Tuesday, November 22, 2011

Disaster Remediation Contracts

The 82nd Texas Legislature passed House Bill 1711 to regulate “Disaster Remediation Contracts” which became effective on September 1, 2011. House Bill 1711 is now Chapter 57 of the Texas Business & Commerce Code and regulates contracts for “the removal, cleaning, sanitizing, demolition, reconstruction, or other treatment of improvements to real property because of damage or destruction to that property caused by a natural disaster.”

A disaster declaration is made by the governor and a recent example would include the wildfires throughout Texas. Other examples would include hurricanes and tropical storms that devastated the Gulf Coast.

The new legislation requires a written contract that includes specific terms and disclosures. Failure to comply is a “Deceptive Trade Practice” under Chapter 17, Texas Business & Commerce Code and can result in a wide range of penalties.

There are a few exceptions to the applicability of the new legislation. Notably, the new statutory requirements do not apply to “local” contractors which are contractors that maintained a physical business address in the county in which the property is located or a county adjacent to the county in which the property is located for at least one year preceding the date of the contract.

If you are soliciting contracts in areas under a disaster declaration, you should review your contracts to ensure that the new required terms and disclosures are included.

Article by Sarah F. Berry, Attorney