Texas 2023 - 88th Regular

Texas Senate Bill SB1768 Compare Versions

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Version 2 (New)

Old	New	Differences
1	1	S.B. No. 1768
2	2
3	3
4	4	AN ACT
5	5	relating to the correction or removal of certain obsolete
6	6	provisions of the Property Code.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Sections 27.001(4), (5), and (8), Property Code,
9	9	are amended to read as follows:
10	10	(4) "Construction defect" [has the meaning assigned by
11	11	Section 401.004 for an action to which Subtitle D, Title 16, applies
12	12	and for any other action] means a matter concerning the design,
13	13	construction, or repair of a new residence, of an alteration of or
14	14	repair or addition to an existing residence, or of an appurtenance
15	15	to a residence, on which a person has a complaint against a
16	16	contractor. The term may include any physical damage to the
17	17	residence, any appurtenance, or the real property on which the
18	18	residence and appurtenance are affixed proximately caused by a
19	19	construction defect.
20	20	(5) "Contractor":
21	21	(A) means:
22	22	(i) a builder[, as defined by Section
23	23	401.003,] contracting with an owner for the construction or repair
24	24	of a new residence, for the repair or alteration of or an addition
25	25	to an existing residence, or for the construction, sale,
26	26	alteration, addition, or repair of an appurtenance to a new or
27	27	existing residence;
28	28	(ii) any person contracting with a
29	29	purchaser for the sale of a new residence constructed by or on
30	30	behalf of that person; or
31	31	(iii) a person contracting with an owner or
32	32	the developer of a condominium for the construction of a new
33	33	residence, for an alteration of or an addition to an existing
34	34	residence, for repair of a new or existing residence, or for the
35	35	construction, sale, alteration, addition, or repair of an
36	36	appurtenance to a new or existing residence; and
37	37	(B) includes:
38	38	(i) an owner, officer, director,
39	39	shareholder, partner, or employee of the contractor; and
40	40	(ii) a risk retention group registered
41	41	under Chapter 2201 [Article 21.54], Insurance Code, that insures
42	42	all or any part of a contractor's liability for the cost to repair a
43	43	residential construction defect.
44	44	(8) "Structural failure" [has the meaning assigned by
45	45	Section 401.002 for an action to which Subtitle D, Title 16, applies
46	46	and for any other action] means actual physical damage to the
47	47	load-bearing portion of a residence caused by a failure of the
48	48	load-bearing portion.
49	49	SECTION 2. Section 27.002(b), Property Code, is amended to
50	50	read as follows:
51	51	(b) To [Except as provided by this subsection, to] the
52	52	extent of conflict between this chapter and any other law,
53	53	including the Deceptive Trade Practices-Consumer Protection Act
54	54	(Subchapter E, Chapter 17, Business & Commerce Code) or a common law
55	55	cause of action, this chapter prevails. [To the extent of conflict
56	56	between this chapter and Title 16, Title 16 prevails.]
57	57	SECTION 3. Section 27.003(a), Property Code, is amended to
58	58	read as follows:
59	59	(a) In an action to recover damages or other relief arising
60	60	from a construction defect:
61	61	(1) a contractor is not liable for any percentage of
62	62	damages caused by:
63	63	(A) negligence of a person other than the
64	64	contractor or an agent, employee, or subcontractor of the
65	65	contractor;
66	66	(B) failure of a person other than the contractor
67	67	or an agent, employee, or subcontractor of the contractor to:
68	68	(i) take reasonable action to mitigate the
69	69	damages; or
70	70	(ii) take reasonable action to maintain the
71	71	residence;
72	72	(C) normal wear, tear, or deterioration;
73	73	(D) normal shrinkage due to drying or settlement
74	74	of construction components within the tolerance of building
75	75	standards; or
76	76	(E) the contractor's reliance on written
77	77	information relating to the residence, appurtenance, or real
78	78	property on which the residence and appurtenance are affixed that
79	79	was obtained from official government records, if the written
80	80	information was false or inaccurate and the contractor did not know
81	81	and could not reasonably have known of the falsity or inaccuracy of
82	82	the information; and
83	83	(2) if an assignee of the claimant or a person
84	84	subrogated to the rights of a claimant fails to provide the
85	85	contractor with the written notice and opportunity to inspect and
86	86	offer to repair required by Section 27.004 [or fails to request
87	87	state-sponsored inspection and dispute resolution under Chapter
88	88	428, if applicable,] before performing repairs, the contractor is
89	89	not liable for the cost of any repairs or any percentage of damages
90	90	caused by repairs made to a construction defect at the request of an
91	91	assignee of the claimant or a person subrogated to the rights of a
92	92	claimant by a person other than the contractor or an agent,
93	93	employee, or subcontractor of the contractor.
94	94	SECTION 4. Sections 27.004(a), (b), (c), and (d), Property
95	95	Code, are amended to read as follows:
96	96	(a) Before [In a claim not subject to Subtitle D, Title 16,
97	97	before] the 60th day preceding the date a claimant seeking from a
98	98	contractor damages or other relief arising from a construction
99	99	defect initiates an action, the claimant shall give written notice
100	100	by certified mail, return receipt requested, to the contractor, at
101	101	the contractor's last known address, specifying in reasonable
102	102	detail the construction defects that are the subject of the
103	103	complaint. On the request of the contractor, the claimant shall
104	104	provide to the contractor any evidence that depicts the nature and
105	105	cause of the defect and the nature and extent of repairs necessary
106	106	to remedy the defect, including expert reports, photographs, and
107	107	videotapes, if that evidence would be discoverable under Rule 192,
108	108	Texas Rules of Civil Procedure. During the 35-day period after the
109	109	date the contractor receives the notice, and on the contractor's
110	110	written request, the contractor shall be given a reasonable
111	111	opportunity to inspect and have inspected the property that is the
112	112	subject of the complaint to determine the nature and cause of the
113	113	defect and the nature and extent of repairs necessary to remedy the
114	114	defect. The contractor may take reasonable steps to document the
115	115	defect. [In a claim subject to Subtitle D, Title 16, a contractor is
116	116	entitled to make an offer of repair in accordance with Subsection
117	117	(b). A claimant is not required to give written notice to a
118	118	contractor under this subsection in a claim subject to Subtitle D,
119	119	Title 16.]
120	120	(b) Not later than the [15th day after the date of a final,
121	121	unappealable determination of a dispute under Subtitle D, Title 16,
122	122	if applicable, or not later than the] 45th day after the date the
123	123	contractor receives the notice under this section, [if Subtitle D,
124	124	Title 16, does not apply,] the contractor may make a written offer
125	125	of settlement to the claimant. The offer must be sent to the
126	126	claimant at the claimant's last known address or to the claimant's
127	127	attorney by certified mail, return receipt requested. The offer
128	128	may include either an agreement by the contractor to repair or to
129	129	have repaired by an independent contractor partially or totally at
130	130	the contractor's expense or at a reduced rate to the claimant any
131	131	construction defect described in the notice and shall describe in
132	132	reasonable detail the kind of repairs which will be made. The
133	133	repairs shall be made not later than the 45th day after the date the
134	134	contractor receives written notice of acceptance of the settlement
135	135	offer, unless completion is delayed by the claimant or by other
136	136	events beyond the control of the contractor. If a contractor makes
137	137	a written offer of settlement that the claimant considers to be
138	138	unreasonable:
139	139	(1) on or before the 25th day after the date the
140	140	claimant receives the offer, the claimant shall advise the
141	141	contractor in writing and in reasonable detail of the reasons why
142	142	the claimant considers the offer unreasonable; and
143	143	(2) not later than the 10th day after the date the
144	144	contractor receives notice under Subdivision (1), the contractor
145	145	may make a supplemental written offer of settlement to the claimant
146	146	by sending the offer to the claimant or the claimant's attorney.
147	147	(c) If [compliance with Subtitle D, Title 16, or] the giving
148	148	of the notice under Subsections (a) and (b) within the period
149	149	prescribed by those subsections is impracticable because of the
150	150	necessity of initiating an action at an earlier date to prevent
151	151	expiration of the statute of limitations or if the complaint is
152	152	asserted as a counterclaim, [compliance with Subtitle D, Title 16,
153	153	or] the notice is not required. However, the action or counterclaim
154	154	shall specify in reasonable detail each construction defect that is
155	155	the subject of the complaint. The [If Subtitle D, Title 16, applies
156	156	to the complaint, simultaneously with the filing of an action by a
157	157	claimant, the claimant must submit a request under Section 428.001.
158	158	If Subtitle D, Title 16, does not apply, the] inspection provided
159	159	for by Subsection (a) may be made not later than the 75th day after
160	160	the date of service of the suit, request for arbitration, or
161	161	counterclaim on the contractor, and the offer provided for by
162	162	Subsection (b) may be made not later than the [15th day after the
163	163	date the state-sponsored inspection and dispute resolution process
164	164	is completed, if Subtitle D, Title 16, applies, or not later than
165	165	the] 60th day after the date of service[, if Subtitle D, Title 16,
166	166	does not apply]. If, while an action subject to this chapter is
167	167	pending, the statute of limitations for the cause of action would
168	168	have expired and it is determined that the provisions of Subsection
169	169	(a) were not properly followed, the action shall be abated to allow
170	170	compliance with Subsections (a) and (b).
