The Texas Legislature has enacted new rules relating to certain construction liability claims concerning public buildings and public works. House Bill 1999 adds Government Code, Chapter 2272, titled “Certain Construction Liability Claims.” The law applies to claims arising from damage to or loss of real or personal property caused by an alleged construction defect in an improvement to real property that is a public building or public work; or claims for indemnity or contribution for such damages. It also applies to claims asserted by a governmental entity with an interest in the public building or public work affected by the alleged construction defect, as well as those asserted against a contractor, subcontractor, supplier, or design professional.
The new rules do not apply to (1) a claim for personal injury, survival, or wrongful death; (2) a claim involving the construction of residential property covered under Chapter 27, Property Code; (3) a contract entered into by the Texas Department of Transportation; 4) a project that receives money from a state or federal highway fund; or (5) a civil works project as defined by Texas Government Code § 2269.351.
Under the statute, before bringing an action asserting an applicable claim, the governmental entity must provide each party with whom the governmental entity has a contract for the design or construction of an affected structure, a written report by certified mail, return receipt requested, that clearly: (1) identifies the specific construction defect on which the claim is based; (2) describes the present physical condition of the affected structure; and (3) describes any modification, maintenance, or repairs to the affected structure made by the governmental entity or others since the affected structure was initially occupied or used. The costs for preparing the report may be recoverable in a civil action brought under Government Code, Chapter 2272.
There are strict timelines for the parties to act. For example, not later than the fifth day after the date a contractor receives such a report, the contractor must provide a copy of the report to each subcontractor retained on the construction of the affected structure whose work is subject to the claim.
In addition, prior to bringing an action asserting an applicable claim, the governmental entity must allow each party with whom the governmental entity has a contract for the design or construction of an affected structure and who is subject to the claim and any known subcontractor or supplier who is subject to the claim, a reasonable opportunity to inspect any construction defect or related condition identified in the report for a period of 30 days after sending the report required by Section 2272.003. Contractors and subcontracts are also given at least 120 days after the inspection to correct any construction defect or related condition identified in the report; or enter into a separate agreement with the governmental entity to correct any construction defect or related condition identified in the report.
The governmental entity is not required to allow contractor to make a correction or repair under the following conditions:
- The party is a contractor and cannot provide payment and performance bonds to cover the corrective work;
- The party cannot provide liability insurance or workers’ compensation insurance;
- The party has been previously terminated for cause by the governmental entity; or
- The party has been convicted of a felony.
The governmental entity, likewise, does not have to give a party an opportunity to correct or repair when the governmental entity previously complied with the process above regarding a construction defect or related condition identified in the report and the defect was not corrected or the correction resulted in a new defect or related condition.
The governmental entity must comply with these procedural requirements prior to bringing suit, or the suit may be subject to dismissal. However, the law does not prohibit or limit a governmental entity from making emergency repairs to the property as necessary to protect the health, safety, and welfare of the public or a building occupant. These procedures went into effect June 14, 2019.