CONTACT US (281) 343-3382

Blog - Vlog

Texas Residential Construction Liability Act - The Basics

Posted by Timothy Rodman | Jan 12, 2024

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" means: "(i) a builder 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; (ii) any person contracting for the sale or construction of a new residence constructed by or on behalf of that person; or (iii) a person contracting with an owner or the developer of a condominium or other housing project for the construction or sale of one or more new residences, 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: (i) an owner, officer, director, shareholder, partner, or employee of the contractor; and (ii) a risk retention group registered under Chapter 2201, 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".  Next, a "construction defect" is defined as "a deficiency in the design, construction, or repair of a new residence, of an alteration of or repair or addition to an existing residence, or of an appurtenance to a residence, on which a person has a complaint against a contractor".  Lastly, a "residence" means "the real property and improvements for a detached one-family or two-family dwelling, a townhouse not more than three stories above grade plane in height with a separate means of egress, an accessory structure not more than three stories above grade plane in height, or a duplex, triplex, or quadruplex or a unit and the common elements in a multiunit residential structure in which the individual units are sold 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 homeowner must "provide to the contractor any evidence that depicts the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect, including any expert reports, photographs, and video or audio recordings, if that evidence would be discoverable under Rule 192, Texas Rules of Civil Procedure."  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.  The contractor shall be given up to 3 opportunities to inspect the property within this inspection period.  Within 60 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.  The contractor's offer notice shall describe in reasonable detail the kind of repairs which will be made and the time for completion of the repairs if more than 60 days.  If the homeowner chooses to accept the settlement offer, the contractor has 60 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.  If a homeowner files suit seeking from a contractor damages arising from a construction defect in an amount greater than $7,500, the homeowner or contractor may file a motion to compel mediation of the dispute and the motion must be filed not later than the 90th day after the date the suit is filed.

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 The Rodman Firm, 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

Managing Attorney

Contact Us Today

The Rodman Firm PLLC is committed to serving your needs in residential and commercial real estate, construction, business, estate planning and probate, oil and gas, and agriculture throughout Texas.

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