One to Watch

By Cassandra McGarvey, Founder of McGarvey PLLC on April 21, 2021

Home builders and contractors are poised to receive additional protections under House Bill 3595, which is currently in the House Committee. Sponsored by Republican Jeff Leach, the proposed bill grants additional powers and protections to contractors, at the expense of new construction buyers and homeowners doing renovations. Once the bill exits the House Committee, it can be voted on and, if passed, is set to take effect on September 2, 2021.

The High Points

HB 3595 proposes significant changes to the Residential Construction Liability Act. McGarvey PLLC has boiled down HB 3595 to a few key highlights below:

To recover damages from construction defect, there must be actual physical damages to the residence which were proximately caused by the construction defect. There is no recovery for anything other than economic damages. In the event that a person attempts to recover damages arising from a construction defect, the contractor is not liable for any percentage of damages caused by:

  • Negligence of a person other than contractor or agent, employee, subcontractor of the general contractor
  • Failure of the person to take reasonable action to mitigate damages or take reasonable action to maintain the residence
  • Normal wear, tear, deterioration
  • Normal shrinkage or cracking due to drying or settlement of construction components within the tolerance of building standards
  • The contractor’s reliance on written information relating to residence or real property that was obtained from official government records, if written information was false, outdated, or inaccurate and the contractor did not know and could not reasonably have known
  • Any condition including noncompliance with any applicable code, standard, warranty, manufacturer’s recommendation, or contractual plan or specification that does not result in either physical damage to residence or failure of a building component to perform its intended function
  • 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 before performing repairs, the contractor is not liable for the cost of any repairs by a person other than the contractor or an agent, employee, or subcontractor of the contractor

Additionally, contractors must be supplied with written notice of the cause of defects and the remedies and contain expert reports, video, photographic evidence. Within 35 days, the contractor will be allowed (on written request) to inspect property to determine defect and extent of repairs to remedy and document. No later than 45 days from notice, the contractor may make written offer to settle. If offer is accepted by claimant, the estimate stated in offer is considered reasonable. If the claimant does not believe the offer is reasonable, the contractor is allowed to advise in writing why it is reasonable and, no later than 10 days, the contractor may make supplemental written offers of settlement.

The motion on the part of the claimant may be dismissed in the event of any of the following:

a) plaintiff failed to provide notice to give contractor reasonable opportunity to inspect the property or failed to follow procedures
b) defendant did not receive written notice
c) defendant did not have reasonable opportunity to inspect premises

In the event that the reasonable cost of repairs necessary to repair a construction defect exceeds an agreed percentage of the current fair market value of residence, contractor may elect to purchase the residence paying the original purchase price of residence and closing costs and cost of transferring title. Homeowner may recover:

  • Reimbursement for permanent improvements the owner made to residence after owner purchased from builder
  • The reasonable cost to move from residence

The proposed bill could have substantial impacts to Texas home buyers and homeowners. McGarvey PLLC will keep a close eye on this bill as it progresses through committee. Cassie McGarvey is double Board Certified in commercial and residential real estate law in the State of Texas. If you have questions on the potential impacts of this bill on you or other questions regarding real estate law in Texas, contact Cassie McGarvey at contact@mcgarveypllc.com.

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