H.B. No. 2022

	AN ACT
	relating to residential construction liability.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 27.001, Property Code, is amended to
	read as follows:
	Sec. 27.001.  DEFINITIONS. In this chapter:
	(1)  "Action" means a court or judicial proceeding or
	an arbitration.
	(2)  "Appurtenance" means any garage, outbuilding,
	retaining wall, or other structure or recreational facility that is
	constructed by a contractor in connection with the construction or
	alteration of a residence, regardless of whether it is attached to
	or [appurtenant to a residence but is not] a part of the dwelling
	unit.
	(3)  ["Commission" means the Texas Residential
	Construction Commission.
	[(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 deficiency in [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.]
	(4) [(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 or construction 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 or other housing project for the
	construction or sale of one or more [a] new residences [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.
	(5) [(6)]  "Economic damages" means compensatory
	damages for pecuniary loss proximately caused by a construction
	defect. The term does not include exemplary damages or damages for
	bodily or personal injury, physical pain and mental anguish, loss
	of consortium, disfigurement, physical impairment, or loss of
	companionship and society.
	(6) [(7)]  "Residence" means the real property and
	improvements for a detached one-family or two-family dwelling, a
	townhouse not more than three stories above grade plane in height
	with a separate means of egress, an accessory structure not more
	than three stories above grade plane in height, or a [single-family
	house,] duplex, triplex, or quadruplex or a unit and the common
	elements in a multiunit residential structure in which [title to]
	the individual units are sold [is transferred] to the owners under a
	condominium or cooperative system.
	(7) [(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.
	(8)  [(9)  "Third-party inspector" has the meaning
	assigned by Section 401.002.
	[(10)]  "Developer of a condominium" means a declarant,
	as defined by Section 82.003, of a condominium consisting of one or
	more residences.
	(9)  "Townhouse" means a single-family dwelling unit
	constructed in a group of three or more attached units in which each
	unit extends from foundation to roof and with a yard or public way
	on not less than two sides.
	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, Property Code, is amended by
	amending Subsection (a) and adding Subsection (c) to read as
	follows:
	(a)  In an action subject to this chapter [to recover damages
	or other relief] arising from a construction defect:
	(1)  a contractor is liable only to the extent a
	defective condition proximately causes:
	(A)  actual physical damage to the residence;
	(B)  an actual failure or lack of capability of a
	building component to perform its intended function or purpose; or
	(C)  a verifiable danger to the safety of the
	occupants of the residence;
	(2)  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; or
	(iii)  timely notify a contractor of a
	construction defect;
	(C)  normal wear, tear, or deterioration;
	(D)  normal cracking or shrinkage cracking 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, modified, or inaccurate and the contractor
	did not know and could not reasonably have known of the falsity,
	modification, or inaccuracy of the information; and
	(3)  [(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.
	(c)  To maintain a claim of breach of a warranty of
	habitability, a claimant must establish that a construction defect:
	(1)   was latent at the time the residence was completed
	or title was conveyed to the original purchaser; and
	(2)  has rendered the residence unsuitable for its
	intended use as a home.
	SECTION 4.  Section 27.004, Property Code, is amended by
	amending Subsections (a), (b), (c), (d), and (g) and adding
	Subsection (g-1) 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. The [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 any expert reports,
	photographs, and video or audio recordings [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.  To the extent
	requested, the contractor shall be given the opportunity to conduct
	up to three inspections during the 35-day period after the date the
	contractor receives the notice and during any extension of that
	inspection period provided by law or as otherwise agreed to by the
	parties. 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 60th [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
	and the time for completion of the repairs if more than 60 days. The
	repairs shall be made not later than the 60th [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.
	(g)  Except as provided by Subsection (e), in an action
	subject to this chapter the claimant may recover only the following
	economic damages proximately caused by a construction defect:
	(1)  the reasonable cost of repairs necessary to cure
	any construction defect;
	(2)  the reasonable and necessary cost for the
	replacement or repair of any damaged goods in the residence;
	(3)  reasonable and necessary engineering and
	consulting fees;
	(4)  the reasonable expenses of temporary housing
	reasonably necessary during the repair period;
	(5)  the reduction in current market value, if any,
	after the construction defect is repaired if the construction
	defect is a structural failure; [and]
	(6)  reasonable and necessary attorney's fees; and
	(7)  reasonable and necessary arbitration filing fees
	and the claimant's share of arbitrator compensation.
	(g-1)  The court or arbitration tribunal may order that an
	offer made by the contractor after the time prescribed is
	considered timely for purposes of Subsection (b) or (c), as
	applicable, if the contractor is prejudiced in the contractor's
	opportunity to inspect as provided for by Subsection (a) or (c) or
	make an offer provided for by Subsection (b) or (c):
	(1)  because the claimant:
	(A)  failed to provide the contractor evidence
	available and in the claimant's possession, custody, or control at
	the time of the original notice depicting the nature and cause of
	the defect and the nature and extent of repairs necessary to remedy
	the defect, including reports, photographs, videos, or any other
	evidence; or
	(B)  amended a claim to add a new alleged defect;
	or
	(2)  due to events beyond the contractor's control.
	SECTION 5.  Section 27.0042(a), Property Code, is amended to
	read as follows:
	(a)  A written agreement between a contractor and a homeowner
	may provide that, [except as provided by Subsection (b),] if the
	reasonable cost of repairs necessary to repair a construction
	defect that is the responsibility of the contractor exceeds an
	agreed percentage of the current fair market value of the
	residence, as determined without reference to the construction
	defects, then, in an action subject to this chapter, the contractor
	may elect as an alternative to the damages specified in Section
	27.004(g) that the contractor who sold the residence to the
	homeowner purchase it.
	SECTION 6.  Section 27.006, Property Code, is amended to
	read as follows:
	Sec. 27.006.  CAUSATION.  In an action to recover damages
	resulting from a construction defect, the claimant must prove that:
	(1)  the construction defect existed at the time of
	completion of the construction, alteration, or repair; and
	(2)  the damages were proximately caused by the
	construction defect.
	SECTION 7.  Chapter 27, Property Code, is amended by adding
	Sections 27.008 and 27.009 to read as follows:
	Sec. 27.008.  EFFECT OF ARBITRATION ON LIMITATIONS PERIOD.
	The submission of an action subject to this chapter to arbitration
	has the same effect on the running of a limitations period as a
	filing in a court in this state.
	Sec. 27.009.  NO WAIVER.  An attempted waiver of the
	provisions of this chapter in a contract subject to this chapter is
	void.
	SECTION 8.  The following provisions of the Property Code
	are repealed:
	(1)  Section 27.004(l);
	(2)  Section 27.0042(b); and
	(3)  Section 27.007(c).
	SECTION 9.  The changes in law made by this Act apply only to
	a cause of action that accrues on or after the effective date of
	this Act. A cause of action that accrued before the effective date
	of this Act is governed by the law as it existed immediately before
	the effective date of this Act, and that law is continued in effect
	for that purpose.
	SECTION 10.  This Act takes effect September 1, 2023.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 2022 was passed by the House on May 3,
	2023, by the following vote:  Yeas 97, Nays 47, 1 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 2022 was passed by the Senate on May
	17, 2023, by the following vote:  Yeas 20, Nays 11.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor