- The Texas legislature passed a series of laws in its latest session that make it easier for construction pros to do business in the state. The laws simplify some statutes, add protections for contractors who continue to work during the pandemic, reduce liability in certain cases and more.
- One of the new laws, SB 219, holds that contractors should generally not be liable for work completed under a defective design. "It's probably the biggest law that’s gone into effect in the latest session," said attorney Bob Hancock of Munsch Hardt Kopf & Harr, a Texas-based commercial law firm with a branch that specializes in construction. "And it's made a lot of contractors feel a whole lot better about doing business here."
- Most of the laws are already in effect; one will begin at the start of 2022.
According to Hancock, the following laws will have a great impact on contractors who work in the state. Here's more detail on what each one does:
1. SB 219 Contractors Not Liable for Design Defects:
In most states, the contractor is typically not held liable for work that's completed under the owner's defective design. But Texas' 1907 case Lonergan v. San Antonio Loan & Trust put the responsibility on the builder. The logic goes that since contractors are in the business of construction, they can be held liable because they have the expertise to know better — even if no one on staff is an architect or engineer. SB 219 goes a long way to correct this legal doctrine, Hancock said, but does not apply if the contractor provides the faulty design.
2. HB 2237 Modernizing and Simplifying Texas Lien Laws, effective Jan. 1, 2022:
The state's lien laws were widely regarded as among the most complex in the U.S. In summary, this 35-page law simplifies notice requirements, relaxes certain unforgiving deadlines, amends statutory definitions of important terms like "labor" and "subcontractor," addresses procedural issues and more. The law removes a lot of uncertainty and makes it easier for contractors to file liens themselves. It does not apply to public projects.
3. SB 968 Protection from Pandemic Related Project Shutdown:
This law prevents a presiding officer of a political subdivision, such as a mayor, from limiting or prohibiting progress on housing and commercial construction projects during a pandemic disaster, among other related activities. It also offers the same protection to businesses engaged in activities that necessarily support the construction industry. Since the pandemic began, more than half of states have passed laws limiting state and local governments' authority to protect public health in various ways, and more are pending, US News reported.
4. SB 6 Omnibus Pandemic Bill, Business Liability/Insurance Protections for Contractors:
This law shields essential businesses like contractors that continued to work amid the COVID-19 from liability for personal injury, death or property damage related to exposure to the pandemic disease. It does not apply in cases where the business failed to comply with government health standards or where it neglected to warn a worker about, or fix, conditions that led to them contracting the disease. "SB 6 is important because it offers protection to businesses that continue to operate during the pandemic," Hancock said.
5. SB 3069 Shorten Statute of Repose for Public Work:
This law shortens the period of time for which a contractor can be sued for defective construction from 10 years to eight years from the date of substantial completion of the project. It also shortens the possible two-year extension to a single year. This law carves out three exceptions: state highway projects, projects that received money from the state highway fund or got federal funds for highways or transit and civil works projects such as water, streets, utilities and airports.
6. SB 338 Uniform General Conditions for K-12 Building Construction:
Essentially, this law allows school districts to adopt uniform general conditions to be incorporated in all district construction contracts made by the state, simplifying the building process for contractors and schools alike.
7. HB 2416 Close Commercial General Liability Gap for Attorney's Fees due to In re Nalle:
This law authorizes the recovery of attorney's fees as compensatory damages for breach of a construction contract. In short, the insurance company is required to pay the prevailing party's attorney's fees instead of the contractor being responsible for that expense. "From a contractor's perspective, this is a really important bill because now you may have to pay a little more in insurance, but it won't be as catastrophic if you're held liable," Hancock said.
8. HB 19 Reformation of Litigation Abuse Regarding Commercial Vehicle Accidents:
This law creates a bifurcated trial system for commercial vehicle accident cases, wherein the trial can be split into two phases to separately determine ordinary and gross negligence. It's an effort to disincentivize frivolous lawsuits in transportation industries including construction, which often requires the use of heavy commercial vehicles. The new process is widely considered by contractors to be more fair, Hancock said.
All of these laws contain details and exceptions that aren't covered in this summary, and it's important for contractors to read over the changes carefully. Nonetheless, in sum they should ease the process of building in Texas, Hancock said.
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