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New Texas Law Lists Requirements for Condominium Defect Litigation

8/25/2015

The Texas Legislature recently passed House Bill 1455 which addresses defect and design claims relative to condominiums and condominium associations. Among the key issues are a series of new steps that must be accomplished before a lawsuit is filed. The new law applies only to a suit filed or arbitration proceeding initiated on or after September 1, 2015.

The following is a summary of the new requirements that an association must follow before filing suit:

  1. Obtain an inspection and a written independent third-party report from a professional engineer that: identifies the specific units or common elements subject to the claim; describes the present physical condition of the units or common elements subject to the claim, and describes any modifications made by the unit owners or the association.
  2. Obtain approval from the unit owners holding more than 50% of the total votes (see paragraph 4 below).
  3. Provide written notice of the inspection to each party subject to a claim no later than 10 days prior to the inspection (identifying the inspector, the units/common elements to be inspected, and the date and time of the inspection). Each party subject to a claim may attend the inspection.
  4. Prior to providing notice of a meeting with the unit owners to vote on the initiation of suit (or arbitration), the association must provide the inspection report to each unit owner -- and each party subject to a claim -- and allow each party subject to a claim at least 90 days to correct any condition in the report.
  5. Not later than the 30th day before the date of the meeting of the unit owners to vote on whether to sue or initiate arbitration, the association must provide each unit owner with written notice of the date, time and location of the meeting. The notice must also include: a description of the nature of the claim, the relief sought by the suit, the anticipated duration of the suit, and the likelihood of success. Additionally, the association must provide a copy of the inspection report, the contract between the association and the attorney representing the association, a description of the anticipated attorney’s fees and costs, a summary of what the association has done to resolve the claim, and a statement that the lawsuit may affect the property values. This notice must be prepared and signed by a person who is not the attorney (or otherwise affiliated with the attorney) who will represent the association in the suit.
  6. The limitations period for filing suit or arbitration is tolled until the first anniversary of the date the procedures are initiated by the association if the procedures for the inspection and owners’ vote are initiated during the final year of the applicable period of limitations.