Texas 2023 - 88th Regular

Texas House Bill HB2022 Compare Versions

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1	1	H.B. No. 2022
2	2
3	3
4	4	AN ACT
5	5	relating to residential construction liability.
6	6	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
7	7	SECTION 1. Section 27.001, Property Code, is amended to
8	8	read as follows:
9	9	Sec. 27.001. DEFINITIONS. In this chapter:
10	10	(1) "Action" means a court or judicial proceeding or
11	11	an arbitration.
12	12	(2) "Appurtenance" means any garage, outbuilding,
13	13	retaining wall, or other structure or recreational facility that is
14	14	constructed by a contractor in connection with the construction or
15	15	alteration of a residence, regardless of whether it is attached to
16	16	or [appurtenant to a residence but is not] a part of the dwelling
17	17	unit.
18	18	(3) ["Commission" means the Texas Residential
19	19	Construction Commission.
20	20	[(4)] "Construction defect" [has the meaning assigned
21	21	by Section 401.004 for an action to which Subtitle D, Title 16,
22	22	applies and for any other action] means a deficiency in [matter
23	23	concerning] the design, construction, or repair of a new residence,
24	24	of an alteration of or repair or addition to an existing residence,
25	25	or of an appurtenance to a residence, on which a person has a
26	26	complaint against a contractor. [The term may include any physical
27	27	damage to the residence, any appurtenance, or the real property on
28	28	which the residence and appurtenance are affixed proximately caused
29	29	by a construction defect.]
30	30	(4) [(5)] "Contractor":
31	31	(A) means:
32	32	(i) a builder [, as defined by Section
33	33	401.003,] contracting with an owner for the construction or repair
34	34	of a new residence, for the repair or alteration of or an addition
35	35	to an existing residence, or for the construction, sale,
36	36	alteration, addition, or repair of an appurtenance to a new or
37	37	existing residence;
38	38	(ii) any person contracting [with a
39	39	purchaser] for the sale or construction of a new residence
40	40	constructed by or on behalf of that person; or
41	41	(iii) a person contracting with an owner or
42	42	the developer of a condominium or other housing project for the
43	43	construction or sale of one or more [a] new residences [residence],
44	44	for an alteration of or an addition to an existing residence, for
45	45	repair of a new or existing residence, or for the construction,
46	46	sale, alteration, addition, or repair of an appurtenance to a new or
47	47	existing residence; and
48	48	(B) includes:
49	49	(i) an owner, officer, director,
50	50	shareholder, partner, or employee of the contractor; and
51	51	(ii) a risk retention group registered
52	52	under Chapter 2201 [Article 21.54], Insurance Code, that insures
53	53	all or any part of a contractor's liability for the cost to repair a
54	54	residential construction defect.
55	55	(5) [(6)] "Economic damages" means compensatory
56	56	damages for pecuniary loss proximately caused by a construction
57	57	defect. The term does not include exemplary damages or damages for
58	58	bodily or personal injury, physical pain and mental anguish, loss
59	59	of consortium, disfigurement, physical impairment, or loss of
60	60	companionship and society.
61	61	(6) [(7)] "Residence" means the real property and
62	62	improvements for a detached one-family or two-family dwelling, a
63	63	townhouse not more than three stories above grade plane in height
64	64	with a separate means of egress, an accessory structure not more
65	65	than three stories above grade plane in height, or a [single-family
66	66	house,] duplex, triplex, or quadruplex or a unit and the common
67	67	elements in a multiunit residential structure in which [title to]
68	68	the individual units are sold [is transferred] to the owners under a
69	69	condominium or cooperative system.
70	70	(7) [(8)] "Structural failure" [has the meaning
71	71	assigned by Section 401.002 for an action to which Subtitle D, Title
72	72	16, applies and for any other action] means actual physical damage
73	73	to the load-bearing portion of a residence caused by a failure of
74	74	the load-bearing portion.
75	75	(8) [(9) "Third-party inspector" has the meaning
76	76	assigned by Section 401.002.
77	77	[(10)] "Developer of a condominium" means a declarant,
78	78	as defined by Section 82.003, of a condominium consisting of one or
79	79	more residences.
80	80	(9) "Townhouse" means a single-family dwelling unit
81	81	constructed in a group of three or more attached units in which each
82	82	unit extends from foundation to roof and with a yard or public way
83	83	on not less than two sides.
