Recap from the 88th - A Good Session for Housing Developers
Before launching into the specific bills that passed, it is important to start with the successful defense in this area as well. It is an existential threat to the continued viability of manufactured and modular housing in Texas if counites obtain land use control or zoning authority.
There were several bills TMHA opposed vigorously that would directly allow counites zoning control, if the local voters approved such expansion of authority, and then also the resurfacing of a bill originally filed and fought over in 2021 that would allow counites de facto zoning and land use authority under the auspice of allowing counties to adopt and enforce the Wildland-Urban Interface Code.
Fortunately, our defensive efforts, along with other similarly interested industries, successfully defeated these bad bills once again.
But we fully expect these fights to come around again in 2025 and sessions thereafter.
Ok, now for the good bills we supported that did pass.
H.B. 2024 changes the statute of repose for a person to sue a home builder for a housing defect. Under current law, a person may bring a suit for damages against a person who constructs or repairs an improvement to real property not later than 10 years after substantial completion.
H.B. 2024 establishes new limitations periods for bringing suit for damages arising out of the design, construction, or repair of certain residential construction, if the contractor being sued has provided a written warranty for a minimum of one year for workmanship and materials, two years for plumbing electrical, heating and air-conditioning systems, and six years for major structural components, then a suit must be brought no later than six years after completion of the project.
The change with this law provides an incentive for home builders to offer warranties that comply with the prerequisites to reduce the limitations for suits down from ten to six years.
This law applies to a "residence" which is defined as, “the real property and improvements for a detached one-family or two-family dwelling or a townhouse not more than three stories above grade plane in height with a separate means of egress or an accessory structure not more than three stories above grade plane in height.”
This law would apply to modular and manufactured homes attached to real property, but would not apply to personal property manufactured homes.
This law took effect immediately after Gov. Abbott signed it into law on June 9, 2023.
H.B. 2022 changes provisions in Chapter 27, Property Code, also referred to as the Residential Construction Liability Act (RCLA).
This bill strongly supported by the Texas Association of Builders, overcame opposition by the Texas Trial Lawyers Association, to makes changes in the process for the resolution of residential construction defect disputes and affords builders the opportunity to cure construction defects.
The law changes clean up several outdated references, but also clarifies that a contractor is only liable if the defect was proximately caused by the contractor resulting in damage, failure of a building component, or verifiable danger. The bill clarifies that normal cracking due to shrinking or settlement is akin to normal wear and tear and not actionable. The bill also clarified provisions related to arbitration of contractor disputes, and that contractors are not liable when there is failure to mitigate damages, maintain the residence, or timely notify the contractor of the defect.
While traditionally issues related to defects with manufactured homes are addressed through the statutory warranty provisions and the consumer process with TDHCA, technically, Chapter 27 can also apply to manufactured homes that fall within the definition of “residence” within Chapter 27.
“Residence” will be defined under a new definition from H.B. 2022 as:
“the real property and improvements for a detached one-family or two-family dwelling, a townhouse not more than three stories above grade plane in height with a separate means of egress, an accessory structure not more than three stories above grade plane in height, or a duplex, triplex, or quadruplex or a unit and the common elements in a multiunit residential structure in which the individual units are sold to the owners under a condominium or cooperative system.”
This law goes into effect September 1, 2023.
H.B. 14 is a pro-land development bill that puts a 15-day clock on local development officials to approve or deny applications for plats and property development plans, permits, and similar documents. If they fail to perform the required approval or inspection after 15 days from the deadline stated in the statute for such a review, then the developer can use a third-party to do the necessary review.
"Development document" means, “a document, including an application for a plat, plan, or development permit, related to the development of or improvement to land that is required by law, ordinance, rule, or other measure to be approved by a regulatory authority in order for a person to initiate, engage in, or complete the development or improvement.”
If a third-party person can be used after the time has expired, it can be a person who is:
- employed by the regulatory authority to review development documents;
- employed by another political subdivision to review development documents, if the regulatory authority has approved the person to review development documents; or
- a licensed engineer.
This law goes into effect September 1, 2023.
H.B. 3492 is another bill brought forth by the pro-housing development community. This bill prohibits cities or counties from imposing a permit or fee based on the value of a particular construction project.
This bill comes as the result of some cities charging development inspection fees based on the value of the development and not to cover the cost of the local inspection program. Those on the development side view such variable fees as an unconstitutional occupations tax.
