By Ron Holmes
Condominium construction defect litigation initiated by a condominium owner association can almost be expected. Typically, the COA sues on behalf of all unit owners for collective damages rather than the unit owners suing for their individual damages.
The Texas legislature has created a platform for relief from construction defect litigation brought by COAs. Chapter 82.102(a)(4) of the Texas Property Code provides: “Unless otherwise provided by the declaration, the association, acting through its board, may…institute…litigation…on behalf of itself or [on behalf of] two or more unit owners on matters affecting the condominium”. The “Unless otherwise provided by the declaration” language allows developers to strip the COA’s right to bring suit on behalf of the condo owners by drafting the declaration to prohibit the COA from instituting any legal action on behalf of any or all of the owners which is based on alleged defects in any unit or any of the common elements, instead requiring that all such actions must be instituted by the unit owners whose units or common elements serving those units sustained such damage.
In October 2018, the “Unless otherwise provided by the declaration” language was put to the test in Mosaic Residential vs. JE Dunn. In that case, the Court held that language in a declaration allowing only the unit owners (not the COA) to sue for their individual damages indeed stripped the COA of the right to sue on behalf of the unit owners.
Accordingly, if you are drafting a new declaration or have the opportunity to amend an existing declaration, you should consider availing yourself of the “Unless otherwise provided by the declaration” language and limit your risk of construction defect litigation. If the unit owners are required to file suit on their own behalf for their own damages (rather than the COA filing suit on behalf of all the owners), their thirst for litigation is typically diminished.
 Texas Property Code Chapter 82.119 also added defenses for contractors/developers by providing a list of pre-suit requirements for a COA to file a lawsuit. As of October 2019, I am not aware of a case which has tested these pre-suit requirements.
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About Ronald L. Holmes (AV Rated), Shareholder and CEO
Ron’s real estate law practice experience is expansive. He’s served as lead counsel on real transactions all across the United States in all manner of real estate transactions, including large scale multi-use land developments and high rise residential condominiums, to acquisitions and sales of operating property portfolios, office, industrial and retail leasing and virtually every other form of real estate development, construction, financing, investing and leasing.Learn more about Ron…