Texas Legislature proposes bill for private construction defect claims over $10 million

A new legislative bill, HB2021, was introduced in Texas on January 22, 2025, aiming to reform the process surrounding construction defect claims for private construction contracts exceeding $10 million. The bill seeks to streamline the resolution of disputes between private owners and contractors by establishing clear protocols for reporting and addressing construction defects.

Key provisions of HB2021 include requirements for governmental entities and private owners to provide written reports detailing specific construction defects, the current condition of the affected structures, and any modifications made since initial occupancy. This report must be sent via certified mail to all parties involved in the construction contract. Additionally, the bill mandates that contractors must share this report with subcontractors within five days of receipt.

The legislation also introduces a structured opportunity for inspection and correction. Before any legal action can be initiated, parties involved must be given a 30-day window to inspect the reported defects and a subsequent 120 days to rectify the issues or negotiate a separate agreement for corrections.

Notably, HB2021 does not apply to claims related to personal injury, residential property, or projects funded by state or federal highway funds, among other exclusions. This specificity aims to limit the scope of the bill to large-scale private construction projects, potentially reducing litigation costs and expediting repairs.

The introduction of HB2021 has sparked discussions among stakeholders in the construction industry. Proponents argue that the bill will enhance accountability and efficiency in addressing construction defects, ultimately benefiting both owners and contractors. However, some critics express concerns that the bill may inadvertently limit the rights of property owners to seek redress for legitimate claims.

The economic implications of HB2021 could be significant, as it may lead to reduced legal disputes and faster resolutions, potentially lowering costs for large construction projects. As the bill progresses through the legislative process, its impact on the construction industry and property owners will be closely monitored. The next steps will involve committee reviews and potential amendments before a vote is scheduled.