Texas 2021 - 87th Regular

Texas House Bill HB3595 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R7575 AJA-F
2	2	By: Leach H.B. No. 3595
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to residential construction liability.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 27.001, Property Code, is amended to
10	10	read as follows:
11	11	Sec. 27.001. DEFINITIONS. In this chapter:
12	12	(1) "Action" means a court or judicial proceeding or
13	13	an arbitration.
14	14	(2) "Appurtenance" means any garage, outbuilding,
15	15	retaining wall, landscaping improvement, or other improvement,
16	16	structure, or recreational facility that is constructed by a
17	17	contractor in connection with the construction of a new residence,
18	18	regardless of whether or not it is attached to or [appurtenant to a
19	19	residence but is not] a part of the dwelling unit.
20	20	(3) ["Commission" means the Texas Residential
21	21	Construction Commission.
22	22	[(4)] "Construction defect" [has the meaning assigned
23	23	by Section 401.004 for an action to which Subtitle D, Title 16,
24	24	applies and for any other action] means a matter concerning the
25	25	design, construction, or repair of a new residence, of an
26	26	alteration of or repair or addition to an existing residence, or of
27	27	an appurtenance to a residence, on which a person has a complaint
28	28	against a contractor. The term may include any physical damage to
29	29	the residence, any appurtenance, or the real property on which the
30	30	residence and appurtenance are affixed proximately caused by a
31	31	construction defect.
32	32	(4) [(5)] "Contractor":
33	33	(A) means:
34	34	(i) a builder [, as defined by Section
35	35	401.003,] contracting with an owner for the construction or repair
36	36	of a new residence, for the repair or alteration of or an addition
37	37	to an existing residence, or for the construction, sale,
38	38	alteration, addition, or repair of an appurtenance to a new or
39	39	existing residence;
40	40	(ii) any person contracting [with a
41	41	purchaser] for the sale or construction of a new residence
42	42	constructed by or on behalf of that person; or
43	43	(iii) a person contracting with an owner or
44	44	the developer of a condominium or other housing project for the
45	45	construction of one or more [a] new residences [residence], for an
46	46	alteration of or an addition to an existing residence, for repair of
47	47	a new or existing residence, or for the construction, sale,
48	48	alteration, addition, or repair of an appurtenance to a new or
49	49	existing residence; and
50	50	(B) includes:
51	51	(i) an owner, officer, director,
52	52	shareholder, partner, or employee of the contractor; and
53	53	(ii) a risk retention group registered
54	54	under Chapter 2201 [Article 21.54], Insurance Code, that insures
55	55	all or any part of a contractor's liability for the cost to repair a
56	56	residential construction defect.
57	57	(5) [(6)] "Economic damages" means compensatory
58	58	damages for pecuniary loss proximately caused by a construction
59	59	defect. The term does not include exemplary damages, speculative
60	60	damages, or damages for bodily or personal injury, physical pain
61	61	and mental anguish, loss of consortium, disfigurement, physical
62	62	impairment, or loss of companionship and society.
63	63	(6) [(7)] "Residence" means the real property and
64	64	improvements for a single-family house, duplex, triplex, or
65	65	quadruplex or a unit and the common elements in a multiunit
66	66	residential structure in which [title to] the individual units are
67	67	sold or leased [is transferred] to the owners or occupants under a
68	68	condominium or cooperative system.
69	69	(7) [(8)] "Structural failure" [has the meaning
70	70	assigned by Section 401.002 for an action to which Subtitle D, Title
71	71	16, applies and for any other action] means actual physical damage
72	72	to the load-bearing portion of a residence, such as a foundation or
73	73	framing system [caused by a failure of the load-bearing portion].
74	74	(8) [(9) "Third-party inspector" has the meaning
75	75	assigned by Section 401.002.
76	76	[(10)] "Developer of a condominium" means a declarant,
77	77	as defined by Section 82.003, of a condominium consisting of one or
78	78	more residences.
79	79	SECTION 2. Section 27.002(b), Property Code, is amended to
80	80	read as follows:
81	81	(b) To [Except as provided by this subsection, to] the
82	82	extent of conflict between this chapter and any other law,
83	83	including the Deceptive Trade Practices-Consumer Protection Act
84	84	(Subchapter E, Chapter 17, Business & Commerce Code) or a common law
85	85	cause of action, this chapter prevails. [To the extent of conflict
86	86	between this chapter and Title 16, Title 16 prevails.]
