Sec. 82.119. PROCEDURES FOR FILING SUIT OR INITIATING ARBITRATION
PROCEEDINGS FOR DEFECT OR DESIGN CLAIMS FOR CERTAIN ASSOCIATIONS.
New Section to TUCA
Requires the condo board to be deliberative about initiating a lawsuit for construction or design defects of
units or common elements. It seeks to eliminate construction defect fishing expeditions (sue first, find
defect later) by requiring an engineering report and an opportunity for the builder and design professionals
to cure before the HOA sues. Also, a majority of unit owners must agree with the board's decision to sue.
The new law reinforces mandatory arbitration provisions, if any, in the declaration. To allow time for the
required procedures, the law grants a one-year toll of the statute of limitations under certain circumstances.
Although aimed at the original construction of buildings less than 10 years old, the bill also covers claims
of construction or design defects in improvements for which the HOA contracted. This new law doesn't
affect claims by individual owners, and it doesn't pertain to other types of litigation by the HOA.
EFFECTIVE FOR A LAWSUIT OR ARBITRATION PROCEEDING FOR A CLAIM PERTAINING
TO THE CONSTRUCTION OR DESIGN OF A UNIT OR THE COMMON ELEMENTS INITIATED
BY A CONDOMINIUM ASSOCIATION ON OR AFTER 9/1/15.
(a) This section does not apply to an association with less than eight units.
(b) In addition to any preconditions to filing suit or initiating an arbitration proceeding included in the
declaration, an association, before filing suit or initiating an arbitration proceeding to resolve a claim
pertaining to the construction or design of a unit or the common elements, must:
(1) obtain an inspection and a written independent third-party report from a licensed professional
(A)identifies the specific units or common elements subject to the claim;
(B) describes the present physical condition of the units or common elements subject to the
(C) describes any modifications, maintenance, or repairs to the units or common elements
performed by the unit owners or the association; and
(2) obtain approval from unit owners holding more than 50 percent of the total votes allocated
under the declaration, voting in person or by proxy as provided by Section 82.110, at a regular, annual, or
special meeting called in accordance with the declaration or bylaws, as applicable.
(c) The association must provide written notice of the inspection to be conducted by the engineer to each
party subject to a claim not later than the 10th day before the date the inspection occurs. The notice must:
(1) identify the party engaged to prepare the report required by Subsection (b)(1);
(2) identify the specific units or common elements to be inspected; and
(3) include the date and time the inspection will occur
(d) Each party subject to a claim may attend the inspection conducted by the engineer, either personally
or through an agent.
(e) Before providing notice of the meeting under Subsection (f), an association must:
(1) on completion of the independent third-party report, provide the report to each unit owner and
each party subject to a claim; and
(2) allow each party subject to a claim at least 90 days after the date of completion of the report to
inspect and correct any condition identified in the report.
(f) Not later than the 30th day before the date the meeting described by Subsection (b)(2) is held, the
association must provide each unit owner with written notice of the date, time, and location of the meeting.
The notice must also include:
(1) a description of the nature of the claim, the relief sought, the anticipated duration of prosecuting
the claim, and the likelihood of success;
(2) a copy of the report required by Subsection (b)(l);
(3) a copy of the contract or proposed contract between the association and the attorney selected
by the board to assert or provide assistance with the claim;
(4) a description of the attorney's fees, consultant fees, expert witness fees, and court costs, whether
incurred by the association directly or for which the association may be liable as a result of prosecuting
(5) a summary of the steps previously taken by the association to resolve the claim;
(6) a statement that initiating a lawsuit or arbitration proceeding to resolve a claim may affect the
market value, marketability, or refinancing of a unit while the claim is prosecuted; and
(7) a description of the manner in which the association proposes to fund the cost of prosecuting
(g) The notice required by Subsection (f) must be prepared and signed by a person who is not:
(1) the attorney who represents or will represent the association in the claim;
(2) a member of the law firm of the attorney who represents the association in the claim; or
(3) employed by or otherwise affiliated with the law firm of the attorney who will represent the
association in the claim.
(h) The period of limitations for filing a suit or initiating an arbitration proceeding for a claim described
by Subsection (b) is tolled until the first anniversary of the date the procedures are initiated by the
association under that subsection if the procedures are initiated during the final year of the applicable
period of limitation.r an election or vote not taken at a meeting, the POA shall give notice of the election or vote to all owners entitled to vote on any matter under consideration. The notice shall be given not later than the 20th day before the latest date on which a ballot may be submitted to be counted.