Texas 2021 - 87th Regular

Texas House Bill HB3503 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Lambert, Darby (Senate Sponsor - Creighton) H.B. No. 3503
2		-	(In the Senate - Received from the House May 17, 2021;
3		-	May 17, 2021, read first time and referred to Committee on State
4		-	Affairs; May 21, 2021, reported favorably by the following vote:
5		-	Yeas 9, Nays 0; May 21, 2021, sent to printer.)
6		-	Click here to see the committee vote
	1	+	87R21763 NC-F
	2	+	By: Lambert, Darby H.B. No. 3503
7	3
8	4
9	5		A BILL TO BE ENTITLED
10	6		AN ACT
11	7		relating to the correction or removal of certain obsolete
12	8		provisions of the Property Code.
13	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	10		SECTION 1. Sections 27.001(4), (5), and (8), Property Code,
15	11		are amended to read as follows:
16	12		(4) "Construction defect" [has the meaning assigned by
17	13		Section 401.004 for an action to which Subtitle D, Title 16, applies
18	14		and for any other action] means a matter concerning the design,
19	15		construction, or repair of a new residence, of an alteration of or
20	16		repair or addition to an existing residence, or of an appurtenance
21	17		to a residence, on which a person has a complaint against a
22	18		contractor. The term may include any physical damage to the
23	19		residence, any appurtenance, or the real property on which the
24	20		residence and appurtenance are affixed proximately caused by a
25	21		construction defect.
26	22		(5) "Contractor":
27	23		(A) means:
28	24		(i) a builder [, as defined by Section
29	25		401.003,] contracting with an owner for the construction or repair
30	26		of a new residence, for the repair or alteration of or an addition
31	27		to an existing residence, or for the construction, sale,
32	28		alteration, addition, or repair of an appurtenance to a new or
33	29		existing residence;
34	30		(ii) any person contracting with a
35	31		purchaser for the sale of a new residence constructed by or on
36	32		behalf of that person; or
37	33		(iii) a person contracting with an owner or
38	34		the developer of a condominium for the construction of a new
39	35		residence, for an alteration of or an addition to an existing
40	36		residence, for repair of a new or existing residence, or for the
41	37		construction, sale, alteration, addition, or repair of an
42	38		appurtenance to a new or existing residence; and
43	39		(B) includes:
44	40		(i) an owner, officer, director,
45	41		shareholder, partner, or employee of the contractor; and
46	42		(ii) a risk retention group registered
47	43		under Chapter 2201 [Article 21.54], Insurance Code, that insures
48	44		all or any part of a contractor's liability for the cost to repair a
49	45		residential construction defect.
50	46		(8) "Structural failure" [has the meaning assigned by
51	47		Section 401.002 for an action to which Subtitle D, Title 16, applies
52	48		and for any other action] means actual physical damage to the
53	49		load-bearing portion of a residence caused by a failure of the
54	50		load-bearing portion.
55	51		SECTION 2. Section 27.003(a), Property Code, is amended to
56	52		read as follows:
57	53		(a) In an action to recover damages or other relief arising
58	54		from a construction defect:
59	55		(1) a contractor is not liable for any percentage of
60	56		damages caused by:
61	57		(A) negligence of a person other than the
62	58		contractor or an agent, employee, or subcontractor of the
63	59		contractor;
64	60		(B) failure of a person other than the contractor
65	61		or an agent, employee, or subcontractor of the contractor to:
66	62		(i) take reasonable action to mitigate the
67	63		damages; or
68	64		(ii) take reasonable action to maintain the
69	65		residence;
70	66		(C) normal wear, tear, or deterioration;
71	67		(D) normal shrinkage due to drying or settlement
72	68		of construction components within the tolerance of building
73	69		standards; or
74	70		(E) the contractor's reliance on written
75	71		information relating to the residence, appurtenance, or real
76	72		property on which the residence and appurtenance are affixed that
77	73		was obtained from official government records, if the written
78	74		information was false or inaccurate and the contractor did not know
79	75		and could not reasonably have known of the falsity or inaccuracy of
80	76		the information; and
81	77		(2) if an assignee of the claimant or a person
82	78		subrogated to the rights of a claimant fails to provide the
83	79		contractor with the written notice and opportunity to inspect and
84	80		offer to repair required by Section 27.004 [or fails to request
85	81		state-sponsored inspection and dispute resolution under Chapter
86	82		428, if applicable,] before performing repairs, the contractor is
87	83		not liable for the cost of any repairs or any percentage of damages
88	84		caused by repairs made to a construction defect at the request of an
89	85		assignee of the claimant or a person subrogated to the rights of a
90	86		claimant by a person other than the contractor or an agent,
91	87		employee, or subcontractor of the contractor.
