Texas is Chipping Away at Property Owners’ Rights: Inside the Troubling Trend 

Why the Texas economy is so robust is perhaps a subject for debate. Certainly, it would require much more space to examine than is available here. But the “Texas Miracle” is by all accounts a real thing. There is little doubt that Texas businesses have thrived in the confluence of conditions existing in Texas for the past couple of decades.  

Then why would the Texas Legislature strive to place hardships on Texas businesses by making it more difficult for them, as property owners, to recover the full cost of repair for construction defects?  

In the last few legislative sessions, the Legislature has been on a mission to strangle the efforts of Texas businesses, governmental entities and individuals to safeguard and defend their property rights when construction is involved.  

The tactics are ingenious and well-suited to larger legislative agendas sponsored by well-funded special interest groups.  

First, you find a thematic boogeyman — in this situation, as in so many others historically in Texas, it’s “litigiousness.” (When a property owner seeks to recover the cost to repair their buildings, they are being “litigious.” When an insurance company sues to interpret a policy provision contrary to the policyholder’s interest, it’s being “prudent.”)  

Then, under the guise of “preventing hardship for blameless parties struggling to make a living,” you begin to chip away at property owners’ ability to recover costs of repair, shielding the responsible parties from full accountability in the process. 

Texas has seen a curious twist to this scheme when it comes to collecting appropriate damages in construction-defect cases. When those seeking to curtail recovery in all instances of shoddy workmanship or performance encounter resistance, they pivot and focus on making the restrictions apply to local governmental entities — a classification of property owners largely without the political clout the Legislature respects.  

In fact, the legislative faction responsible for this course seems determined to dilute whatever political influence local governments might have. Witness Senate Bill 175 before the current Legislature, which seeks, as other bills in past sessions have done, to prohibit political subdivisions from hiring lobbyists. Note: This SB 175 died in the House State Affairs Committee)

Once a municipality’s rights have been slashed, usually without public outcry, the door is open to continuing incremental restrictions against everyone else. Ultimately, no property owners are safe, including businesses. 

Consider House Bill 1999 in the 85^th Legislature (2019), adding Chapter 2272 to the Texas Government Code. The statute places significant restrictions on the rights of governments to seek redress for construction defects. It not only requires potential plaintiffs to expend substantial resources before being able to bring a claim, it also gives potential defendants a grace period and the opportunity to attempt to repair work they should have done correctly in the first place before permitting the property owner the benefit of court action.  

Having successfully curtailed governmental rights with Government Code Chapter 2272 in 2019, the legislative forces aligned against property owners are seeking this session to extend the restrictions to all Texans with House Bill 2310, which accomplishes essentially the same thing across the board. (Note: HB 2310 reported favorably by House Judiciary & Civil Jurisprudence Committee; died in Calendars Committee)

In this light, let’s reflect upon the statutes of repose for construction-related cases. The initial effort to reduce them for everyone from a debatably reasonable 10 years (although the better argument is to extend them to 15) to a manifestly unreasonable five years failed. The effort shifted and succeeded in reducing them to eight years, but only when the injured party is a unit of local government.  

How long do you suppose it will be until we see a renewed general assault on the statutes of repose? Not long, as it turns out. House Bill 2024, filed this legislative session, is just such an assault. The bill ostensibly applies only to residential construction claims rather than business properties. Still, it continues the pattern of chipping away at owners’ property rights by reducing the period within which a suit must be brought to an irrationally short six years. That’s a pretty big chisel. (Note: HB 2024 is effective as of June 9, 2023)

Then there are statutes like House Bill 2022, which amends Property Code Chapter 27 to give contractors — whose improper performance was responsible for defective construction in the first place — significant protections, including the option for multiple inspections and the privilege to control the process of repair (either by themselves or others) before the property owner can avail themselves of the Texas civil justice system. And this applies whether the structure involved is a single-family residence or a multistory high-rise condominium complex. (Note: HB 2022 is effective on Sept. 1, 2023)

Improved real property is a significant portion of many businesses’ asset picture. For the Texas business environment to remain robust, Texas businesses — all of them, from mom-and-pop operations to huge multinationals — need security and the knowledge that their assets are protected. Unfettered recourse to full compensation for construction defect damages is critical to that security.  

Yes, the Texas Miracle is real. But will the Texas Legislature allow it to continue?*

* While not all of the anti-business bills mentioned in this article passed, enough did (and are now or soon will be the law) to conclude that the slow asphyxiation of business interests in Texas continues.