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AN ACT
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relating to procedures required before certain condominium |
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associations file a suit or initiate an arbitration proceeding for |
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a defect or design claim. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter C, Chapter 82, Property Code, is |
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amended by adding Sections 82.119 and 82.120 to read as follows: |
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Sec. 82.119. PROCEDURES FOR FILING SUIT OR INITIATING |
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ARBITRATION PROCEEDINGS FOR DEFECT OR DESIGN CLAIMS FOR CERTAIN |
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ASSOCIATIONS. (a) This section does not apply to an association |
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with less than eight units. |
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(b) In addition to any preconditions to filing suit or |
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initiating an arbitration proceeding included in the declaration, |
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an association, before filing suit or initiating an arbitration |
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proceeding to resolve a claim pertaining to the construction or |
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design of a unit or the common elements, must: |
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(1) obtain an inspection and a written independent |
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third-party report from a licensed professional engineer that: |
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(A) identifies the specific units or common |
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elements subject to the claim; |
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(B) describes the present physical condition of |
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the units or common elements subject to the claim; and |
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(C) describes any modifications, maintenance, or |
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repairs to the units or common elements performed by the unit owners |
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or the association; and |
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(2) obtain approval from unit owners holding more than |
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50 percent of the total votes allocated under the declaration, |
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voting in person or by proxy as provided by Section 82.110, at a |
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regular, annual, or special meeting called in accordance with the |
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declaration or bylaws, as applicable. |
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(c) The association must provide written notice of the |
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inspection to be conducted by the engineer to each party subject to |
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a claim not later than the 10th day before the date the inspection |
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occurs. The notice must: |
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(1) identify the party engaged to prepare the report |
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required by Subsection (b)(1); |
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(2) identify the specific units or common elements to |
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be inspected; and |
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(3) include the date and time the inspection will |
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occur. |
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(d) Each party subject to a claim may attend the inspection |
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conducted by the engineer, either personally or through an agent. |
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(e) Before providing the notice of the meeting under |
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Subsection (f), an association must: |
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(1) on completion of the independent third-party |
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report, provide the report to each unit owner and each party subject |
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to a claim; and |
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(2) allow each party subject to a claim at least 90 |
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days after the date of completion of the report to inspect and |
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correct any condition identified in the report. |
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(f) Not later than the 30th day before the date the meeting |
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described by Subsection (b)(2) is held, the association must |
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provide each unit owner with written notice of the date, time, and |
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location of the meeting. The notice must also include: |
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(1) a description of the nature of the claim, the |
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relief sought, the anticipated duration of prosecuting the claim, |
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and the likelihood of success; |
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(2) a copy of the report required by Subsection |
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(b)(1); |
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(3) a copy of the contract or proposed contract |
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between the association and the attorney selected by the board to |
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assert or provide assistance with the claim; |
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(4) a description of the attorney's fees, consultant |
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fees, expert witness fees, and court costs, whether incurred by the |
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association directly or for which the association may be liable as a |
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result of prosecuting the claim; |
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(5) a summary of the steps previously taken by the |
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association to resolve the claim; |
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(6) a statement that initiating a lawsuit or |
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arbitration proceeding to resolve a claim may affect the market |
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value, marketability, or refinancing of a unit while the claim is |
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prosecuted; and |
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(7) a description of the manner in which the |
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association proposes to fund the cost of prosecuting the claim. |
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(g) The notice required by Subsection (f) must be prepared |
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and signed by a person who is not: |
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(1) the attorney who represents or will represent the |
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association in the claim; |
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(2) a member of the law firm of the attorney who |
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represents or will represent the association in the claim; or |
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(3) employed by or otherwise affiliated with the law |
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firm of the attorney who represents or will represent the |
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association in the claim. |
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(h) The period of limitations for filing a suit or |
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initiating an arbitration proceeding for a claim described by |
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Subsection (b) is tolled until the first anniversary of the date the |
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procedures are initiated by the association under that subsection |
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if the procedures are initiated during the final year of the |
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applicable period of limitation. |
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Sec. 82.120. BINDING ARBITRATION FOR CERTAIN CLAIMS. (a) A |
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declaration may provide that a claim pertaining to the construction |
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or design of a unit or the common elements must be resolved by |
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binding arbitration and may provide for a process by which the claim |
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is resolved. |
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(b) An amendment to the declaration that modifies or removes |
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the arbitration requirement or the process associated with |
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resolution of a claim may not apply retroactively to a claim |
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regarding the construction or design of units or common elements |
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based on an alleged act or omission that occurred before the date of |
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the amendment. |
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SECTION 2. Section 82.119, Property Code, as added by this |
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Act, applies only to a suit filed or arbitration proceeding |
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initiated on or after the effective date of this Act. A suit filed |
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or arbitration proceeding initiated before the effective date of |
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this Act is governed by the law applicable to the claim immediately |
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before the effective date of this Act, and that law is continued in |
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effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2015. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 1455 was passed by the House on May 8, |
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2015, by the following vote: Yeas 98, Nays 44, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 1455 was passed by the Senate on May |
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26, 2015, by the following vote: Yeas 24, Nays 7. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |