Texas Legislature Raises Threshold Requirements For Defect & Design Suits Brought By Condo Associations
As of September 1, 2015, Texas law requires condominium associations to satisfy approximately six new pre-litigation requirements before filing a defect or design claim in court. Texas House Bill 1455 sets forth the new requirements, noting that they apply only to a suit filed or arbitration proceeding initiated on or after September 1, 2015. From that date forward, before filing suit, condo associations must:
- Get 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, as well as a description of any modifications made by the unit owners or the association.
- Gain approval from the unit owners holding more than 50% of the total votes.
- 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, and allowing each subjected party to be present for the inspection.
- Prior to providing notice of a meeting with the unit owners to vote on bringing suit or arbitration, the association must provide the inspection report to each unit owner and each party subject to a claim, allowing each subjected party at least 90 days to correct any condition in the report.
- By 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 that includes 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.
- 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.
Before initiating any such suit or arbitration, condo associations should be very careful to comply with all of these new requirements, and keep good records should they face a subsequent challenge in court.