (a) If a builder
is ordered to replace a home or refund the purchase price under
Section 456.008 or 456.009, the builder shall reimburse the
homebuyer for:
(1) reasonable incidental costs resulting from the
loss of the use of the home because of the defect; and
(2) lost wages resulting from time required for
appointments with the builder or the builder's representative that
are necessary because of the defect.
(b) As necessary to promote the public interest, the
commission by rule:
(1) shall define the incidental costs that are
eligible for reimbursement under Subsection (a) and specify other
requirements necessary to determine an eligible cost; and
(2) may set a maximum amount that is eligible for
reimbursement, either by type of eligible cost or by a total for all
costs.
(c) Refunds shall be made to the homebuyer and primary
lienholder, as applicable.
Sec. 456.011. OTHER REMEDIES NOT PRECLUDED. This chapter
does not prevent a homebuyer from obtaining a remedy available to
the homebuyer under a new home warranty that provides remedies in
addition to those provided by this chapter.
Sec. 456.012. RIGHT TO FILE ACTION. (a) Except as provided
by this section, a homebuyer may not seek the remedies provided by
this chapter in a civil action unless the homebuyer files a
complaint against the builder under this chapter and exhausts the
administrative proceedings provided by this chapter. A court shall
dismiss an action filed in violation of this section.
(b) If the hearing examiner does not issue a proposal for
decision and make a recommendation to the commission for a final
order on or before the 150th day after the date a complaint is filed
under this chapter, the commission shall provide written notice, by
certified mail, to the complainant and the builder.
(c) The notice must inform the recipient of:
(1) the date the period for issuing a final order under
this chapter expires; and
(2) the complainant's right to file an action under
this section.
(d) After receiving a notice of the right to file an action
under Subsection (b), a complainant may file an action against a
builder named in the complaint. The commission's failure to issue a
notice of the right to file an action does not affect a
complainant's right to bring an action.
Sec. 456.013. JUDICIAL REVIEW. A final order of the
commission under this chapter:
(1) is the final action of the commission under this
chapter; and
(2) is subject to review only by judicial review as
provided by Chapter 2001, Government Code, to the extent that
chapter is not inconsistent with this chapter.
Sec. 456.014. INITIATION OR REMOVAL OF ACTION. (a) Except
as otherwise provided by this chapter, an appeal initiated under
this chapter may be removed to the Third Court of Appeals District
if any party to the action files a notice of removal with the
district court before the trial in the district court begins.
(b) An appeal initiated in or removed to the Third Court of
Appeals District:
(1) must be initiated under Chapter 2001, Government
Code, as if initiated in a Travis County district court; and
(2) is governed from the time of filing by the Texas
Rules of Appellate Procedure.
(c) If evidence outside the commission's record is to be
admitted in an appeal under Chapter 2001, Government Code, or
otherwise, the action:
(1) must be initiated in a Travis County district
court; or
(2) if initiated in the Third Court of Appeals
District, is subject to remand to a Travis County district court for
proceedings in accordance with instructions from the court of
appeals.
(d) Citation must be served on the commission and each party
of record before the commission. For an appeal initiated in the
Third Court of Appeals District, the court shall cause citation to
be issued.
Sec. 456.015. DILIGENCE REQUIRED. (a) An appellant must
pursue an appeal with reasonable diligence. If an appellant fails
to prosecute an appeal in the six-month period after the appeal is
filed, the court shall presume that the appeal has been abandoned
and dismiss the appeal if a motion for dismissal is submitted by the
attorney general or another party.
(b) An appeal may not be dismissed under this section if the
appellant, after receiving notice and an opportunity to be heard,
demonstrates good cause for a delay.
Sec. 456.016. DISCLOSURE REQUIRED. (a) A builder who is
ordered to refund the purchase price of or replace a home under this
chapter shall provide to the first retail purchaser of the home
after the home was repurchased or replaced by the builder a
disclosure statement stating that the home was repurchased or
replaced by the builder under this chapter.
(b) The disclosure statement must include the toll-free
telephone number established by the commission under Section
456.018.
(c) Before a home repurchased or replaced under this chapter
may be sold again, the deed that transfers title to the home must be
marked with a clear statement that indicates that the home was
repurchased or replaced under this chapter.
Sec. 456.017. RESTORATION OF WARRANTY REQUIRED. A builder
who sells a home after repurchasing or replacing the home under this
chapter must restore the home in a manner that conforms with the
limited statutory warranties and building and performance
standards.
Sec. 456.018. TOLL-FREE TELEPHONE NUMBER. The commission
shall establish a toll-free telephone number for providing
information to persons who request information about a defect that
was the basis for ordering a remedy under this chapter. The
commission shall maintain an effective method of providing
information to persons who make requests.
Sec. 456.019. ANNUAL REPORT. (a) The commission shall
publish and make available to the public an annual report relating
to homes ordered repurchased or replaced by a builder under this
chapter.
(b) The report must:
(1) list the number of homes by subdivision name, if
any;
(2) identify the builder; and
(3) include a brief description of each defect that
was the subject of a remedy provided by this chapter.
(c) The commission may charge a reasonable fee to recover
the cost of the report.
Sec. 456.020. DISCIPLINARY PROCEEDINGS; ADMINISTRATIVE
PENALTY. A builder who violates this chapter or a rule or order
adopted under this chapter is subject to disciplinary action and an
administrative penalty under Chapters 418 and 419.
SECTION 2. Subtitle G, Title 16, Property Code, as added by
this Act, applies only to the sale of a new home for which the
closing date is on or after the effective date of this Act. A sale
of a new home for which the closing date was before the effective
date of this Act is governed by the law in effect at the time of the
sale, and that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2009.