84	84	SECTION 2. Section 27.002(b), Property Code, is amended to
85	85	read as follows:
86	86	(b) To [Except as provided by this subsection, to] the
87	87	extent of conflict between this chapter and any other law,
88	88	including the Deceptive Trade Practices-Consumer Protection Act
89	89	(Subchapter E, Chapter 17, Business & Commerce Code) or a common law
90	90	cause of action, this chapter prevails. [To the extent of conflict
91	91	between this chapter and Title 16, Title 16 prevails.]
92	92	SECTION 3. Section 27.003, Property Code, is amended by
93	93	amending Subsection (a) and adding Subsection (c) to read as
94	94	follows:
95	95	(a) In an action subject to this chapter [to recover damages
96	96	or other relief] arising from a construction defect:
97	97	(1) a contractor is liable only to the extent a
98	98	defective condition proximately causes:
99	99	(A) actual physical damage to the residence;
100	100	(B) an actual failure or lack of capability of a
101	101	building component to perform its intended function or purpose; or
102	102	(C) a verifiable danger to the safety of the
103	103	occupants of the residence;
104	104	(2) a contractor is not liable for [any percentage of]
105	105	damages caused by:
106	106	(A) negligence of a person other than the
107	107	contractor or an agent, employee, or subcontractor of the
108	108	contractor;
109	109	(B) failure of a person other than the contractor
110	110	or an agent, employee, or subcontractor of the contractor to:
111	111	(i) [take reasonable action to] mitigate
112	112	the damages; [or]
113	113	(ii) [take reasonable action to] maintain
114	114	the residence; or
115	115	(iii) timely notify a contractor of a
116	116	construction defect;
117	117	(C) normal wear, tear, or deterioration;
118	118	(D) normal cracking or shrinkage cracking due to
119	119	drying or settlement of construction components within the
120	120	tolerance of building standards; or
121	121	(E) the contractor's reliance on written
122	122	information relating to the residence, appurtenance, or real
123	123	property on which the residence and appurtenance are affixed that
124	124	was obtained from official government records, if the written
125	125	information was false, modified, or inaccurate and the contractor
126	126	did not know and could not reasonably have known of the falsity,
127	127	modification, or inaccuracy of the information; and
128	128	(3) [(2)] if an assignee of the claimant or a person
129	129	subrogated to the rights of a claimant fails to provide the
130	130	contractor with the written notice and opportunity to inspect and
131	131	offer to repair required by Section 27.004 [or fails to request
132	132	state-sponsored inspection and dispute resolution under Chapter
133	133	428, if applicable,] before performing repairs, the contractor is
134	134	not liable for the cost of any repairs or any percentage of damages
135	135	caused by repairs made to a construction defect at the request of an
136	136	assignee of the claimant or a person subrogated to the rights of a
137	137	claimant by a person other than the contractor or an agent,
138	138	employee, or subcontractor of the contractor.
139	139	(c) To maintain a claim of breach of a warranty of
140	140	habitability, a claimant must establish that a construction defect:
141	141	(1) was latent at the time the residence was completed
142	142	or title was conveyed to the original purchaser; and
143	143	(2) has rendered the residence unsuitable for its
144	144	intended use as a home.
145	145	SECTION 4. Section 27.004, Property Code, is amended by
146	146	amending Subsections (a), (b), (c), (d), and (g) and adding
147	147	Subsection (g-1) to read as follows:
148	148	(a) Before [In a claim not subject to Subtitle D, Title 16,
149	149	before] the 60th day preceding the date a claimant seeking from a
150	150	contractor damages or other relief arising from a construction
151	151	defect initiates an action, the claimant shall give written notice
152	152	by certified mail, return receipt requested, to the contractor, at
153	153	the contractor's last known address, specifying in reasonable
154	154	detail the construction defects that are the subject of the
155	155	complaint. The [On the request of the contractor, the] claimant
156	156	shall provide to the contractor any evidence that depicts the
157	157	nature and cause of the defect and the nature and extent of repairs
158	158	necessary to remedy the defect, including any expert reports,
159	159	photographs, and video or audio recordings [videotapes], if that
160	160	evidence would be discoverable under Rule 192, Texas Rules of Civil
161	161	Procedure. During the 35-day period after the date the contractor
162	162	receives the notice, and on the contractor's written request, the
163	163	contractor shall be given a reasonable opportunity to inspect and
164	164	have inspected the property that is the subject of the complaint to
165	165	determine the nature and cause of the defect and the nature and
166	166	extent of repairs necessary to remedy the defect. To the extent
167	167	requested, the contractor shall be given the opportunity to conduct
168	168	up to three inspections during the 35-day period after the date the
169	169	contractor receives the notice and during any extension of that
170	170	inspection period provided by law or as otherwise agreed to by the
171	171	parties. The contractor may take reasonable steps to document the
172	172	defect. [In a claim subject to Subtitle D, Title 16, a contractor
173	173	is entitled to make an offer of repair in accordance with Subsection
174	174	(b). A claimant is not required to give written notice to a
175	175	contractor under this subsection in a claim subject to Subtitle D,
176	176	Title 16.]
