88R3339 ATP-F
	By: Bryant	H.B. No. 3422

	A BILL TO BE ENTITLED
	AN ACT
	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" [has the meaning assigned by
	Section 401.004 for an action to which Subtitle D, Title 16, applies
	and for any other action] means a matter concerning the design,
	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 [, as defined by Section
	401.003,] contracting with an owner for the construction or repair
	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 [Article 21.54], Insurance Code, that insures
	all or any part of a contractor's liability for the cost to repair a
	residential construction defect.
	(8)  "Structural failure" [has the meaning assigned by
	Section 401.002 for an action to which Subtitle D, Title 16, applies
	and for any other action] means actual physical damage to the
	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 [Except as provided by this subsection, to] the
	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. [To the extent of conflict
	between this chapter and Title 16, Title 16 prevails.]
	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 [or fails to request
	state-sponsored inspection and dispute resolution under Chapter
	428, if applicable,] before performing repairs, the contractor is
	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 [In a claim not subject to Subtitle D, Title 16,
	before] the 60th day preceding the date a claimant seeking from a
	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. [In a claim subject to Subtitle D, Title 16, a contractor is
	entitled to make an offer of repair in accordance with Subsection
	(b). A claimant is not required to give written notice to a
	contractor under this subsection in a claim subject to Subtitle D,
	Title 16.]
	(b)  Not later than the [15th day after the date of a final,
	unappealable determination of a dispute under Subtitle D, Title 16,
	if applicable, or not later than the] 45th day after the date the
	contractor receives the notice under this section, [if Subtitle D,
	Title 16, does not apply,] the contractor may make a written offer
	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 [compliance with Subtitle D, Title 16, or] the giving
	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, [compliance with Subtitle D, Title 16,
	or] the notice is not required. However, the action or counterclaim
	shall specify in reasonable detail each construction defect that is
	the subject of the complaint. The [If Subtitle D, Title 16, applies
	to the complaint, simultaneously with the filing of an action by a
	claimant, the claimant must submit a request under Section 428.001.
	If Subtitle D, Title 16, does not apply, the] inspection provided
	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 [15th day after the
	date the state-sponsored inspection and dispute resolution process
	is completed, if Subtitle D, Title 16, applies, or not later than
	the] 60th day after the date of service [, if Subtitle D, Title 16,
	does not apply]. If, while an action subject to this chapter is
	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 [comply with
	the requirements of Subtitle D, Title 16, if applicable, failed to]
	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) [or Subtitle D,
	Title 16]; and
	(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[:
	[(1)]  the residence is more than five years old at the
	time an action is initiated[; or
	[(2)  the contractor makes such an election later than
	the 15th day after the date of a final, unappealable determination
	of a dispute under Subtitle D, Title 16, if applicable].
	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 [Section 1, Chapter 87, Acts of the 56th
	Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
	Insurance Code)]; and
	(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 [Non-Profit] Corporation
	Law, as described by Section 1.008(d), Business Organizations Code
	[Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)],
	the Texas Cooperative Association Law, as described by Section
	1.008(i), Business Organizations Code [Act (Article 1396-50.01,
	Vernon's Texas Civil Statutes)], and Chapter 161, Utilities Code.
	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, [the Texas
	Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
	Texas Civil Statutes)] and organized for the same purpose as the
	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 [NON-PROFIT] CORPORATION LAW [ACT
	(ARTICLE 1396-1.01 ET SEQ., VERNON'S TEXAS CIVIL STATUTES)].
	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 [the Community Homes for Disabled Persons
	Location Act (Article 1011n, Vernon's Texas Civil Statutes)].
	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 [the Community
	Homes for Disabled Persons Location Act (Article 1011n, Vernon's
	Texas Civil Statutes)]. A dedicatory instrument or restrictive
	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 [Non-Profit]
	Corporation Law, as described by Section 1.008(d), Business
	Organizations Code [Act (Article 1396-1.01 et seq., Vernon's Texas
	Civil Statutes)].
	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 [Non-Profit] Corporation Law, as described by Section
	1.008(d), Business Organizations Code, [Act (Article 1396-1.01 et
	seq., Vernon's Texas Civil Statutes)] and by majority vote of its
	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.