Bill Text: TX HB3422 | 2023-2024 | 88th Legislature | Comm Sub
Bill Title: Relating to the correction or removal of certain obsolete provisions of the Property Code.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2023-05-11 - Placed on General State Calendar [HB3422 Detail]
Download: Texas-2023-HB3422-Comm_Sub.html
88R3339 ATP-F | ||
By: Bryant | H.B. No. 3422 |
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relating to the correction or removal of certain obsolete | ||
provisions of the Property Code. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Sections 27.001(4), (5), and (8), Property Code, | ||
are amended to read as follows: | ||
(4) "Construction defect" [ |
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construction, or repair of a new residence, of an alteration of or | ||
repair or addition to an existing residence, or of an appurtenance | ||
to a residence, on which a person has a complaint against a | ||
contractor. The term may include any physical damage to the | ||
residence, any appurtenance, or the real property on which the | ||
residence and appurtenance are affixed proximately caused by a | ||
construction defect. | ||
(5) "Contractor": | ||
(A) means: | ||
(i) a builder [ |
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of a new residence, for the repair or alteration of or an addition | ||
to an existing residence, or for the construction, sale, | ||
alteration, addition, or repair of an appurtenance to a new or | ||
existing residence; | ||
(ii) any person contracting with a | ||
purchaser for the sale of a new residence constructed by or on | ||
behalf of that person; or | ||
(iii) a person contracting with an owner or | ||
the developer of a condominium for the construction of a new | ||
residence, for an alteration of or an addition to an existing | ||
residence, for repair of a new or existing residence, or for the | ||
construction, sale, alteration, addition, or repair of an | ||
appurtenance to a new or existing residence; and | ||
(B) includes: | ||
(i) an owner, officer, director, | ||
shareholder, partner, or employee of the contractor; and | ||
(ii) a risk retention group registered | ||
under Chapter 2201 [ |
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all or any part of a contractor's liability for the cost to repair a | ||
residential construction defect. | ||
(8) "Structural failure" [ |
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load-bearing portion of a residence caused by a failure of the | ||
load-bearing portion. | ||
SECTION 2. Section 27.002(b), Property Code, is amended to | ||
read as follows: | ||
(b) To [ |
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extent of conflict between this chapter and any other law, | ||
including the Deceptive Trade Practices-Consumer Protection Act | ||
(Subchapter E, Chapter 17, Business & Commerce Code) or a common law | ||
cause of action, this chapter prevails. [ |
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SECTION 3. Section 27.003(a), Property Code, is amended to | ||
read as follows: | ||
(a) In an action to recover damages or other relief arising | ||
from a construction defect: | ||
(1) a contractor is not liable for any percentage of | ||
damages caused by: | ||
(A) negligence of a person other than the | ||
contractor or an agent, employee, or subcontractor of the | ||
contractor; | ||
(B) failure of a person other than the contractor | ||
or an agent, employee, or subcontractor of the contractor to: | ||
(i) take reasonable action to mitigate the | ||
damages; or | ||
(ii) take reasonable action to maintain the | ||
residence; | ||
(C) normal wear, tear, or deterioration; | ||
(D) normal shrinkage due to drying or settlement | ||
of construction components within the tolerance of building | ||
standards; or | ||
(E) the contractor's reliance on written | ||
information relating to the residence, appurtenance, or real | ||
property on which the residence and appurtenance are affixed that | ||
was obtained from official government records, if the written | ||
information was false or inaccurate and the contractor did not know | ||
and could not reasonably have known of the falsity or inaccuracy of | ||
the information; and | ||
(2) if an assignee of the claimant or a person | ||
subrogated to the rights of a claimant fails to provide the | ||
contractor with the written notice and opportunity to inspect and | ||
offer to repair required by Section 27.004 [ |
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not liable for the cost of any repairs or any percentage of damages | ||
caused by repairs made to a construction defect at the request of an | ||
assignee of the claimant or a person subrogated to the rights of a | ||
claimant by a person other than the contractor or an agent, | ||
employee, or subcontractor of the contractor. | ||
SECTION 4. Sections 27.004(a), (b), (c), and (d), Property | ||
Code, are amended to read as follows: | ||
(a) Before [ |
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contractor damages or other relief arising from a construction | ||
defect initiates an action, the claimant shall give written notice | ||
by certified mail, return receipt requested, to the contractor, at | ||
the contractor's last known address, specifying in reasonable | ||
