Condos: 2015 Legislative Update

The 84^th Texas Legislature made multiple changes to the laws affecting property owners associations.  The majority of the changes impact single family HOAs, but one important change was made to Chapter 82 of the Texas Property Code, or the Texas Uniform Condominium Act (“TUCA”).  Section 82.119 takes effect on September 1, 2015, and represents a major change to construction defect litigation.

 
The new section, entitled Construction Defect Litigation, requires the condo board to take specific steps prior to initiating a lawsuit for construction or design defects of units or common elements.  Specifically, the condo board must obtain an inspection and report from an independent, licensed professional engineer.  Another important aspect is that the condo board must notify all parties that may be subject to a claim that an inspection will be taking place.  The potential parties must be given at least 10 days’ notice, and must be permitted to attend the inspection.  The report must identify the location of the defect, describe the current physical condition, and describe any modifications undertaken by the Association or the homeowners. 

Upon completion, the inspection report must be provided to each party potentially subject to a claim.  To the extent that defects are found, the statute provides for a cure period, allowing the developer, contractor, or subcontractor the opportunity to remedy the defect.

As if the foregoing hurdles were not enough to protect the developers, the condominium board must obtain approval of at least 50% of the total votes in the Association prior to filing suit or initiating an arbitration proceeding.  

I have long recommended that homeowner boards undertake an engineering inspection upon turnover.  This inspection is sometimes referred to as a “turnover inspection”.  This seems especially important given the new requirements of section 82.119.