87	87	SECTION 3. Section 27.003(a), Property Code, is amended to
88	88	read as follows:
89	89	(a) In an action to recover damages or other relief arising
90	90	from a construction defect:
91	91	(1) a contractor is not liable for any percentage of
92	92	damages caused by:
93	93	(A) negligence of a person other than the
94	94	contractor or an agent, employee, or subcontractor of the
95	95	contractor;
96	96	(B) failure of a person other than the contractor
97	97	or an agent, employee, or subcontractor of the contractor to:
98	98	(i) take reasonable action to mitigate the
99	99	damages; or
100	100	(ii) take reasonable action to maintain the
101	101	residence;
102	102	(C) normal wear, tear, or deterioration;
103	103	(D) normal shrinkage or cracking due to drying or
104	104	settlement of construction components within the tolerance of
105	105	building standards; [or]
106	106	(E) the contractor's reliance on written
107	107	information relating to the residence, appurtenance, or real
108	108	property on which the residence and appurtenance are affixed that
109	109	was obtained from official government records, if the written
110	110	information was false, outdated, or inaccurate and the contractor
111	111	did not know and could not reasonably have known of the falsity,
112	112	modification, or inaccuracy of the information; or
113	113	(F) any condition, including noncompliance with
114	114	an applicable code, standard, warranty, manufacturer's
115	115	recommendation, or contractual plan or specification, that does not
116	116	result in either:
117	117	(i) actual physical damage to the
118	118	residence; or
119	119	(ii) the failure of a building component to
120	120	perform its intended function or purpose at the time the notice
121	121	required by Section 27.004 is sent; and
122	122	(2) if an assignee of the claimant or a person
123	123	subrogated to the rights of a claimant fails to provide the
124	124	contractor with the written notice and opportunity to inspect and
125	125	offer to repair required by Section 27.004 [or fails to request
126	126	state-sponsored inspection and dispute resolution under Chapter
127	127	428, if applicable,] before performing repairs, the contractor is
128	128	not liable for the cost of any repairs or any percentage of damages
129	129	caused by repairs made to a construction defect at the request of an
130	130	assignee of the claimant or a person subrogated to the rights of a
131	131	claimant by a person other than the contractor or an agent,
132	132	employee, or subcontractor of the contractor.
133	133	SECTION 4. Sections 27.004(a), (b), (c), (d), (e), (g), and
134	134	(m), Property Code, are amended to read as follows:
135	135	(a) Before [In a claim not subject to Subtitle D, Title 16,
136	136	before] the 60th day preceding the date a claimant seeking from a
137	137	contractor damages or other relief arising from a construction
138	138	defect initiates an action, the claimant shall give written notice
139	139	by certified mail, return receipt requested, to the contractor, at
140	140	the contractor's last known address, specifying in reasonable
141	141	detail the construction defects that are the subject of the
142	142	complaint. The [On the request of the contractor, the] claimant
143	143	shall provide to the contractor any evidence that depicts the
144	144	nature and cause of the defect and the nature and extent of repairs
145	145	necessary to remedy the defect, including any expert reports,
146	146	photographs, and videotapes [, if that evidence would be
147	147	discoverable under Rule 192, Texas Rules of Civil Procedure].
148	148	During the 35-day period after the date the contractor receives the
149	149	notice, and on the contractor's written request, the contractor
150	150	shall be given a reasonable opportunity to inspect and have
151	151	inspected the property that is the subject of the complaint to
152	152	determine the nature and cause of the defect and the nature and
153	153	extent of repairs necessary to remedy the defect. To the extent
154	154	requested, the contractor shall be given the opportunity to conduct
155	155	multiple inspections during the 35-day period after the date the
156	156	contractor receives the notice and during any extension of that
157	157	inspection period provided by law or agreed to by the parties. The
158	158	contractor may take reasonable steps to document the defect. [In a
159	159	claim subject to Subtitle D, Title 16, a contractor is entitled to
160	160	make an offer of repair in accordance with Subsection (b). A
161	161	claimant is not required to give written notice to a contractor
162	162	under this subsection in a claim subject to Subtitle D, Title 16.]
163	163	(b) Not later than the [15th day after the date of a final,
164	164	unappealable determination of a dispute under Subtitle D, Title 16,
165	165	if applicable, or not later than the] 45th day after the date the
166	166	contractor receives the notice under this section, [if Subtitle D,
167	167	Title 16, does not apply,] the contractor may make a written offer
168	168	of settlement to the claimant. The offer must be sent to the
169	169	claimant at the claimant's last known address or to the claimant's
170	170	attorney by certified mail, return receipt requested. The offer
171	171	may include either an agreement by the contractor to repair or to
172	172	have repaired by an independent contractor partially or totally at
173	173	the contractor's expense or at a reduced rate to the claimant any
174	174	construction defect described in the notice and shall describe in
175	175	reasonable detail the kind of repairs which will be made and the
176	176	estimated time for completion of the repairs. The repairs shall be
177	177	made within a reasonable time [not later than the 45th day after the
178	178	date the contractor receives written notice of acceptance of the
179	179	settlement offer], unless completion is delayed by the claimant or
180	180	by other events beyond the control of the contractor. If the offer
181	181	of repair is accepted, the estimated time stated in the offer shall
182	182	be considered reasonable. If a contractor makes a written offer of
183	183	settlement that the claimant considers to be unreasonable:
184	184	(1) on or before the 25th day after the date the
185	185	claimant receives the offer, the claimant shall advise the
186	186	contractor in writing and in reasonable detail of the reasons why
187	187	the claimant considers the offer unreasonable; and
188	188	(2) not later than the 10th day after the date the
189	189	contractor receives notice under Subdivision (1), the contractor
190	190	may make a supplemental written offer of settlement to the claimant
191	191	by sending the offer to the claimant or the claimant's attorney.
