Will Texas public entity “right to repair” bill begin national wave?

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Publication July 2019

Texas’ newly enacted House Bill 1999 (“HB 1999”) allows those designing or constructing a public building or public work to inspect and repair alleged defects prior to institution of litigation by the public entity. Aimed at quelling preventable litigation and saving taxpayer money when a contractor can and will satisfy its contractual requirements, this Texas “right to repair” could start a national trend to codify, solidify and clarify a design professional’s or contractor’s right to cure defects.

Further, the concept—that a construction owner or developer must first provide an opportunity to inspect and correct—could expand into private construction projects, especially in instances where private owners or developers utilize some form of public funding, financing or incentives.

HB 1999 evolved from concerns that groups of Texas attorneys had regularly encouraged local governments to sue contractors and design professionals for defects prior to providing notice or an opportunity to inspect or cure.

HB 1999 not only covers new construction, but also applies to improvements, additions and repairs or alterations. Under the new law, government entities must provide contractors and design professionals with a written report describing the defect, 30 days to inspect the defect, and an additional 120 days to repair (or enter an agreement to repair) the defects.

Although the bill does not apply to transportation and highway projects, it does apply to other projects for the state, cities, counties, school districts and local government bodies. Within Texas, HB 1999 raises questions and concerns for public entities, contractors, design-professional and subcontractors, specifically with respect to the following:

  • Conflicts with contract: What happens when the contract has more specific or shorter cure periods?
  • Emergencies: What types of emergency repairs might constitute an exception to HB 1999?
  • Subcontractor rights: What are the rights of subcontractors not in privity with the public entity?
  • Repair quality: Does the owner have sole authority to deem something repaired / Can the owner reject a proposed repair contract for any reason? Does the owner have the right to reject a repair process or does the contractor have the right to attempt a repair, and risk making it worse?
  • Termination: Will this lead to public entities or owners on public projects terminating design professionals and contractors to avoid the requirements of HB 1999?

Outside Texas, construction owners, developers, design professionals and contractors should anticipate the potential spread of legislation like HB 1999 to other states and the potential expansion of the contractor notice-and-cure rights to quasi-public and privately funded projects.

Our construction lawyers negotiate contracts and resolve complex construction disputes for energy, infrastructure, and commercial construction clients through unparalleled, world class knowledge in the energy, infrastructure, commercial construction and real estate sectors coupled with an extensively deep bench in construction disputes. We routinely counsel owner, developer, and sponsor clients throughout all aspects of the construction process to avoid disputes when possible, manage risk, and recover damages necessary to maintain profitable projects.

Our lawyers know construction. We stand alongside our clients conducting critical path delay and liquidated damages analysis, reviewing change order and extra work claims, assessing design professional errors, mitigating defects, evaluating performance guaranty damages, and documenting all types of hurdles, pitfalls, and unexpected project anomalies.

 

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