Defects, Legislation, Lien

UPDATE – More Construction Bills to Watch in the 86th Texas Legislative Session

The Texas Legislature is back in session, and lawmakers generally have until March 8, 2019 to file bills for consideration this session. In our original post on January 31, 2019, we identified several bills of interest to the construction industry that had been filed as of that date. Since that post, the following bills of interest have been filed:

Defense and Indemnity by Architects and EngineersSB 771 proposes an amendment to Section 130.002(b) of the Texas Civil Practice and Remedies Code, which currently voids any provision in a construction contract that requires a registered architect or licensed engineer to indemnify an owner with respect to damage that is caused by or results from the owner’s negligence. SB 771 would modify Section 130.002(b) so that any provision in a construction contract that requires a registered architect or licensed engineer to defend an owner with respect to damage that is caused by or results from the owner’s negligence is also void.

Modified Statutes of Repose – Under Sections 16.008 and 16.009 of the Texas Civil Practice and Remedies Code, most construction claims have to be filed within 10 years of the substantial completion of the project at issue. HB 1737 would shorten this period to 8 years and insert a new, shorter period tied to latent and patent deficiencies. Specifically, Sections 16.008 and 16.009 would require certain construction claims to be brought not later than four years after: (1) the substantial completion of project if the action arises out of a patent deficiency, (2) the discovery of a latent deficiency in the project, or (3) a latent deficiency becomes a patent deficiency.

Clarifications of Texas Lien LawSB 845 and HB 1918 would make several modifications to Chapter 53 of the Texas Property Code related to the discharge of mechanic’s and materialman’s liens. Right now, there is some confusion in the case law related to when certain obligations imposed on an owner are extinguished and the scope of an owner’s liability under various Chapter 53 scenarios. SB 845 would insert language throughout Chapter 53 that seems to be designed to clarify and confirm that an owner’s liability is discharged and extinguished once a perfected lien or the claim secured by the lien is paid, settled, discharged, or indemnified against under the Property Code.

Limited Ability to Incorporate by ReferenceHB 2268 is focused on terms in construction contracts that incorporate other documents into the contract by reference. This bill would make any provision in a contract between an owner and an original contractor or an original contractor and a subcontractor that incorporates the terms and conditions of another document voidable if a copy of the incorporated document is not provided before the contract is executed.

Liens for Interior Designers – Currently, an architect, engineer, or surveyor who prepares a plan or plat under or by virtue of a written contract with an owner in connection with the actual or proposed design, construction, or repair of improvements on real property or the location of the boundaries of real property is entitled to claim a lien on the property. SB 921 and HB 2346 would expand this group to include interior designers, but only if the designer is registered under Chapter 1053 of the Texas Occupations Code.

Notice of Defect and Right to CureHB 1999 would impose new rules on construction defect claims asserted by governmental entities related to public buildings or public works. Under HB 1999, prior to filing suit, a governmental entity would have to: (1) hire an independent third-party licensed professional engineer to prepare a detailed report about the alleged construction defect; (2) provide a copy of the report to any party that may be the subject of a claim; and (3) allow each party subject to the claim at least 150 days after receipt of the report to inspect and correct any construction defect described in the report.

CMAR Subcontractor Selection – If passed and signed into law, HB 1752 would amend Chapter 2269.255(a) of the Texas Government Code to require construction managers-at-risk to use the statutory competitive bidding method or competitive sealed proposal method to consider a contract with a trade contractor or subcontractor. Further, if a construction manager-at-risk chose to use the competitive sealed proposal method to consider a contract with a trade contractor or subcontractor: (1) price would be required to be one of the selection criteria; and (2) the weighted value of price as a selection criterion would have to be at least half of the total weighted value of all of the selection criteria.

Limits on Modifications of Model CodesHB 2439 would place limits on the ability of certain governmental entities to selectively modify model codes adopted by the entity. The bill would do this by amending the Texas Government Code to bar governmental entities from adopting or enforcing any rule, charter provision, ordinance, order, or other regulation that prohibits, directly or indirectly, the use of a building product, material, or method in the construction, renovation, maintenance, or other alteration of a residential or commercial structure if the building product, material, or method is approved for use by a national model code that: (1) is adopted by the governmental entity; and (2) governs the construction, renovation, use, or maintenance of buildings and building systems.

We will continue to monitor the bills filed through the March 8, 2019 filing deadline and will publish an update if additional bills of interest are filed.

 

 

 

 

 

 

Sean McChristian is a partner in the construction practice group of Porter Hedges.  He represents contractors, subcontractors, developers, owners, suppliers, sureties, and design professionals in all types of construction-related disputes. Sean is certified by the Texas Board of Legal Specialization in Construction Law.  To read Sean’s full bio, click here.