92	88		SECTION 3. Sections 27.004(a), (b), (c), and (d), Property
93	89		Code, are amended to read as follows:
94	90		(a) Before [In a claim not subject to Subtitle D, Title 16,
95	91		before] the 60th day preceding the date a claimant seeking from a
96	92		contractor damages or other relief arising from a construction
97	93		defect initiates an action, the claimant shall give written notice
98	94		by certified mail, return receipt requested, to the contractor, at
99	95		the contractor's last known address, specifying in reasonable
100	96		detail the construction defects that are the subject of the
101	97		complaint. On the request of the contractor, the claimant shall
102	98		provide to the contractor any evidence that depicts the nature and
103	99		cause of the defect and the nature and extent of repairs necessary
104	100		to remedy the defect, including expert reports, photographs, and
105	101		videotapes, if that evidence would be discoverable under Rule 192,
106	102		Texas Rules of Civil Procedure. During the 35-day period after the
107	103		date the contractor receives the notice, and on the contractor's
108	104		written request, the contractor shall be given a reasonable
109	105		opportunity to inspect and have inspected the property that is the
110	106		subject of the complaint to determine the nature and cause of the
111	107		defect and the nature and extent of repairs necessary to remedy the
112	108		defect. The contractor may take reasonable steps to document the
113	109		defect. [In a claim subject to Subtitle D, Title 16, a contractor is
114	110		entitled to make an offer of repair in accordance with Subsection
115	111		(b). A claimant is not required to give written notice to a
116	112		contractor under this subsection in a claim subject to Subtitle D,
117	113		Title 16.]
118	114		(b) Not later than the [15th day after the date of a final,
119	115		unappealable determination of a dispute under Subtitle D, Title 16,
120	116		if applicable, or not later than the] 45th day after the date the
121	117		contractor receives the notice under this section, [if Subtitle D,
122	118		Title 16, does not apply,] the contractor may make a written offer
123	119		of settlement to the claimant. The offer must be sent to the
124	120		claimant at the claimant's last known address or to the claimant's
125	121		attorney by certified mail, return receipt requested. The offer
126	122		may include either an agreement by the contractor to repair or to
127	123		have repaired by an independent contractor partially or totally at
128	124		the contractor's expense or at a reduced rate to the claimant any
129	125		construction defect described in the notice and shall describe in
130	126		reasonable detail the kind of repairs which will be made. The
131	127		repairs shall be made not later than the 45th day after the date the
132	128		contractor receives written notice of acceptance of the settlement
133	129		offer, unless completion is delayed by the claimant or by other
134	130		events beyond the control of the contractor. If a contractor makes
135	131		a written offer of settlement that the claimant considers to be
136	132		unreasonable:
137	133		(1) on or before the 25th day after the date the
138	134		claimant receives the offer, the claimant shall advise the
139	135		contractor in writing and in reasonable detail of the reasons why
140	136		the claimant considers the offer unreasonable; and
141	137		(2) not later than the 10th day after the date the
142	138		contractor receives notice under Subdivision (1), the contractor
143	139		may make a supplemental written offer of settlement to the claimant
144	140		by sending the offer to the claimant or the claimant's attorney.
145	141		(c) If [compliance with Subtitle D, Title 16, or] the giving
146	142		of the notice under Subsections (a) and (b) within the period
147	143		prescribed by those subsections is impracticable because of the
148	144		necessity of initiating an action at an earlier date to prevent
149	145		expiration of the statute of limitations or if the complaint is
150	146		asserted as a counterclaim, [compliance with Subtitle D, Title 16,
151	147		or] the notice is not required. However, the action or counterclaim
152	148		shall specify in reasonable detail each construction defect that is
153	149		the subject of the complaint. The [If Subtitle D, Title 16, applies
154	150		to the complaint, simultaneously with the filing of an action by a
155	151		claimant, the claimant must submit a request under Section 428.001.
156	152		If Subtitle D, Title 16, does not apply, the] inspection provided
157	153		for by Subsection (a) may be made not later than the 75th day after
158	154		the date of service of the suit, request for arbitration, or
159	155		counterclaim on the contractor, and the offer provided for by
160	156		Subsection (b) may be made not later than the [15th day after the
161	157		date the state-sponsored inspection and dispute resolution process
162	158		is completed, if Subtitle D, Title 16, applies, or not later than
163	159		the] 60th day after the date of service [, if Subtitle D, Title 16,
164	160		does not apply]. If, while an action subject to this chapter is
165	161		pending, the statute of limitations for the cause of action would
166	162		have expired and it is determined that the provisions of Subsection
167	163		(a) were not properly followed, the action shall be abated to allow
168	164		compliance with Subsections (a) and (b).
169	165		(d) The court or arbitration tribunal shall abate an action
170	166		governed by this chapter if Subsection (c) does not apply and the
171	167		court or tribunal, after a hearing, finds that the contractor is
172	168		entitled to abatement because the claimant failed to [comply with
173	169		the requirements of Subtitle D, Title 16, if applicable, failed to]
174	170		provide the notice or failed to give the contractor a reasonable
175	171		opportunity to inspect the property as required by Subsection (a),
176	172		or failed to follow the procedures specified by Subsection (b). An
177	173		action is automatically abated without the order of the court or
178	174		tribunal beginning on the 11th day after the date a motion to abate
179	175		is filed if the motion:
180	176		(1) is verified and alleges that the person against
181	177		whom the action is pending did not receive the written notice
182	178		required by Subsection (a), the person against whom the action is
183	179		pending was not given a reasonable opportunity to inspect the
184	180		property as required by Subsection (a), or the claimant failed to
185	181		follow the procedures specified by Subsection (b) [or Subtitle D,
186	182		Title 16]; and
187	183		(2) is not controverted by an affidavit filed by the
188	184		claimant before the 11th day after the date on which the motion to
189	185		abate is filed.
190	186		SECTION 4. Section 53.172, Property Code, is amended to
191	187		read as follows:
192	188		Sec. 53.172. BOND REQUIREMENTS. The bond must:
193	189		(1) describe the property on which the liens are
194	190		claimed;
195	191		(2) refer to each lien claimed in a manner sufficient
196	192		to identify it;
197	193		(3) be in an amount that is double the amount of the
198	194		liens referred to in the bond unless the total amount claimed in the
199	195		liens exceeds $40,000, in which case the bond must be in an amount
200	196		that is the greater of 1-1/2 times the amount of the liens or the sum
201	197		of $40,000 and the amount of the liens;
202	198		(4) be payable to the parties claiming the liens;
203	199		(5) be executed by:
204	200		(A) the party filing the bond as principal; and
205	201		(B) a corporate surety authorized and admitted to
206	202		do business under the law in this state and licensed by this state
207	203		to execute the bond as surety, subject to Subchapter A, Chapter
208	204		3503, Insurance Code [Section 1, Chapter 87, Acts of the 56th
209	205		Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
210	206		Insurance Code)]; and
211	207		(6) be conditioned substantially that the principal
212	208		and sureties will pay to the named obligees or to their assignees
213	209		the amount that the named obligees would have been entitled to
214	210		recover if their claims had been proved to be valid and enforceable
215	211		liens on the property.
216	212		SECTION 5. Section 74.3013(h), Property Code, is amended
217	213		to read as follows:
218	214		(h) In this section, a nonprofit cooperative corporation
219	215		means a cooperative corporation organized under Chapters 51 and 52,
220	216		Agriculture Code, the Texas Nonprofit [Non-Profit] Corporation
221	217		Law, as described by Section 1.008(d), Business Organizations Code
222	218		[Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)],
223	219		the Texas Cooperative Association Law, as described by Section
224	220		1.008(i), Business Organizations Code [Act (Article 1396-50.01,
225	221		Vernon's Texas Civil Statutes)], and Chapter 161, Utilities Code.
226	222		SECTION 6. Sections 112.058(c) and (d), Property Code, are
227	223		amended to read as follows:
228	224		(c) The community trust may transfer assets of the trust to
229	225		a nonprofit corporation only if the nonprofit corporation is
230	226		organized under the Texas Nonprofit Corporation Law, as described
231	227		by Section 1.008(d), Business Organizations Code, [the Texas
232	228		Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
233	229		Texas Civil Statutes)] and organized for the same purpose as the
234	230		community trust. The charter of the nonprofit corporation must
235	231		describe the purpose of the corporation and the proposed use of the
236	232		assets transferred using language substantially similar to the
237	233		language used in the instrument creating the community trust.
238	234		(d) To transfer the assets of and terminate a community
239	235		trust under this section, the governing body of the community trust
240	236		must:
241	237		(1) file a petition in a probate court, county court,
242	238		or district court requesting:
243	239		(A) the transfer of the assets of the trust to a
244	240		nonprofit corporation established for the purpose of receiving and
245	241		administering the assets of the trust; and
246	242		(B) the termination of the trust;
247	243		(2) send by first class mail to each trust settlor and
248	244		each trustee of each component trust of the community trust who can
249	245		be located by the exercise of reasonable diligence a copy of the
250	246		governing body's petition and a notice specifying the time and
251	247		place of the court-scheduled hearing on the petition; and
252	248		(3) publish once in a newspaper of general circulation
253	249		in the county in which the proceeding is pending a notice that reads
254	250		substantially similar to the following:
255	251		TO ALL INTERESTED PERSONS:
256	252		(NAME OF COMMUNITY TRUST) HAS FILED A PETITION IN (NAME OF
257	253		COURT) OF (NAME OF COUNTY), TEXAS, REQUESTING PERMISSION TO CONVERT
258	254		TO A NONPROFIT CORPORATION. IF PERMITTED TO CONVERT:
259	255		(1) THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED;
260	256		AND
261	257		(2) THE ASSETS OF THE TRUST WILL BE:
262	258		(A) TRANSFERRED TO A NONPROFIT CORPORATION WITH
263	259		THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF
264	260		COMMUNITY TRUST); AND
265	261		(B) HELD AND ADMINISTERED BY THE CORPORATION AS
266	262		PROVIDED BY THE TEXAS NONPROFIT [NON-PROFIT] CORPORATION LAW [ACT
267	263		(ARTICLE 1396-1.01 ET SEQ., VERNON'S TEXAS CIVIL STATUTES)].
268	264		THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE
269	265		THE MONEY SAVED TO FURTHER THE PURPOSES FOR WHICH THE (NAME OF
270	266		COMMUNITY TRUST) WAS CREATED.
271	267		A HEARING ON THE PETITION IS SCHEDULED ON (DATE AND TIME) AT
272	268		(LOCATION OF COURT).
273	269		FOR ADDITIONAL INFORMATION, YOU MAY CONTACT THE GOVERNING
274	270		BODY OF THE (NAME OF COMMUNITY TRUST) AT (ADDRESS AND TELEPHONE
275	271		NUMBER) OR THE COURT.
276	272		SECTION 7. Section 202.002(b), Property Code, is amended to
277	273		read as follows:
278	274		(b) This chapter does not affect the requirements of Chapter
279	275		123, Human Resources Code [the Community Homes for Disabled Persons
280	276		Location Act (Article 1011n, Vernon's Texas Civil Statutes)].
281	277		SECTION 8. Section 202.003(b), Property Code, is amended to
282	278		read as follows:
283	279		(b) In this subsection, "family home" is a residential home
284	280		that meets the definition of and requirements applicable to a
285	281		family home under Chapter 123, Human Resources Code [the Community
286	282		Homes for Disabled Persons Location Act (Article 1011n, Vernon's
287	283		Texas Civil Statutes)]. A dedicatory instrument or restrictive
288	284		covenant may not be construed to prevent the use of property as a
289	285		family home. However, any restrictive covenant that applies to
290	286		property used as a family home shall be liberally construed to give
291	287		effect to its purposes and intent except to the extent that the
292	288		construction would restrict the use as a family home.
293	289		SECTION 9. Section 204.004(b), Property Code, is amended to
294	290		read as follows:
295	291		(b) The association must be nonprofit and may be
296	292		incorporated as a Texas nonprofit corporation. An unincorporated
297	293		association may incorporate under the Texas Nonprofit [Non-Profit]
298	294		Corporation Law, as described by Section 1.008(d), Business
299	295		Organizations Code [Act (Article 1396-1.01 et seq., Vernon's Texas
300	296		Civil Statutes)].
