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SB 834, if passed, would modify the Property Code (Subchapter C, Chapter 28) by adding two new sections, 82.119, and 82.120, each of which will be discussed in turn. The first change regards new procedures for filing suit and the second change regards binding arbitration made on certain claims.
Section 82.119 places new requirements on condominium associations (with more than eight units) if said associations wish to file suit for defects or design claims. Associations would be required to obtain an independent inspection from a third party attesting to the elements in question, approval of the unit owner who holds 50% or more of votes, and must provide written notice to each party subject to the claim. This notice must identify all parties and elements involved, and include the date and time of the proposed inspection.
This section also requires that a special meeting be held in which each owner is provided a written notice on the subject of the claim which describes the nature of the claim, among other legal information (listed under subsection f of the bill)
Section 82.229 adds new language to the code regarding binding arbitration for certain claims. Any claim made under the above section pertaining to construction or design elements must be resolved via binding arbitration. This binding arbitration requirement does not apply retroactively to claims which occurred prior to the passage of this bill.
SB 834 offers both positive and negative developments. On the one hand, the bill would strengthen property rights. Currently condominium associations need not inform individual unit owners of suits filed for defects and this process could adversely affect property values. SB 834 would make unit owners aware of the situation and given somewhat detailed notification. On the other hand this process comes at the cost of the detailed regulations laid forth in the bill.
The requirement that this be resolved via binding arbitration might not be necessary. We also take issue with the exemption of condominiums with less than eight units. Ultimately, the gains in the realm of property rights are somewhat negated by these other concerns. As such we are neutral on SB 834.