192	192	(c) If [compliance with Subtitle D, Title 16, or] the giving
193	193	of the notice under Subsections (a) and (b) within the period
194	194	prescribed by those subsections is impracticable because of the
195	195	necessity of initiating an action at an earlier date to prevent
196	196	expiration of the statute of limitations or if the complaint is
197	197	asserted as a counterclaim, [compliance with Subtitle D, Title 16,
198	198	or] the notice is not required. However, the action or counterclaim
199	199	shall specify in reasonable detail each construction defect that is
200	200	the subject of the complaint. The [If Subtitle D, Title 16, applies
201	201	to the complaint, simultaneously with the filing of an action by a
202	202	claimant, the claimant must submit a request under Section 428.001.
203	203	If Subtitle D, Title 16, does not apply, the] inspection provided
204	204	for by Subsection (a) may be made not later than the 75th day after
205	205	the date of service of the suit, request for arbitration, or
206	206	counterclaim on the contractor, and the offer provided for by
207	207	Subsection (b) may be made not later than the [15th day after the
208	208	date the state-sponsored inspection and dispute resolution process
209	209	is completed, if Subtitle D, Title 16, applies, or not later than
210	210	the] 60th day after the date of service [, if Subtitle D, Title 16,
211	211	does not apply]. If, while an action subject to this chapter is
212	212	pending, the statute of limitations for the cause of action would
213	213	have expired and it is determined that the provisions of Subsection
214	214	(a) were not properly followed, the action shall be abated to allow
215	215	compliance with Subsections (a) and (b).
216	216	(d) The court or arbitration tribunal shall dismiss [abate]
217	217	an action governed by this chapter if Subsection (c) does not apply
218	218	and the court or tribunal, after a hearing, finds that the
219	219	contractor is entitled to dismissal [abatement] because the
220	220	claimant [failed to comply with the requirements of Subtitle D,
221	221	Title 16, if applicable,] failed to provide the notice or failed to
222	222	give the contractor a reasonable opportunity to inspect the
223	223	property as required by Subsection (a), or failed to follow the
224	224	procedures specified by Subsection (b). An action is
225	225	automatically dismissed [abated] without the order of the court or
226	226	tribunal beginning on the 11th day after the date a motion to
227	227	dismiss [abate] is filed if the motion:
228	228	(1) is verified and alleges that the person against
229	229	whom the action is pending did not receive the written notice
230	230	required by Subsection (a), the person against whom the action is
231	231	pending was not given a reasonable opportunity to inspect the
232	232	property as required by Subsection (a), or the claimant failed to
233	233	follow the procedures specified by Subsection (b) [or Subtitle D,
234	234	Title 16]; and
235	235	(2) is not controverted by an affidavit filed by the
236	236	claimant before the 11th day after the date on which the motion to
237	237	dismiss [abate] is filed.
238	238	(e) If a claimant rejects a reasonable offer made under
239	239	Subsection (b) or does not permit the contractor or independent
240	240	contractor a reasonable opportunity to inspect or repair the defect
241	241	pursuant to an accepted offer of settlement, the claimant[:
242	242	[(1)] may not recover an amount in excess of:
243	243	(1) [(A)] the fair market value of the contractor's
244	244	last offer of settlement under Subsection (b); or
245	245	(2) [(B)] the amount of a reasonable monetary
246	246	settlement or purchase offer made under Subsection (n)[; and
247	247	[(2) may recover only the amount of reasonable and
248	248	necessary costs and attorney's fees as prescribed by Rule 1.04,
249	249	Texas Disciplinary Rules of Professional Conduct, incurred before
250	250	the offer was rejected or considered rejected].
251	251	(g) Except as provided by Subsection (e), in an action
252	252	subject to this chapter the claimant may recover only the following
253	253	economic damages proximately caused by a construction defect:
254	254	(1) the reasonable cost of repairs necessary to cure
255	255	any construction defect;
256	256	(2) the reasonable and necessary cost for the
257	257	replacement or repair of any damaged goods in the residence;
258	258	(3) reasonable and necessary engineering and
259	259	consulting fees;
260	260	(4) the reasonable expenses of temporary housing
261	261	reasonably necessary during the repair period; and
262	262	(5) the reduction in current market value, if any,
263	263	after the construction defect is repaired if the construction
264	264	defect is a structural failure [; and
265	265	[(6) reasonable and necessary attorney's fees].