301	297		SECTION 10. Section 204.010(a), Property Code, is amended
302	298		to read as follows:
303	299		(a) Unless otherwise provided by the restrictions or the
304	300		association's articles of incorporation or bylaws, the property
305	301		owners' association, acting through its board of directors or
306	302		trustees, may:
307	303		(1) adopt and amend bylaws;
308	304		(2) adopt and amend budgets for revenues,
309	305		expenditures, and reserves and collect regular assessments or
310	306		special assessments for common expenses from property owners;
311	307		(3) hire and terminate managing agents and other
312	308		employees, agents, and independent contractors;
313	309		(4) institute, defend, intervene in, settle, or
314	310		compromise litigation or administrative proceedings on matters
315	311		affecting the subdivision;
316	312		(5) make contracts and incur liabilities relating to
317	313		the operation of the subdivision and the property owners'
318	314		association;
319	315		(6) regulate the use, maintenance, repair,
320	316		replacement, modification, and appearance of the subdivision;
321	317		(7) make additional improvements to be included as a
322	318		part of the common area;
323	319		(8) grant easements, leases, licenses, and
324	320		concessions through or over the common area;
325	321		(9) impose and receive payments, fees, or charges for
326	322		the use, rental, or operation of the common area and for services
327	323		provided to property owners;
328	324		(10) impose interest, late charges, and, if
329	325		applicable, returned check charges for late payments of regular
330	326		assessments or special assessments;
331	327		(11) if notice and an opportunity to be heard are
332	328		given, collect reimbursement of actual attorney's fees and other
333	329		reasonable costs incurred by the property owners' association
334	330		relating to violations of the subdivision's restrictions or the
335	331		property owners' association's bylaws and rules;
336	332		(12) charge costs to an owner's assessment account and
337	333		collect the costs in any manner provided in the restrictions for the
338	334		collection of assessments;
339	335		(13) adopt and amend rules regulating the collection
340	336		of delinquent assessments and the application of payments;
341	337		(14) impose reasonable charges for preparing,
342	338		recording, or copying amendments to the restrictions, resale
343	339		certificates, or statements of unpaid assessments;
344	340		(15) purchase insurance and fidelity bonds, including
345	341		directors' and officers' liability insurance, that the board
346	342		considers appropriate or necessary;
347	343		(16) if the restrictions allow for an annual increase
348	344		in the maximum regular assessment without a vote of the membership,
349	345		assess the increase annually or accumulate and assess the increase
350	346		after a number of years;
351	347		(17) subject to the requirements of the Texas
352	348		Nonprofit [Non-Profit] Corporation Law, as described by Section
353	349		1.008(d), Business Organizations Code [Act (Article 1396-1.01 et
354	350		seq., Vernon's Texas Civil Statutes)] and by majority vote of its
355	351		board of directors, indemnify a director or officer of the property
356	352		owners' association who was, is, or may be made a named defendant or
357	353		respondent in a proceeding because the person is or was a director;
358	354		(18) if the restrictions vest the architectural
359	355		control authority in the property owners' association or if the
360	356		authority is vested in the property owners' association under
361	357		Section 204.011:
362	358		(A) implement written architectural control
363	359		guidelines for its own use or record the guidelines in the real
364	360		property records of the applicable county; and
365	361		(B) modify the guidelines as the needs of the
366	362		subdivision change;
367	363		(19) exercise other powers conferred by the
368	364		restrictions, its articles of incorporation, or its bylaws;
369	365		(20) exercise other powers that may be exercised in
370	366		this state by a corporation of the same type as the property owners'
371	367		association; and
372	368		(21) exercise other powers necessary and proper for
373	369		the governance and operation of the property owners' association.
374	370		SECTION 11. The following provisions of the Property Code
375	371		are repealed:
376	372		(1) Section 5.018;
377	373		(2) Sections 27.001(3) and (9);
378	374		(3) Section 27.004(l); and
379	375		(4) Section 27.007(c).
380	376		SECTION 12. This Act takes effect immediately if it
381	377		receives a vote of two-thirds of all the members elected to each
382	378		house, as provided by Section 39, Article III, Texas Constitution.
383	379		If this Act does not receive the vote necessary for immediate
384	380		effect, this Act takes effect September 1, 2021.
385		-	* * * * *