detail the construction defects that are the subject of the | ||
complaint. On the request of the contractor, the claimant shall | ||
provide to the contractor any evidence that depicts the nature and | ||
cause of the defect and the nature and extent of repairs necessary | ||
to remedy the defect, including expert reports, photographs, and | ||
videotapes, if that evidence would be discoverable under Rule 192, | ||
Texas Rules of Civil Procedure. During the 35-day period after the | ||
date the contractor receives the notice, and on the contractor's | ||
written request, the contractor shall be given a reasonable | ||
opportunity to inspect and have inspected the property that is the | ||
subject of the complaint to determine the nature and cause of the | ||
defect and the nature and extent of repairs necessary to remedy the | ||
defect. The contractor may take reasonable steps to document the | ||
defect. [ |
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(b) Not later than the [ |
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contractor receives the notice under this section, [ |
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of settlement to the claimant. The offer must be sent to the | ||
claimant at the claimant's last known address or to the claimant's | ||
attorney by certified mail, return receipt requested. The offer | ||
may include either an agreement by the contractor to repair or to | ||
have repaired by an independent contractor partially or totally at | ||
the contractor's expense or at a reduced rate to the claimant any | ||
construction defect described in the notice and shall describe in | ||
reasonable detail the kind of repairs which will be made. The | ||
repairs shall be made not later than the 45th day after the date the | ||
contractor receives written notice of acceptance of the settlement | ||
offer, unless completion is delayed by the claimant or by other | ||
events beyond the control of the contractor. If a contractor makes | ||
a written offer of settlement that the claimant considers to be | ||
unreasonable: | ||
(1) on or before the 25th day after the date the | ||
claimant receives the offer, the claimant shall advise the | ||
contractor in writing and in reasonable detail of the reasons why | ||
the claimant considers the offer unreasonable; and | ||
(2) not later than the 10th day after the date the | ||
contractor receives notice under Subdivision (1), the contractor | ||
may make a supplemental written offer of settlement to the claimant | ||
by sending the offer to the claimant or the claimant's attorney. | ||
(c) If [ |
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of the notice under Subsections (a) and (b) within the period | ||
prescribed by those subsections is impracticable because of the | ||
necessity of initiating an action at an earlier date to prevent | ||
expiration of the statute of limitations or if the complaint is | ||
asserted as a counterclaim, [ |
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shall specify in reasonable detail each construction defect that is | ||
the subject of the complaint. The [ |
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for by Subsection (a) may be made not later than the 75th day after | ||
the date of service of the suit, request for arbitration, or | ||
counterclaim on the contractor, and the offer provided for by | ||
Subsection (b) may be made not later than the [ |
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pending, the statute of limitations for the cause of action would | ||
have expired and it is determined that the provisions of Subsection | ||
(a) were not properly followed, the action shall be abated to allow | ||
compliance with Subsections (a) and (b). | ||
(d) The court or arbitration tribunal shall abate an action | ||
governed by this chapter if Subsection (c) does not apply and the | ||
court or tribunal, after a hearing, finds that the contractor is | ||
entitled to abatement because the claimant failed to [ |
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provide the notice or failed to give the contractor a reasonable | ||
opportunity to inspect the property as required by Subsection (a), | ||
or failed to follow the procedures specified by Subsection (b). An | ||
action is automatically abated without the order of the court or | ||
tribunal beginning on the 11th day after the date a motion to abate | ||
is filed if the motion: | ||
(1) is verified and alleges that the person against | ||
whom the action is pending did not receive the written notice | ||
required by Subsection (a), the person against whom the action is | ||
pending was not given a reasonable opportunity to inspect the | ||
property as required by Subsection (a), or the claimant failed to | ||
follow the procedures specified by Subsection (b) [ |
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(2) is not controverted by an affidavit filed by the | ||
claimant before the 11th day after the date on which the motion to | ||
abate is filed. | ||
SECTION 5. Section 27.0042(b), Property Code, is amended to | ||
read as follows: | ||
(b) A contractor may not elect to purchase the residence | ||
under Subsection (a) if[ |
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[ |
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time an action is initiated[ |
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[ |
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SECTION 6. Section 53.172, Property Code, is amended to | ||
read as follows: | ||
Sec. 53.172. BOND REQUIREMENTS. The bond must: | ||
(1) describe the property on which the liens are | ||
claimed; | ||
(2) refer to each lien claimed in a manner sufficient | ||
to identify it; | ||
(3) be in an amount that is double the amount of the | ||
liens referred to in the bond unless the total amount claimed in the | ||
liens exceeds $40,000, in which case the bond must be in an amount | ||
that is the greater of 1-1/2 times the amount of the liens or the sum | ||
of $40,000 and the amount of the liens; | ||
(4) be payable to the parties claiming the liens; | ||
(5) be executed by: | ||
(A) the party filing the bond as principal; and | ||
(B) a corporate surety authorized and admitted to | ||
do business under the law in this state and licensed by this state | ||
to execute the bond as surety, subject to Subchapter A, Chapter | ||
3503, Insurance Code [ |
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(6) be conditioned substantially that the principal | ||
and sureties will pay to the named obligees or to their assignees | ||
the amount that the named obligees would have been entitled to | ||
recover if their claims had been proved to be valid and enforceable | ||
liens on the property. | ||
SECTION 7. Section 74.3013(h), Property Code, is amended | ||
to read as follows: | ||
(h) In this section, a nonprofit cooperative corporation | ||
means a cooperative corporation organized under Chapters 51 and 52, | ||
Agriculture Code, the Texas Nonprofit [ |
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Law, as described by Section 1.008(d), Business Organizations Code | ||
[ |
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the Texas Cooperative Association Law, as described by Section | ||
1.008(i), Business Organizations Code [ |
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SECTION 8. Sections 112.058(c) and (d), Property Code, are | ||
amended to read as follows: | ||
(c) The community trust may transfer assets of the trust to | ||
a nonprofit corporation only if the nonprofit corporation is | ||
organized under the Texas Nonprofit Corporation Law, as described | ||
by Section 1.008(d), Business Organizations Code, [ |
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community trust. The charter of the nonprofit corporation must | ||
describe the purpose of the corporation and the proposed use of the | ||
assets transferred using language substantially similar to the | ||
language used in the instrument creating the community trust. | ||
(d) To transfer the assets of and terminate a community | ||
trust under this section, the governing body of the community trust | ||
must: | ||
(1) file a petition in a probate court, county court, | ||
or district court requesting: | ||
(A) the transfer of the assets of the trust to a | ||
nonprofit corporation established for the purpose of receiving and | ||
administering the assets of the trust; and | ||
(B) the termination of the trust; | ||
(2) send by first class mail to each trust settlor and | ||
each trustee of each component trust of the community trust who can | ||
be located by the exercise of reasonable diligence a copy of the | ||
governing body's petition and a notice specifying the time and | ||
place of the court-scheduled hearing on the petition; and | ||
(3) publish once in a newspaper of general circulation | ||
in the county in which the proceeding is pending a notice that reads | ||
substantially similar to the following: | ||
TO ALL INTERESTED PERSONS: | ||
(NAME OF COMMUNITY TRUST) HAS FILED A PETITION IN (NAME OF | ||
COURT) OF (NAME OF COUNTY), TEXAS, REQUESTING PERMISSION TO CONVERT | ||
TO A NONPROFIT CORPORATION. IF PERMITTED TO CONVERT: | ||
(1) THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED; | ||
AND | ||
(2) THE ASSETS OF THE TRUST WILL BE: | ||
(A) TRANSFERRED TO A NONPROFIT CORPORATION WITH | ||
THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF | ||
COMMUNITY TRUST); AND | ||
(B) HELD AND ADMINISTERED BY THE CORPORATION AS | ||
PROVIDED BY THE TEXAS NONPROFIT [ |
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THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE | ||
THE MONEY SAVED TO FURTHER THE PURPOSES FOR WHICH THE (NAME OF | ||
COMMUNITY TRUST) WAS CREATED. | ||
A HEARING ON THE PETITION IS SCHEDULED ON (DATE AND TIME) AT | ||
(LOCATION OF COURT). | ||
FOR ADDITIONAL INFORMATION, YOU MAY CONTACT THE GOVERNING | ||
BODY OF THE (NAME OF COMMUNITY TRUST) AT (ADDRESS AND TELEPHONE | ||
NUMBER) OR THE COURT. | ||
SECTION 9. Section 202.002(b), Property Code, is amended to | ||
read as follows: | ||
(b) This chapter does not affect the requirements of Chapter | ||
123, Human Resources Code [ |
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SECTION 10. Section 202.003(b), Property Code, is amended | ||
to read as follows: | ||
(b) In this subsection, "family home" is a residential home | ||
that meets the definition of and requirements applicable to a | ||
family home under Chapter 123, Human Resources Code [ |
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covenant may not be construed to prevent the use of property as a | ||
family home. However, any restrictive covenant that applies to | ||
property used as a family home shall be liberally construed to give | ||
effect to its purposes and intent except to the extent that the | ||
construction would restrict the use as a family home. | ||
SECTION 11. Section 204.004(b), Property Code, is amended | ||
to read as follows: | ||
(b) The association must be nonprofit and may be | ||
incorporated as a Texas nonprofit corporation. An unincorporated | ||
association may incorporate under the Texas Nonprofit [ |
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Corporation Law, as described by Section 1.008(d), Business | ||
Organizations Code [ |
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SECTION 12. Section 204.010(a), Property Code, is amended | ||
to read as follows: | ||
(a) Unless otherwise provided by the restrictions or the | ||
association's articles of incorporation or bylaws, the property | ||
owners' association, acting through its board of directors or | ||
trustees, may: | ||
(1) adopt and amend bylaws; | ||
(2) adopt and amend budgets for revenues, | ||
expenditures, and reserves and collect regular assessments or | ||
special assessments for common expenses from property owners; | ||
(3) hire and terminate managing agents and other | ||
employees, agents, and independent contractors; | ||
(4) institute, defend, intervene in, settle, or | ||
compromise litigation or administrative proceedings on matters | ||
affecting the subdivision; | ||
(5) make contracts and incur liabilities relating to | ||
the operation of the subdivision and the property owners' | ||
association; | ||
(6) regulate the use, maintenance, repair, | ||
replacement, modification, and appearance of the subdivision; | ||
(7) make additional improvements to be included as a | ||
part of the common area; | ||
(8) grant easements, leases, licenses, and | ||
concessions through or over the common area; | ||
(9) impose and receive payments, fees, or charges for | ||
the use, rental, or operation of the common area and for services | ||
provided to property owners; | ||
(10) impose interest, late charges, and, if | ||
applicable, returned check charges for late payments of regular | ||
assessments or special assessments; | ||
(11) if notice and an opportunity to be heard are | ||
given, collect reimbursement of actual attorney's fees and other | ||
reasonable costs incurred by the property owners' association | ||
relating to violations of the subdivision's restrictions or the | ||
property owners' association's bylaws and rules; | ||
(12) charge costs to an owner's assessment account and | ||
collect the costs in any manner provided in the restrictions for the | ||
collection of assessments; | ||
(13) adopt and amend rules regulating the collection | ||
of delinquent assessments and the application of payments; | ||
(14) impose reasonable charges for preparing, | ||
recording, or copying amendments to the restrictions, resale | ||
certificates, or statements of unpaid assessments; | ||
(15) purchase insurance and fidelity bonds, including | ||
directors' and officers' liability insurance, that the board | ||
considers appropriate or necessary; | ||
(16) if the restrictions allow for an annual increase | ||
in the maximum regular assessment without a vote of the membership, | ||
assess the increase annually or accumulate and assess the increase | ||
after a number of years; | ||
(17) subject to the requirements of the Texas | ||
Nonprofit [ |
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1.008(d), Business Organizations Code, [ |
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board of directors, indemnify a director or officer of the property | ||
owners' association who was, is, or may be made a named defendant or | ||
respondent in a proceeding because the person is or was a director; | ||
(18) if the restrictions vest the architectural | ||
control authority in the property owners' association or if the | ||
authority is vested in the property owners' association under | ||
Section 204.011: | ||
(A) implement written architectural control | ||
guidelines for its own use or record the guidelines in the real | ||
property records of the applicable county; and | ||
(B) modify the guidelines as the needs of the | ||
subdivision change; | ||
(19) exercise other powers conferred by the | ||
restrictions, its articles of incorporation, or its bylaws; | ||
(20) exercise other powers that may be exercised in | ||
this state by a corporation of the same type as the property owners' | ||
association; and | ||
(21) exercise other powers necessary and proper for | ||
the governance and operation of the property owners' association. | ||
SECTION 13. The following provisions of the Property Code | ||
are repealed: | ||
(1) Section 5.018; | ||
(2) Sections 27.001(3) and (9); | ||
(3) Section 27.004(l); and | ||
(4) Section 27.007(c). | ||
SECTION 14. This Act takes effect immediately if it | ||
receives a vote of two-thirds of all the members elected to each | ||
house, as provided by Section 39, Article III, Texas Constitution. | ||
If this Act does not receive the vote necessary for immediate | ||
effect, this Act takes effect September 1, 2023. |