266	266	(m) Notwithstanding Subsections (a), (b), and (c), a
267	267	contractor who receives written notice of a construction defect
268	268	resulting from work performed by the contractor or an agent,
269	269	employee, or subcontractor of the contractor and creating an
270	270	imminent threat to the health or safety of the inhabitants of the
271	271	residence shall take reasonable steps to cure the defect as soon as
272	272	practicable. If the contractor fails to cure the defect in a
273	273	reasonable time, the owner of the residence may have the defect
274	274	cured and may recover from the contractor the reasonable cost of the
275	275	repairs [plus attorney's fees and costs in addition to any other
276	276	damages recoverable under any law not inconsistent with the
277	277	provisions of this chapter].
278	278	SECTION 5. Sections 27.0042(a) and (c), Property Code, are
279	279	amended to read as follows:
280	280	(a) A written agreement between a contractor and a homeowner
281	281	may provide that, [except as provided by Subsection (b),] if the
282	282	reasonable cost of repairs necessary to repair a construction
283	283	defect that is the responsibility of the contractor exceeds an
284	284	agreed percentage of the current fair market value of the
285	285	residence, as determined without reference to the construction
286	286	defects, then, in an action subject to this chapter, the contractor
287	287	may elect as an alternative to the damages specified in Section
288	288	27.004(g) that the contractor who sold the residence to the
289	289	homeowner purchase it.
290	290	(c) If a contractor elects to purchase the residence under
291	291	Subsection (a):
292	292	(1) the contractor shall pay the original purchase
293	293	price of the residence and closing costs incurred by the homeowner
294	294	and the cost of transferring title to the contractor under the
295	295	election;
296	296	(2) the homeowner may recover:
297	297	(A) [reasonable and necessary attorney's and
298	298	expert fees as identified in Section 27.004(g);
299	299	[(B)] reimbursement for permanent improvements
300	300	the owner made to the residence after the date the owner purchased
301	301	the residence from the builder; and
302	302	(B) [(C)] reasonable costs to move from the
303	303	residence; and
304	304	(3) conditioned on the payment of the purchase price,
305	305	the homeowner shall tender a special warranty deed to the
306	306	contractor, free of all liens and claims to liens as of the date the
307	307	title is transferred to the contractor, and without damage caused
308	308	by the homeowner.
309	309	SECTION 6. Section 27.005, Property Code, is amended to
310	310	read as follows:
311	311	Sec. 27.005. [LIMITATIONS ON] EFFECT OF CHAPTER; REPOSE.
312	312	(a) This chapter does not create a cause of action or derivative
313	313	liability or extend a limitations period.
314	314	(b) Notwithstanding any other law, including Sections
315	315	16.008 and 16.009, Civil Practice and Remedies Code, an action
316	316	subject to this chapter must be initiated by filing and service of a
317	317	lawsuit or a demand for arbitration not later than five years after
318	318	the earlier of:
319	319	(1) the date construction of the residence was
320	320	completed;
321	321	(2) the date a final inspection or certificate of
322	322	occupancy was issued;
323	323	(3) the date of transfer of title to the first owner of
324	324	the residence;
325	325	(4) the date of first occupancy of the residence;
326	326	(5) the date of final payment to the contractor; or
327	327	(6) the date an affidavit of completion is filed in the
328	328	county in which the residence is located.
329	329	SECTION 7. Section 27.006, Property Code, is amended to
330	330	read as follows:
331	331	Sec. 27.006. CAUSATION. In an action to recover damages
332	332	resulting from a construction defect, the claimant must prove that
333	333	actual physical [the] damages to the residence were proximately
334	334	caused by the construction defect. In no event may a claimant
335	335	recover anything other than economic damages in connection with a
336	336	claim subject to this chapter.
337	337	SECTION 8. The following provisions of the Property Code
338	338	are repealed:
339	339	(1) Section 27.0031;
340	340	(2) Sections 27.004(f) and (l);
341	341	(3) Section 27.0042(b); and
342	342	(4) Section 27.007(c).
343	343	SECTION 9. The changes in law made by this Act apply only to
344	344	a cause of action that accrues on or after the effective date of
345	345	this Act. A cause of action that accrued before the effective date
346	346	of this Act is governed by the law as it existed immediately before
347	347	the effective date of this Act, and that law is continued in effect
348	348	for that purpose.
349	349	SECTION 10. This Act takes effect September 1, 2021.