177	177	(b) Not later than the 60th [15th day after the date of a
178	178	final, unappealable determination of a dispute under Subtitle D,
179	179	Title 16, if applicable, or not later than the 45th] day after the
180	180	date the contractor receives the notice under this section, [if
181	181	Subtitle D, Title 16, does not apply,] the contractor may make a
182	182	written offer of settlement to the claimant. The offer must be sent
183	183	to the claimant at the claimant's last known address or to the
184	184	claimant's attorney by certified mail, return receipt requested.
185	185	The offer may include either an agreement by the contractor to
186	186	repair or to have repaired by an independent contractor partially
187	187	or totally at the contractor's expense or at a reduced rate to the
188	188	claimant any construction defect described in the notice and shall
189	189	describe in reasonable detail the kind of repairs which will be made
190	190	and the time for completion of the repairs if more than 60 days. The
191	191	repairs shall be made not later than the 60th [45th] day after the
192	192	date the contractor receives written notice of acceptance of the
193	193	settlement offer, unless completion is delayed by the claimant or
194	194	by other events beyond the control of the contractor. If a
195	195	contractor makes a written offer of settlement that the claimant
196	196	considers to be unreasonable:
197	197	(1) on or before the 25th day after the date the
198	198	claimant receives the offer, the claimant shall advise the
199	199	contractor in writing and in reasonable detail of the reasons why
200	200	the claimant considers the offer unreasonable; and
201	201	(2) not later than the 10th day after the date the
202	202	contractor receives notice under Subdivision (1), the contractor
203	203	may make a supplemental written offer of settlement to the claimant
204	204	by sending the offer to the claimant or the claimant's attorney.
205	205	(c) If [compliance with Subtitle D, Title 16, or] the giving
206	206	of the notice under Subsections (a) and (b) within the period
207	207	prescribed by those subsections is impracticable because of the
208	208	necessity of initiating an action at an earlier date to prevent
209	209	expiration of the statute of limitations or if the complaint is
210	210	asserted as a counterclaim, [compliance with Subtitle D, Title 16,
211	211	or] the notice is not required. However, the action or counterclaim
212	212	shall specify in reasonable detail each construction defect that is
213	213	the subject of the complaint. The [If Subtitle D, Title 16, applies
214	214	to the complaint, simultaneously with the filing of an action by a
215	215	claimant, the claimant must submit a request under Section 428.001.
216	216	If Subtitle D, Title 16, does not apply, the] inspection provided
217	217	for by Subsection (a) may be made not later than the 75th day after
218	218	the date of service of the suit, request for arbitration, or
219	219	counterclaim on the contractor, and the offer provided for by
220	220	Subsection (b) may be made not later than the [15th day after the
221	221	date the state-sponsored inspection and dispute resolution process
222	222	is completed, if Subtitle D, Title 16, applies, or not later than
223	223	the] 60th day after the date of service [, if Subtitle D, Title 16,
224	224	does not apply]. If, while an action subject to this chapter is
225	225	pending, the statute of limitations for the cause of action would
226	226	have expired and it is determined that the provisions of Subsection
227	227	(a) were not properly followed, the action shall be abated to allow
228	228	compliance with Subsections (a) and (b).
229	229	(d) The court or arbitration tribunal shall abate an action
230	230	governed by this chapter if Subsection (c) does not apply and the
231	231	court or tribunal, after a hearing, finds that the contractor is
232	232	entitled to abatement because the claimant [failed to comply with
233	233	the requirements of Subtitle D, Title 16, if applicable,] failed to
234	234	provide the notice or failed to give the contractor a reasonable
235	235	opportunity to inspect the property as required by Subsection
236	236	(a)[,] or failed to follow the procedures specified by Subsection
237	237	(b). An action is automatically abated without the order of the
238	238	court or tribunal beginning on the 11th day after the date a motion
239	239	to abate is filed if the motion:
240	240	(1) is verified and alleges that the person against
241	241	whom the action is pending did not receive the written notice
242	242	required by Subsection (a), the person against whom the action is
243	243	pending was not given a reasonable opportunity to inspect the
244	244	property as required by Subsection (a), or the claimant failed to
245	245	follow the procedures specified by Subsection (b) [or Subtitle D,
246	246	Title 16]; and
247	247	(2) is not controverted by an affidavit filed by the
248	248	claimant before the 11th day after the date on which the motion to
249	249	abate is filed.
