Texas 2023 - 88th Regular

Texas House Bill HB3422 Compare Versions

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1	1	88R3339 ATP-F
2	2	By: Bryant H.B. No. 3422
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the correction or removal of certain obsolete
8	8	provisions of the Property Code.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Sections 27.001(4), (5), and (8), Property Code,
11	11	are amended to read as follows:
12	12	(4) "Construction defect" [has the meaning assigned by
13	13	Section 401.004 for an action to which Subtitle D, Title 16, applies
14	14	and for any other action] means a matter concerning the design,
15	15	construction, or repair of a new residence, of an alteration of or
16	16	repair or addition to an existing residence, or of an appurtenance
17	17	to a residence, on which a person has a complaint against a
18	18	contractor. The term may include any physical damage to the
19	19	residence, any appurtenance, or the real property on which the
20	20	residence and appurtenance are affixed proximately caused by a
21	21	construction defect.
22	22	(5) "Contractor":
23	23	(A) means:
24	24	(i) a builder [, as defined by Section
25	25	401.003,] contracting with an owner for the construction or repair
26	26	of a new residence, for the repair or alteration of or an addition
27	27	to an existing residence, or for the construction, sale,
28	28	alteration, addition, or repair of an appurtenance to a new or
29	29	existing residence;
30	30	(ii) any person contracting with a
31	31	purchaser for the sale of a new residence constructed by or on
32	32	behalf of that person; or
33	33	(iii) a person contracting with an owner or
34	34	the developer of a condominium for the construction of a new
35	35	residence, for an alteration of or an addition to an existing
36	36	residence, for repair of a new or existing residence, or for the
37	37	construction, sale, alteration, addition, or repair of an
38	38	appurtenance to a new or existing residence; and
39	39	(B) includes:
40	40	(i) an owner, officer, director,
41	41	shareholder, partner, or employee of the contractor; and
42	42	(ii) a risk retention group registered
43	43	under Chapter 2201 [Article 21.54], Insurance Code, that insures
44	44	all or any part of a contractor's liability for the cost to repair a
45	45	residential construction defect.
46	46	(8) "Structural failure" [has the meaning assigned by
47	47	Section 401.002 for an action to which Subtitle D, Title 16, applies
48	48	and for any other action] means actual physical damage to the
49	49	load-bearing portion of a residence caused by a failure of the
50	50	load-bearing portion.
51	51	SECTION 2. Section 27.002(b), Property Code, is amended to
52	52	read as follows:
53	53	(b) To [Except as provided by this subsection, to] the
54	54	extent of conflict between this chapter and any other law,
55	55	including the Deceptive Trade Practices-Consumer Protection Act
56	56	(Subchapter E, Chapter 17, Business & Commerce Code) or a common law
57	57	cause of action, this chapter prevails. [To the extent of conflict
58	58	between this chapter and Title 16, Title 16 prevails.]
59	59	SECTION 3. Section 27.003(a), Property Code, is amended to
60	60	read as follows:
61	61	(a) In an action to recover damages or other relief arising
62	62	from a construction defect:
63	63	(1) a contractor is not liable for any percentage of
64	64	damages caused by:
65	65	(A) negligence of a person other than the
66	66	contractor or an agent, employee, or subcontractor of the
67	67	contractor;
68	68	(B) failure of a person other than the contractor
69	69	or an agent, employee, or subcontractor of the contractor to:
70	70	(i) take reasonable action to mitigate the
71	71	damages; or
72	72	(ii) take reasonable action to maintain the
73	73	residence;
74	74	(C) normal wear, tear, or deterioration;
75	75	(D) normal shrinkage due to drying or settlement
76	76	of construction components within the tolerance of building
77	77	standards; or
78	78	(E) the contractor's reliance on written
79	79	information relating to the residence, appurtenance, or real
80	80	property on which the residence and appurtenance are affixed that
81	81	was obtained from official government records, if the written
82	82	information was false or inaccurate and the contractor did not know
83	83	and could not reasonably have known of the falsity or inaccuracy of
84	84	the information; and
85	85	(2) if an assignee of the claimant or a person
86	86	subrogated to the rights of a claimant fails to provide the
87	87	contractor with the written notice and opportunity to inspect and
88	88	offer to repair required by Section 27.004 [or fails to request
89	89	state-sponsored inspection and dispute resolution under Chapter
90	90	428, if applicable,] before performing repairs, the contractor is
91	91	not liable for the cost of any repairs or any percentage of damages
92	92	caused by repairs made to a construction defect at the request of an
93	93	assignee of the claimant or a person subrogated to the rights of a
94	94	claimant by a person other than the contractor or an agent,
95	95	employee, or subcontractor of the contractor.