H.B. 3492 prohibits municipalities and counties from considering the cost of constructing or improving public infrastructure in determining the amount of inspection fees. H.B. 3492 requires the municipality or county to use the actual cost to review and process the engineering or construction plan or inspect the infrastructure improvement.
H.B. 3492 also requires the governmental entity to calculate what the actual cost is to provide the inspection and provides entities with a method for determining how to calculate these costs.
The locally imposed fees, in compliance with this law, must then be disclosed on the cities’ or counties’ website.
This law goes into effect on September 1, 2023.
H.B. 3697 is a bill that relates to, “to county regulation of subdivisions and approval of subdivision plans or plats.” Texas counties have different requirements for subdivision regulation and subdivision plat approval. H.B. 3697 requires a county commissioners court to post and continuously maintain on the county's website the most current version of the documentation list needed and other information that must be submitted with a plat application.
The legislative intent for H.B. 3697 is to provide more consistency throughout Texas for future development and to provide the public with as much notice as possible regarding the requirements for a plat application.
H.B. 3697 also removes the previous law that allowed a county to have a “designee” for reviewing and approving plating and subdivisions plans, and instead now requires a “county authority responsible for approving plats,” which must be, “one or more officers or employees of the county.”
The new law makes clear that a plat is considered filed on the date the applicant submits the plat, along with a completed plat application and the application fees to:
- the commissioners court; or
- the county authority responsible for approving plats.
The law also prohibits the commissioners court or the county authority responsible for approving plats from requiring an analysis, study, document, agreement, or similar requirement to be included in or as part of an application for a plat, development permit, or subdivision of land that is not explicitly required by state law.
This effectively preempts, at the state-level, all local county specific requirements over plats, permits or subdivision development documents. Developers need only comply with the state law requirements, which counties must also follow and then list on their county website.
Once all disclosed and properly required, from the state level, documents are submitted, the application is considered “complete,” which can be important for freezing in time the development regulations and vested rights for the developer.
This law goes into effect on September 1, 2023.
H.B. 3699 is the sister legislation to H.B. 3697, but instead of counties, H.B. 3699 applies to, “municipal (i.e. cities) regulation of subdivisions and approval of subdivision plans or plats.”
This law was borne out of developer’s complaints that city subdivision regulations and approval differs city-to-city throughout Texas. Specifically, there is no consistency with regard to how cities handle requirements for completed subdivision plat applications and the beginning of the 30-day period in which to approve, approve with conditions, or disapprove a completed plat application.
Again, similar to H.B. 3697, this law clarifies that a plat application is filed on the date, “the applicant submits the plat, along with a completed plat application and the application fees and other requirements prescribed by or under this subchapter, to:
- the governing body of the municipality; or
- the municipal authority responsible for approving plats.
The law also prohibits a city from requiring an, “analysis, study, document, agreement, or similar requirement to be included in or as part of an application for a plat, development permit, or subdivision of land that is not explicitly allowed by state law.”
The goal of the law change is to make the application process crystal clear and set the date when a completed application is filed. This is important for freezing the development requirements, for things like building codes etc., in time for the development, along with the developers’ vested rights in the future project.
Prior to this law, some cities had changing or confusing requirements or other intermediate designations of the application process such that they would not “trigger” the vested rights clock, leaving a housing developer subject to the future changes of development standards and requirements.
The new law also requires cities to publish their list of development application requirements and post them on their website, or if they don’t operate a website, the newspaper of record or where the city council meets.
H.B. 3699 prohibits a city from requiring, as a condition of plat or subdivision approval, the dedication of land within a subdivision for a future street or alley that is:
- not intended by the owner of the tract; and
- not included, funded, and approved in:
- a capital improvement plan adopted by the municipality; or
- a similar plan adopted by a county in which the municipality is located or the state.
If a city authority responsible for approving plats fails or refuses to approve a plat that meets the requirements of this subchapter, the owner of the tract that is the subject of the plat may bring an action in a district court in a county in which the tract is located for a writ of mandamus to compel the municipal authority to approve the plat. The applicant shall recover reasonable attorney's fees and court costs in the action if the applicant prevails.
The municipality may recover reasonable attorney's fees and court costs in the action if the municipality prevails and the court finds the action is frivolous.
This law goes into effect on September 1, 2023.