250	250	(g) Except as provided by Subsection (e), in an action
251	251	subject to this chapter the claimant may recover only the following
252	252	economic damages proximately caused by a construction defect:
253	253	(1) the reasonable cost of repairs necessary to cure
254	254	any construction defect;
255	255	(2) the reasonable and necessary cost for the
256	256	replacement or repair of any damaged goods in the residence;
257	257	(3) reasonable and necessary engineering and
258	258	consulting fees;
259	259	(4) the reasonable expenses of temporary housing
260	260	reasonably necessary during the repair period;
261	261	(5) the reduction in current market value, if any,
262	262	after the construction defect is repaired if the construction
263	263	defect is a structural failure; [and]
264	264	(6) reasonable and necessary attorney's fees; and
265	265	(7) reasonable and necessary arbitration filing fees
266	266	and the claimant's share of arbitrator compensation.
267	267	(g-1) The court or arbitration tribunal may order that an
268	268	offer made by the contractor after the time prescribed is
269	269	considered timely for purposes of Subsection (b) or (c), as
270	270	applicable, if the contractor is prejudiced in the contractor's
271	271	opportunity to inspect as provided for by Subsection (a) or (c) or
272	272	make an offer provided for by Subsection (b) or (c):
273	273	(1) because the claimant:
274	274	(A) failed to provide the contractor evidence
275	275	available and in the claimant's possession, custody, or control at
276	276	the time of the original notice depicting the nature and cause of
277	277	the defect and the nature and extent of repairs necessary to remedy
278	278	the defect, including reports, photographs, videos, or any other
279	279	evidence; or
280	280	(B) amended a claim to add a new alleged defect;
281	281	or
282	282	(2) due to events beyond the contractor's control.
283	283	SECTION 5. Section 27.0042(a), Property Code, is amended to
284	284	read as follows:
285	285	(a) A written agreement between a contractor and a homeowner
286	286	may provide that, [except as provided by Subsection (b),] if the
287	287	reasonable cost of repairs necessary to repair a construction
288	288	defect that is the responsibility of the contractor exceeds an
289	289	agreed percentage of the current fair market value of the
290	290	residence, as determined without reference to the construction
291	291	defects, then, in an action subject to this chapter, the contractor
292	292	may elect as an alternative to the damages specified in Section
293	293	27.004(g) that the contractor who sold the residence to the
294	294	homeowner purchase it.
295	295	SECTION 6. Section 27.006, Property Code, is amended to
296	296	read as follows:
297	297	Sec. 27.006. CAUSATION. In an action to recover damages
298	298	resulting from a construction defect, the claimant must prove that:
299	299	(1) the construction defect existed at the time of
300	300	completion of the construction, alteration, or repair; and
301	301	(2) the damages were proximately caused by the
302	302	construction defect.
303	303	SECTION 7. Chapter 27, Property Code, is amended by adding
304	304	Sections 27.008 and 27.009 to read as follows:
305	305	Sec. 27.008. EFFECT OF ARBITRATION ON LIMITATIONS PERIOD.
306	306	The submission of an action subject to this chapter to arbitration
307	307	has the same effect on the running of a limitations period as a
308	308	filing in a court in this state.
309	309	Sec. 27.009. NO WAIVER. An attempted waiver of the
310	310	provisions of this chapter in a contract subject to this chapter is
311	311	void.
312	312	SECTION 8. The following provisions of the Property Code
313	313	are repealed:
314	314	(1) Section 27.004(l);
315	315	(2) Section 27.0042(b); and
316	316	(3) Section 27.007(c).
317	317	SECTION 9. The changes in law made by this Act apply only to
318	318	a cause of action that accrues on or after the effective date of
319	319	this Act. A cause of action that accrued before the effective date
320	320	of this Act is governed by the law as it existed immediately before
321	321	the effective date of this Act, and that law is continued in effect
322	322	for that purpose.
323	323	SECTION 10. This Act takes effect September 1, 2023.
324	324	______________________________ ______________________________
325	325	President of the Senate Speaker of the House
326	326	I certify that H.B. No. 2022 was passed by the House on May 3,
327	327	2023, by the following vote: Yeas 97, Nays 47, 1 present, not
328	328	voting.
329	329	______________________________
330	330	Chief Clerk of the House
331	331	I certify that H.B. No. 2022 was passed by the Senate on May
332	332	17, 2023, by the following vote: Yeas 20, Nays 11.
333	333	______________________________
334	334	Secretary of the Senate
335	335	APPROVED: _____________________
336	336	Date
337	337	_____________________
338	338	Governor