171	171	(d) The court or arbitration tribunal shall abate an action
172	172	governed by this chapter if Subsection (c) does not apply and the
173	173	court or tribunal, after a hearing, finds that the contractor is
174	174	entitled to abatement because the claimant failed to [comply with
175	175	the requirements of Subtitle D, Title 16, if applicable, failed to]
176	176	provide the notice or failed to give the contractor a reasonable
177	177	opportunity to inspect the property as required by Subsection (a),
178	178	or failed to follow the procedures specified by Subsection (b). An
179	179	action is automatically abated without the order of the court or
180	180	tribunal beginning on the 11th day after the date a motion to abate
181	181	is filed if the motion:
182	182	(1) is verified and alleges that the person against
183	183	whom the action is pending did not receive the written notice
184	184	required by Subsection (a), the person against whom the action is
185	185	pending was not given a reasonable opportunity to inspect the
186	186	property as required by Subsection (a), or the claimant failed to
187	187	follow the procedures specified by Subsection (b) [or Subtitle D,
188	188	Title 16]; and
189	189	(2) is not controverted by an affidavit filed by the
190	190	claimant before the 11th day after the date on which the motion to
191	191	abate is filed.
192	192	SECTION 5. Section 27.0042(b), Property Code, is amended to
193	193	read as follows:
194	194	(b) A contractor may not elect to purchase the residence
195	195	under Subsection (a) if[:
196	196	[(1)] the residence is more than five years old at the
197	197	time an action is initiated[; or
198	198	[(2) the contractor makes such an election later than
199	199	the 15th day after the date of a final, unappealable determination
200	200	of a dispute under Subtitle D, Title 16, if applicable].
201	201	SECTION 6. Section 53.172, Property Code, is amended to
202	202	read as follows:
203	203	Sec. 53.172. BOND REQUIREMENTS. The bond must:
204	204	(1) describe the property on which the liens are
205	205	claimed;
206	206	(2) refer to each lien claimed in a manner sufficient
207	207	to identify it;
208	208	(3) be in an amount that is double the amount of the
209	209	liens referred to in the bond unless the total amount claimed in the
210	210	liens exceeds $40,000, in which case the bond must be in an amount
211	211	that is the greater of 1-1/2 times the amount of the liens or the sum
212	212	of $40,000 and the amount of the liens;
213	213	(4) be payable to the parties claiming the liens;
214	214	(5) be executed by:
215	215	(A) the party filing the bond as principal; and
216	216	(B) a corporate surety authorized and admitted to
217	217	do business under the law in this state and licensed by this state
218	218	to execute the bond as surety, subject to Subchapter A, Chapter
219	219	3503, Insurance Code [Section 1, Chapter 87, Acts of the 56th
220	220	Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
221	221	Insurance Code)]; and
222	222	(6) be conditioned substantially that the principal
223	223	and sureties will pay to the named obligees or to their assignees
224	224	the amount that the named obligees would have been entitled to
225	225	recover if their claims had been proved to be valid and enforceable
226	226	liens on the property.
227	227	SECTION 7. Section 74.3013(h), Property Code, is amended
228	228	to read as follows:
229	229	(h) In this section, a nonprofit cooperative corporation
230	230	means a cooperative corporation organized under Chapters 51 and 52,
231	231	Agriculture Code, the Texas Nonprofit [Non-Profit] Corporation
232	232	Law, as described by Section 1.008(d), Business Organizations Code
233	233	[Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)],
234	234	the Texas Cooperative Association Law, as described by Section
235	235	1.008(i), Business Organizations Code [Act (Article 1396-50.01,
236	236	Vernon's Texas Civil Statutes)], and Chapter 161, Utilities Code.
237	237	SECTION 8. Sections 112.058(c) and (d), Property Code, are
238	238	amended to read as follows:
239	239	(c) The community trust may transfer assets of the trust to
240	240	a nonprofit corporation only if the nonprofit corporation is
241	241	organized under the Texas Nonprofit Corporation Law, as described
242	242	by Section 1.008(d), Business Organizations Code, [the Texas
243	243	Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
244	244	Texas Civil Statutes)] and organized for the same purpose as the
245	245	community trust. The charter of the nonprofit corporation must
246	246	describe the purpose of the corporation and the proposed use of the
247	247	assets transferred using language substantially similar to the
248	248	language used in the instrument creating the community trust.
249	249	(d) To transfer the assets of and terminate a community
250	250	trust under this section, the governing body of the community trust
251	251	must:
252	252	(1) file a petition in a probate court, county court,
253	253	or district court requesting:
254	254	(A) the transfer of the assets of the trust to a
255	255	nonprofit corporation established for the purpose of receiving and
256	256	administering the assets of the trust; and
257	257	(B) the termination of the trust;
258	258	(2) send by first class mail to each trust settlor and
259	259	each trustee of each component trust of the community trust who can
260	260	be located by the exercise of reasonable diligence a copy of the
261	261	governing body's petition and a notice specifying the time and
262	262	place of the court-scheduled hearing on the petition; and
263	263	(3) publish once in a newspaper of general circulation
264	264	in the county in which the proceeding is pending a notice that reads
265	265	substantially similar to the following:
266	266	TO ALL INTERESTED PERSONS:
267	267	(NAME OF COMMUNITY TRUST) HAS FILED A PETITION IN (NAME OF
268	268	COURT) OF (NAME OF COUNTY), TEXAS, REQUESTING PERMISSION TO CONVERT
269	269	TO A NONPROFIT CORPORATION. IF PERMITTED TO CONVERT:
270	270	(1) THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED;
271	271	AND
272	272	(2) THE ASSETS OF THE TRUST WILL BE:
273	273	(A) TRANSFERRED TO A NONPROFIT CORPORATION WITH
274	274	THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF
275	275	COMMUNITY TRUST); AND
276	276	(B) HELD AND ADMINISTERED BY THE CORPORATION AS
277	277	PROVIDED BY THE TEXAS NONPROFIT [NON-PROFIT] CORPORATION LAW [ACT
278	278	(ARTICLE 1396-1.01 ET SEQ., VERNON'S TEXAS CIVIL STATUTES)].
279	279	THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE
280	280	THE MONEY SAVED TO FURTHER THE PURPOSES FOR WHICH THE (NAME OF
281	281	COMMUNITY TRUST) WAS CREATED.
282	282	A HEARING ON THE PETITION IS SCHEDULED ON (DATE AND TIME) AT
283	283	(LOCATION OF COURT).
284	284	FOR ADDITIONAL INFORMATION, YOU MAY CONTACT THE GOVERNING
285	285	BODY OF THE (NAME OF COMMUNITY TRUST) AT (ADDRESS AND TELEPHONE
286	286	NUMBER) OR THE COURT.
287	287	SECTION 9. Section 202.002(b), Property Code, is amended to
288	288	read as follows:
289	289	(b) This chapter does not affect the requirements of Chapter
290	290	123, Human Resources Code [the Community Homes for Disabled Persons
291	291	Location Act (Article 1011n, Vernon's Texas Civil Statutes)].
292	292	SECTION 10. Section 202.003(b), Property Code, is amended
293	293	to read as follows:
294	294	(b) In this subsection, "family home" is a residential home
295	295	that meets the definition of and requirements applicable to a
296	296	family home under Chapter 123, Human Resources Code [the Community
297	297	Homes for Disabled Persons Location Act (Article 1011n, Vernon's
298	298	Texas Civil Statutes)]. A dedicatory instrument or restrictive
299	299	covenant may not be construed to prevent the use of property as a
300	300	family home. However, any restrictive covenant that applies to
301	301	property used as a family home shall be liberally construed to give
302	302	effect to its purposes and intent except to the extent that the
303	303	construction would restrict the use as a family home.
304	304	SECTION 11. Section 204.004(b), Property Code, is amended
305	305	to read as follows:
306	306	(b) The association must be nonprofit and may be
307	307	incorporated as a Texas nonprofit corporation. An unincorporated
308	308	association may incorporate under the Texas Nonprofit [Non-Profit]
309	309	Corporation Law, as described by Section 1.008(d), Business
310	310	Organizations Code [Act (Article 1396-1.01 et seq., Vernon's Texas
311	311	Civil Statutes)].
