The Woodlands (281) 343-3382

Blog - Vlog

Texas Residential Construction Liability Act - The Basics

Posted by Timothy Rodman | Oct 18, 2021

Residential construction of homes in Texas has been booming for years. With no signs of slowing down, especially around the major cities, residential construction of homes is being completed at an extraordinary pace.  With that demand and time crunch to build can come defects and problems.  This is where the Texas Residential Construction Liability Act (RCLA) helps protect Texas residents.  The Texas Residential Construction Liability Act is located in the Texas Property Code under Title 4, Chapter 27.  The RCLA lays out a formal process for providing notice and filing a residential construction defect lawsuit.

The statute of limitations for Texas Residential Construction Liability Act claims are 4 years for breach of contract or breach of warranty and 2 years for torts such as negligence or product liability.  In Texas, the Statute of Repose is 10 years.  This means an owner must file suit against the contractor for a construction defect during the first 10 years after substantial completion of the project with some specific exceptions.

There are a few definitions that are key to RCLA actions and the homeowner's proper standing to file a lawsuit.  First, a "contractor" includes "(1) a builder, as defined by Section 401.003, contracting with an owner for the construction or repair of a new residence, for the repair or alteration of or an addition to an existing residence, or for the construction, sale, alteration, addition, or repair of an appurtenance to a new or existing residence; (2) any person contracting with a purchaser for the sale of a new residence constructed by or on behalf of that person; or (3) a person contracting with an owner or the developer of a condominium for the construction of a new residence, for an alteration of or an addition to an existing residence, for repair of a new or existing residence, or for the construction, sale, alteration, addition, or repair of an appurtenance to a new or existing residence; and includes an owner, officer, director, shareholder, partner, or employee of the contractor; and a risk retention group registered under Article 21.54, Insurance Code, that insures all or any part of a contractor's liability for the cost to repair a residential construction defect".  A "builder" is defined by Section 401.003 Subtitle D, Title 16, as "any person who, for a fixed price, commission, fee, wage, or other compensation, sells, constructs, or supervises or manages the construction of, or contracts for the construction of or the supervision or management of the construction of: (1) a new home; (2) a material improvement to a home, other than an improvement solely to replace or repair a roof of an existing home; or (3) an improvement to the interior of an existing home when the cost of the work exceeds $10,000. The term includes: (1) an owner, officer, director, shareholder, partner, affiliate, subsidiary, or employee of the builder; (2) a risk retention group governed by Article 21.54, Insurance Code, that insures all or any part of a builder's liability for the cost to repair a residential construction defect; and (3) a third-party warranty company and its administrator".  Second, a "construction defect" is defined by Section 401.004 Subtitle D, Title 16, as "(1) the failure of the design, construction, or repair of a home, an alteration of or a repair, addition, or improvement to an existing home, or an appurtenance to a home to meet the applicable warranty and building and performance standards during the applicable warranty period; and (2) any physical damage to the home, an appurtenance to the home, or real property on which the home or appurtenance is affixed that is proximately caused by that failure. The term does not include a defect that arises or any damages that arise wholly or partly from: (1) the negligence of a person other than the builder or an agent, employee, subcontractor, or supplier of the builder; (2) failure of a person other than the builder or an agent, employee, subcontractor, or supplier of the builder to: (A) take reasonable action to mitigate any damages that arise from a defect; or (B) take reasonable action to maintain the home; (3) normal wear, tear, or deterioration; or (4) normal shrinkage due to drying or settlement of construction components within the tolerance of building and performance standards".  Lastly, a "residence" means the "real property and improvements for a single-family house, duplex, triplex, or quadruplex or a unit and the common elements in a multiunit residential structure in which title to the individual units is transferred to the owners under a condominium or cooperative system."

The Texas Residential Construction Liability Act provides notice requirements that must be followed prior to filing a lawsuit.  If these notice requirements are not followed, the lawsuit may be delayed to give the contractor time to inspect and make a reasonable offer of repair or settlement.  According to Section 27.004, initial notice of a RCLA claim must be provided by the homeowner to the contractor at least 60 days prior to filing the lawsuit.  This notice must provide reasonable details about the construction defects subject to the complaint.  The contractor may also request the homeowner provide any evidence depicting the nature and cause of the defect(s), along with, the nature and extent of necessary repairs.  This disclosure should include photographs, video, and expert reports that are subject to discovery during the lawsuit.  

Once the contractor receives the initial notice, they have 35 days to request, in writing, and schedule an inspection of the property.  Within 45 days after receipt of the initial notice, the contractor may make a written offer of settlement, by certified mail return receipt requested, to the homeowner.  If the homeowner chooses to accept the settlement offer, the contractor has 45 days after written notice of acceptance to repair the defects.  However, the homeowner has 25 days to reject the settlement offer, in writing, while providing reasonable detail as to why the offer is considered unreasonable.  Upon receipt of the written rejection of the offer, the contractor has 10 days to provide a supplemental written offer of settlement.  A "reasonable offer" is somewhat vague and not defined in the RCLA itself so it is important to evaluate any offer very carefully before rejection.  The rejection of a reasonable offer by the homeowner can result in a significant reduction in available damages to either the fair market value of repairs in the rejected settlement offer or the amount of monetary settlement to purchase the property made by the contractor, along with, reasonable and necessary costs and attorney's fees incurred prior to the rejection.

Damages under the Texas Residential Construction Liability Act are limited to "(1) the reasonable cost of repairs necessary to cure any construction defect; (2) the reasonable and necessary cost for the replacement or repair of any damaged goods in the residence; (3) reasonable and necessary engineering and consulting fees; (4) the reasonable expenses of temporary housing reasonably necessary during the repair period; (5) the reduction in current market value, if any, after the construction defect is repaired if the construction defect is a structural failure; and (6) reasonable and necessary attorney's fees."

The Texas Residential Construction Liability Act can be confusing for homeowners and has requirements that must be strictly followed.  Consulting an experienced attorney to navigate the process can help you avoid delays or loss of damages owed to you.  At Bertolatus Rodman PLLC, we provide free initial consultations to review your complaint.  Please feel free to call us at (281) 343-3382 or submit the contact form to get started!

DISCLAIMER

The information is not offered as legal advice upon which anyone may rely.  Information in this article is provided for public informational and educational purposes only.  No attorney-client relationship is created by the offering or reading of this article.  This law firm does not represent you until expressly retained by written agreement. It is recommended that you seek legal and professional counsel for your individual circumstances prior to taking any action with legal implications.

About the Author

Timothy Rodman

Partner

Contact Us Today

Bertolatus Rodman PLLC is committed to serving your needs in Estate Planning & Probate, Real Estate, Construction, and Business law issues in The Woodlands, Houston, and surrounding areas.

We offer a free consultation and we'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.

Menu