96	96	SECTION 4. Sections 27.004(a), (b), (c), and (d), Property
97	97	Code, are amended to read as follows:
98	98	(a) Before [In a claim not subject to Subtitle D, Title 16,
99	99	before] the 60th day preceding the date a claimant seeking from a
100	100	contractor damages or other relief arising from a construction
101	101	defect initiates an action, the claimant shall give written notice
102	102	by certified mail, return receipt requested, to the contractor, at
103	103	the contractor's last known address, specifying in reasonable
104	104	detail the construction defects that are the subject of the
105	105	complaint. On the request of the contractor, the claimant shall
106	106	provide to the contractor any evidence that depicts the nature and
107	107	cause of the defect and the nature and extent of repairs necessary
108	108	to remedy the defect, including expert reports, photographs, and
109	109	videotapes, if that evidence would be discoverable under Rule 192,
110	110	Texas Rules of Civil Procedure. During the 35-day period after the
111	111	date the contractor receives the notice, and on the contractor's
112	112	written request, the contractor shall be given a reasonable
113	113	opportunity to inspect and have inspected the property that is the
114	114	subject of the complaint to determine the nature and cause of the
115	115	defect and the nature and extent of repairs necessary to remedy the
116	116	defect. The contractor may take reasonable steps to document the
117	117	defect. [In a claim subject to Subtitle D, Title 16, a contractor is
118	118	entitled to make an offer of repair in accordance with Subsection
119	119	(b). A claimant is not required to give written notice to a
120	120	contractor under this subsection in a claim subject to Subtitle D,
121	121	Title 16.]
122	122	(b) Not later than the [15th day after the date of a final,
123	123	unappealable determination of a dispute under Subtitle D, Title 16,
124	124	if applicable, or not later than the] 45th day after the date the
125	125	contractor receives the notice under this section, [if Subtitle D,
126	126	Title 16, does not apply,] the contractor may make a written offer
127	127	of settlement to the claimant. The offer must be sent to the
128	128	claimant at the claimant's last known address or to the claimant's
129	129	attorney by certified mail, return receipt requested. The offer
130	130	may include either an agreement by the contractor to repair or to
131	131	have repaired by an independent contractor partially or totally at
132	132	the contractor's expense or at a reduced rate to the claimant any
133	133	construction defect described in the notice and shall describe in
134	134	reasonable detail the kind of repairs which will be made. The
135	135	repairs shall be made not later than the 45th day after the date the
136	136	contractor receives written notice of acceptance of the settlement
137	137	offer, unless completion is delayed by the claimant or by other
138	138	events beyond the control of the contractor. If a contractor makes
139	139	a written offer of settlement that the claimant considers to be
140	140	unreasonable:
141	141	(1) on or before the 25th day after the date the
142	142	claimant receives the offer, the claimant shall advise the
143	143	contractor in writing and in reasonable detail of the reasons why
144	144	the claimant considers the offer unreasonable; and
145	145	(2) not later than the 10th day after the date the
146	146	contractor receives notice under Subdivision (1), the contractor
147	147	may make a supplemental written offer of settlement to the claimant
148	148	by sending the offer to the claimant or the claimant's attorney.
149	149	(c) If [compliance with Subtitle D, Title 16, or] the giving
150	150	of the notice under Subsections (a) and (b) within the period
151	151	prescribed by those subsections is impracticable because of the
152	152	necessity of initiating an action at an earlier date to prevent
153	153	expiration of the statute of limitations or if the complaint is
154	154	asserted as a counterclaim, [compliance with Subtitle D, Title 16,
155	155	or] the notice is not required. However, the action or counterclaim
156	156	shall specify in reasonable detail each construction defect that is
157	157	the subject of the complaint. The [If Subtitle D, Title 16, applies
158	158	to the complaint, simultaneously with the filing of an action by a
159	159	claimant, the claimant must submit a request under Section 428.001.