312	312	SECTION 12. Section 204.010(a), Property Code, is amended
313	313	to read as follows:
314	314	(a) Unless otherwise provided by the restrictions or the
315	315	association's articles of incorporation or bylaws, the property
316	316	owners' association, acting through its board of directors or
317	317	trustees, may:
318	318	(1) adopt and amend bylaws;
319	319	(2) adopt and amend budgets for revenues,
320	320	expenditures, and reserves and collect regular assessments or
321	321	special assessments for common expenses from property owners;
322	322	(3) hire and terminate managing agents and other
323	323	employees, agents, and independent contractors;
324	324	(4) institute, defend, intervene in, settle, or
325	325	compromise litigation or administrative proceedings on matters
326	326	affecting the subdivision;
327	327	(5) make contracts and incur liabilities relating to
328	328	the operation of the subdivision and the property owners'
329	329	association;
330	330	(6) regulate the use, maintenance, repair,
331	331	replacement, modification, and appearance of the subdivision;
332	332	(7) make additional improvements to be included as a
333	333	part of the common area;
334	334	(8) grant easements, leases, licenses, and
335	335	concessions through or over the common area;
336	336	(9) impose and receive payments, fees, or charges for
337	337	the use, rental, or operation of the common area and for services
338	338	provided to property owners;
339	339	(10) impose interest, late charges, and, if
340	340	applicable, returned check charges for late payments of regular
341	341	assessments or special assessments;
342	342	(11) if notice and an opportunity to be heard are
343	343	given, collect reimbursement of actual attorney's fees and other
344	344	reasonable costs incurred by the property owners' association
345	345	relating to violations of the subdivision's restrictions or the
346	346	property owners' association's bylaws and rules;
347	347	(12) charge costs to an owner's assessment account and
348	348	collect the costs in any manner provided in the restrictions for the
349	349	collection of assessments;
350	350	(13) adopt and amend rules regulating the collection
351	351	of delinquent assessments and the application of payments;
352	352	(14) impose reasonable charges for preparing,
353	353	recording, or copying amendments to the restrictions, resale
354	354	certificates, or statements of unpaid assessments;
355	355	(15) purchase insurance and fidelity bonds, including
356	356	directors' and officers' liability insurance, that the board
357	357	considers appropriate or necessary;
358	358	(16) if the restrictions allow for an annual increase
359	359	in the maximum regular assessment without a vote of the membership,
360	360	assess the increase annually or accumulate and assess the increase
361	361	after a number of years;
362	362	(17) subject to the requirements of the Texas
363	363	Nonprofit [Non-Profit] Corporation Law, as described by Section
364	364	1.008(d), Business Organizations Code, [Act (Article 1396-1.01 et
365	365	seq., Vernon's Texas Civil Statutes)] and by majority vote of its
366	366	board of directors, indemnify a director or officer of the property
367	367	owners' association who was, is, or may be made a named defendant or
368	368	respondent in a proceeding because the person is or was a director;
369	369	(18) if the restrictions vest the architectural
370	370	control authority in the property owners' association or if the
371	371	authority is vested in the property owners' association under
372	372	Section 204.011:
373	373	(A) implement written architectural control
374	374	guidelines for its own use or record the guidelines in the real
375	375	property records of the applicable county; and
376	376	(B) modify the guidelines as the needs of the
377	377	subdivision change;
378	378	(19) exercise other powers conferred by the
379	379	restrictions, its articles of incorporation, or its bylaws;
380	380	(20) exercise other powers that may be exercised in
381	381	this state by a corporation of the same type as the property owners'
382	382	association; and
383	383	(21) exercise other powers necessary and proper for
384	384	the governance and operation of the property owners' association.
385	385	SECTION 13. The following provisions of the Property Code
386	386	are repealed:
387	387	(1) Section 5.018;
388	388	(2) Sections 27.001(3) and (9);
389	389	(3) Section 27.004(l); and
390	390	(4) Section 27.007(c).
391	391	SECTION 14. This Act takes effect immediately if it
392	392	receives a vote of two-thirds of all the members elected to each
393	393	house, as provided by Section 39, Article III, Texas Constitution.
394	394	If this Act does not receive the vote necessary for immediate
395	395	effect, this Act takes effect September 1, 2023.
396	396	______________________________ ______________________________
397	397	President of the Senate Speaker of the House
398	398	I hereby certify that S.B. No. 1768 passed the Senate on
399	399	April 20, 2023, by the following vote: Yeas 31, Nays 0.
400	400	______________________________
401	401	Secretary of the Senate
402	402	I hereby certify that S.B. No. 1768 passed the House on
403	403	May 16, 2023, by the following vote: Yeas 136, Nays 6, one
404	404	present not voting.
405	405	______________________________
406	406	Chief Clerk of the House
407	407	Approved:
408	408	______________________________
409	409	Date
410	410	______________________________
411	411	Governor