This post was written by Chris Rhody, Esq., one of our founding members who has spent his entire legal career involved construction defect litigation.
Introduction: Construction Defect Law in Texas
While many metropolitan areas recently suffered declines in residential construction, areas with strong local economies – like those in Texas – continued to experience strong construction growth. In these “boom” areas, the demand for qualified labor; coupled with the desire to build quickly to maximize profits; led to many communities suffering construction defects. There problems have been, and continue to be especially severe in condominium communities.
In this legislative session, a bill (HB 1455) has been introduced that would harmfully reduce condominium associations’ abilities to pursue claims for construction defects. Alarmingly, the bill targets only condominium associations, and not other types of common interest communities. If this bill becomes a law: 1) Condominium associations could be prevented from bringing their claims at all; 2) Condominium associations would be required to spend large amounts of money hiring consultants before they could even consider bringing claims; 3) Condominium associations would even be prevented from hiring legal counsel to assist them.
This article will explore the negative impacts this proposed bill would have on condominium associations, and what they can do to about it.Call Today 1-800-996-1770
How HB 1455 Harms Condominium Owners
HB 1455 has a number of provisions that negatively impact condominium owners. These include:
- Preventing homeowners from amending builder-written governing declarations from their covenants;
- Suppressing homeowner input by imposing restrictive voting rules.
- Imposing prohibitive costs on homeowners before claims are even filed.
- Restricting homeowners’ rights to obtain full legal representation when victimized by negligent construction.
Builders Set the Rules from the Beginning. Before a condominium community is even built, the declarant (or its agent – usually a lawyer) writes the covenants governing the community. The covenants in newer communities often attempt to ban homeowners from asserting construction defect claims and/or waive their rights to a jury trial.
Allows Builders To Continue Setting Rules. Under current law, homeowners can amend any covenant provisions they deem unacceptable, after securing homeowner control, by holding a vote. HB 1455 would prevent condominium associations from voting to amend covenants related to addressing construction defects; and would prevent them from voting to amend covenants waiving their right to trial.
Builders Already Have the Opportunity to Avoid Litigation. Texas law, through the Residential Construction Liability Act (RCLA), already provides a required notice process and opportunity to repair before any claims can be filed. According to the RCLA, before a construction defect lawsuit can be filed, the association must first try to informally resolve its claims against the builder by presenting the builder notice and an opportunity to inspect the defects. The builder can then decide if it wants to make a monetary settlement offer, or an offer to perform repairs. This process typically takes at least 135 days. Interestingly, condominium associations are not required to go through such a process to enforce any of their other legal rights (for example collecting monthly assessments), which demonstrates the power builders have already exercised to protect themselves from claims of negligent construction.
Restricts Homeowners’ Access to Expert Advice. HB 1455 interferes with a homeowner’s right to obtain full legal representation in order to assess the scope/impact of a construction defect. HB 1455 would limit the scope of early legal representation and dictates the scope of early expert investigation. This would be unprecedented in Texas. There is no other situation where the law restricts an entity or individual’s right to hire an attorney or other consultant to assist in evaluating a problem.
Suppresses Homeowner Input. By requiring 50% in-person attendance at a vote on pursuing a construction defect claim, the bill would prevent homeowners from making construction defect decisions through their elected board; or to allow proxy votes to accommodate work schedules, military service, family obligations, and out-of-state owners. This would be especially harmful to condominium communities who often experience higher percentages of such owners.
Shifts Expensive Costs to Homeowners. HB 1455 imposes expensive and time consuming pre-claim investigations by engineers, appraisers, and real estate brokers on homeowners. The costs associated with hiring these experts could run thousands of dollars (or higher) even for the smallest claims. These costs, in effect, would prevent homeowners who cannot afford them from making construction defect claims.
Takes Away Homeowners’ Rights to Direct Repairs to Their Own Property. HB 1455 forces homeowners to allow the parties who caused the defects in the first place access to their property to make potentially inadequate repairs.
What can be Done
There are a number of ways to combat HB 1455. The first is to contact your local state House and Senate representatives to voice your opposition to the bill. In addition, Texas’ strong Community Associations Institute chapters, including the Dallas/Ft. Worth Chapter, can take a position against this bill as being against the interests of all common interest communities in Texas.
Condominium builders in Texas are already afforded sufficient protection under the Residential Construction Liability Act to protect them from construction defect claims. Construction defects are resolved by building homes right, not through legislation punishing Texas homeowners.
About the Author
Chris Rhody, Esq.,
222 Las Colinas Blvd. W., Suite 1955N
Irving, TX 75039
Chris is a founding member of McKenzie Rhody. Chris’ entire legal career has involved construction defect litigation. He got his start defending some of the country’s largest home builders. However, since 1998, Chris has concentrated solely on representing homeowners and homeowners associations in construction defect lawsuits.
Chris has been an active member of and speaker on construction defect issues for several chapters of CAI since 1998. He has also spoken throughout the United States on construction defect issues, including presentations at the AEI-Brookings Judicial Symposium on Critical Issues in Construction Defects Litigation; the Mealey’s Construction Defect Super Conference; and Lorman construction defect seminars. Chris has also written numerous articles on construction defect issues affecting homeowners and homeowners associations.Call Today 1-800-996-1770