160	160	If Subtitle D, Title 16, does not apply, the] inspection provided
161	161	for by Subsection (a) may be made not later than the 75th day after
162	162	the date of service of the suit, request for arbitration, or
163	163	counterclaim on the contractor, and the offer provided for by
164	164	Subsection (b) may be made not later than the [15th day after the
165	165	date the state-sponsored inspection and dispute resolution process
166	166	is completed, if Subtitle D, Title 16, applies, or not later than
167	167	the] 60th day after the date of service [, if Subtitle D, Title 16,
168	168	does not apply]. If, while an action subject to this chapter is
169	169	pending, the statute of limitations for the cause of action would
170	170	have expired and it is determined that the provisions of Subsection
171	171	(a) were not properly followed, the action shall be abated to allow
172	172	compliance with Subsections (a) and (b).
173	173	(d) The court or arbitration tribunal shall abate an action
174	174	governed by this chapter if Subsection (c) does not apply and the
175	175	court or tribunal, after a hearing, finds that the contractor is
176	176	entitled to abatement because the claimant failed to [comply with
177	177	the requirements of Subtitle D, Title 16, if applicable, failed to]
178	178	provide the notice or failed to give the contractor a reasonable
179	179	opportunity to inspect the property as required by Subsection (a),
180	180	or failed to follow the procedures specified by Subsection (b). An
181	181	action is automatically abated without the order of the court or
182	182	tribunal beginning on the 11th day after the date a motion to abate
183	183	is filed if the motion:
184	184	(1) is verified and alleges that the person against
185	185	whom the action is pending did not receive the written notice
186	186	required by Subsection (a), the person against whom the action is
187	187	pending was not given a reasonable opportunity to inspect the
188	188	property as required by Subsection (a), or the claimant failed to
189	189	follow the procedures specified by Subsection (b) [or Subtitle D,
190	190	Title 16]; and
191	191	(2) is not controverted by an affidavit filed by the
192	192	claimant before the 11th day after the date on which the motion to
193	193	abate is filed.
194	194	SECTION 5. Section 27.0042(b), Property Code, is amended to
195	195	read as follows:
196	196	(b) A contractor may not elect to purchase the residence
197	197	under Subsection (a) if[:
198	198	[(1)] the residence is more than five years old at the
199	199	time an action is initiated[; or
200	200	[(2) the contractor makes such an election later than
201	201	the 15th day after the date of a final, unappealable determination
202	202	of a dispute under Subtitle D, Title 16, if applicable].
203	203	SECTION 6. Section 53.172, Property Code, is amended to
204	204	read as follows:
205	205	Sec. 53.172. BOND REQUIREMENTS. The bond must:
206	206	(1) describe the property on which the liens are
207	207	claimed;
208	208	(2) refer to each lien claimed in a manner sufficient
209	209	to identify it;
210	210	(3) be in an amount that is double the amount of the
211	211	liens referred to in the bond unless the total amount claimed in the
212	212	liens exceeds $40,000, in which case the bond must be in an amount
213	213	that is the greater of 1-1/2 times the amount of the liens or the sum
214	214	of $40,000 and the amount of the liens;
215	215	(4) be payable to the parties claiming the liens;
216	216	(5) be executed by:
217	217	(A) the party filing the bond as principal; and
218	218	(B) a corporate surety authorized and admitted to
219	219	do business under the law in this state and licensed by this state
220	220	to execute the bond as surety, subject to Subchapter A, Chapter
221	221	3503, Insurance Code [Section 1, Chapter 87, Acts of the 56th
222	222	Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
223	223	Insurance Code)]; and
224	224	(6) be conditioned substantially that the principal
225	225	and sureties will pay to the named obligees or to their assignees
226	226	the amount that the named obligees would have been entitled to
227	227	recover if their claims had been proved to be valid and enforceable
228	228	liens on the property.
229	229	SECTION 7. Section 74.3013(h), Property Code, is amended
230	230	to read as follows:
231	231	(h) In this section, a nonprofit cooperative corporation
232	232	means a cooperative corporation organized under Chapters 51 and 52,
233	233	Agriculture Code, the Texas Nonprofit [Non-Profit] Corporation
234	234	Law, as described by Section 1.008(d), Business Organizations Code
235	235	[Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)],
236	236	the Texas Cooperative Association Law, as described by Section
237	237	1.008(i), Business Organizations Code [Act (Article 1396-50.01,
238	238	Vernon's Texas Civil Statutes)], and Chapter 161, Utilities Code.
239	239	SECTION 8. Sections 112.058(c) and (d), Property Code, are
240	240	amended to read as follows:
241	241	(c) The community trust may transfer assets of the trust to
242	242	a nonprofit corporation only if the nonprofit corporation is
243	243	organized under the Texas Nonprofit Corporation Law, as described
244	244	by Section 1.008(d), Business Organizations Code, [the Texas
245	245	Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
246	246	Texas Civil Statutes)] and organized for the same purpose as the
247	247	community trust. The charter of the nonprofit corporation must
248	248	describe the purpose of the corporation and the proposed use of the
249	249	assets transferred using language substantially similar to the
250	250	language used in the instrument creating the community trust.
251	251	(d) To transfer the assets of and terminate a community
252	252	trust under this section, the governing body of the community trust
253	253	must:
254	254	(1) file a petition in a probate court, county court,
255	255	or district court requesting:
256	256	(A) the transfer of the assets of the trust to a
257	257	nonprofit corporation established for the purpose of receiving and
258	258	administering the assets of the trust; and
259	259	(B) the termination of the trust;
260	260	(2) send by first class mail to each trust settlor and
261	261	each trustee of each component trust of the community trust who can
262	262	be located by the exercise of reasonable diligence a copy of the
263	263	governing body's petition and a notice specifying the time and
264	264	place of the court-scheduled hearing on the petition; and
265	265	(3) publish once in a newspaper of general circulation
266	266	in the county in which the proceeding is pending a notice that reads
267	267	substantially similar to the following:
268	268	TO ALL INTERESTED PERSONS:
269	269	(NAME OF COMMUNITY TRUST) HAS FILED A PETITION IN (NAME OF
270	270	COURT) OF (NAME OF COUNTY), TEXAS, REQUESTING PERMISSION TO CONVERT
271	271	TO A NONPROFIT CORPORATION. IF PERMITTED TO CONVERT:
272	272	(1) THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED;
273	273	AND
274	274	(2) THE ASSETS OF THE TRUST WILL BE:
275	275	(A) TRANSFERRED TO A NONPROFIT CORPORATION WITH
276	276	THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF
277	277	COMMUNITY TRUST); AND
278	278	(B) HELD AND ADMINISTERED BY THE CORPORATION AS
279	279	PROVIDED BY THE TEXAS NONPROFIT [NON-PROFIT] CORPORATION LAW [ACT
280	280	(ARTICLE 1396-1.01 ET SEQ., VERNON'S TEXAS CIVIL STATUTES)].
281	281	THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE
282	282	THE MONEY SAVED TO FURTHER THE PURPOSES FOR WHICH THE (NAME OF
283	283	COMMUNITY TRUST) WAS CREATED.
284	284	A HEARING ON THE PETITION IS SCHEDULED ON (DATE AND TIME) AT
285	285	(LOCATION OF COURT).
286	286	FOR ADDITIONAL INFORMATION, YOU MAY CONTACT THE GOVERNING
287	287	BODY OF THE (NAME OF COMMUNITY TRUST) AT (ADDRESS AND TELEPHONE
288	288	NUMBER) OR THE COURT.
289	289	SECTION 9. Section 202.002(b), Property Code, is amended to
290	290	read as follows:
291	291	(b) This chapter does not affect the requirements of Chapter
292	292	123, Human Resources Code [the Community Homes for Disabled Persons
293	293	Location Act (Article 1011n, Vernon's Texas Civil Statutes)].
294	294	SECTION 10. Section 202.003(b), Property Code, is amended
295	295	to read as follows:
296	296	(b) In this subsection, "family home" is a residential home
297	297	that meets the definition of and requirements applicable to a
298	298	family home under Chapter 123, Human Resources Code [the Community
299	299	Homes for Disabled Persons Location Act (Article 1011n, Vernon's
300	300	Texas Civil Statutes)]. A dedicatory instrument or restrictive
301	301	covenant may not be construed to prevent the use of property as a
302	302	family home. However, any restrictive covenant that applies to
303	303	property used as a family home shall be liberally construed to give
304	304	effect to its purposes and intent except to the extent that the
305	305	construction would restrict the use as a family home.
306	306	SECTION 11. Section 204.004(b), Property Code, is amended
307	307	to read as follows:
308	308	(b) The association must be nonprofit and may be
309	309	incorporated as a Texas nonprofit corporation. An unincorporated
310	310	association may incorporate under the Texas Nonprofit [Non-Profit]
311	311	Corporation Law, as described by Section 1.008(d), Business
312	312	Organizations Code [Act (Article 1396-1.01 et seq., Vernon's Texas
313	313	Civil Statutes)].
314	314	SECTION 12. Section 204.010(a), Property Code, is amended
315	315	to read as follows:
316	316	(a) Unless otherwise provided by the restrictions or the
317	317	association's articles of incorporation or bylaws, the property
318	318	owners' association, acting through its board of directors or
319	319	trustees, may:
320	320	(1) adopt and amend bylaws;
321	321	(2) adopt and amend budgets for revenues,
322	322	expenditures, and reserves and collect regular assessments or
323	323	special assessments for common expenses from property owners;
324	324	(3) hire and terminate managing agents and other
325	325	employees, agents, and independent contractors;
326	326	(4) institute, defend, intervene in, settle, or
327	327	compromise litigation or administrative proceedings on matters
328	328	affecting the subdivision;
329	329	(5) make contracts and incur liabilities relating to
330	330	the operation of the subdivision and the property owners'
331	331	association;
332	332	(6) regulate the use, maintenance, repair,
333	333	replacement, modification, and appearance of the subdivision;
334	334	(7) make additional improvements to be included as a
335	335	part of the common area;
336	336	(8) grant easements, leases, licenses, and
337	337	concessions through or over the common area;
338	338	(9) impose and receive payments, fees, or charges for
339	339	the use, rental, or operation of the common area and for services
340	340	provided to property owners;
341	341	(10) impose interest, late charges, and, if
342	342	applicable, returned check charges for late payments of regular
343	343	assessments or special assessments;
344	344	(11) if notice and an opportunity to be heard are
345	345	given, collect reimbursement of actual attorney's fees and other
346	346	reasonable costs incurred by the property owners' association
347	347	relating to violations of the subdivision's restrictions or the
348	348	property owners' association's bylaws and rules;
349	349	(12) charge costs to an owner's assessment account and
350	350	collect the costs in any manner provided in the restrictions for the
351	351	collection of assessments;
352	352	(13) adopt and amend rules regulating the collection
353	353	of delinquent assessments and the application of payments;
354	354	(14) impose reasonable charges for preparing,
355	355	recording, or copying amendments to the restrictions, resale
356	356	certificates, or statements of unpaid assessments;
357	357	(15) purchase insurance and fidelity bonds, including
358	358	directors' and officers' liability insurance, that the board
359	359	considers appropriate or necessary;
360	360	(16) if the restrictions allow for an annual increase
361	361	in the maximum regular assessment without a vote of the membership,
362	362	assess the increase annually or accumulate and assess the increase
363	363	after a number of years;
364	364	(17) subject to the requirements of the Texas
365	365	Nonprofit [Non-Profit] Corporation Law, as described by Section
366	366	1.008(d), Business Organizations Code, [Act (Article 1396-1.01 et
367	367	seq., Vernon's Texas Civil Statutes)] and by majority vote of its
368	368	board of directors, indemnify a director or officer of the property
369	369	owners' association who was, is, or may be made a named defendant or
370	370	respondent in a proceeding because the person is or was a director;
371	371	(18) if the restrictions vest the architectural
372	372	control authority in the property owners' association or if the
373	373	authority is vested in the property owners' association under
374	374	Section 204.011:
375	375	(A) implement written architectural control
376	376	guidelines for its own use or record the guidelines in the real
377	377	property records of the applicable county; and
378	378	(B) modify the guidelines as the needs of the
379	379	subdivision change;
380	380	(19) exercise other powers conferred by the
381	381	restrictions, its articles of incorporation, or its bylaws;
382	382	(20) exercise other powers that may be exercised in
383	383	this state by a corporation of the same type as the property owners'
384	384	association; and
385	385	(21) exercise other powers necessary and proper for
386	386	the governance and operation of the property owners' association.
387	387	SECTION 13. The following provisions of the Property Code
388	388	are repealed:
389	389	(1) Section 5.018;
390	390	(2) Sections 27.001(3) and (9);
391	391	(3) Section 27.004(l); and
392	392	(4) Section 27.007(c).
393	393	SECTION 14. This Act takes effect immediately if it
394	394	receives a vote of two-thirds of all the members elected to each
395	395	house, as provided by Section 39, Article III, Texas Constitution.
396	396	If this Act does not receive the vote necessary for immediate
397	397	effect, this Act takes effect September 1, 2023.