The Texas Residential Construction Liability Act, 2022

The Texas Residential Construction Liability Act, 2022

Chapter 27 of the Texas Property Code

Homebuilding in Texas Continues to Grow

With the surge in Texas residential construction continuing to grow, there is an elevated demand on land, time, subcontractors and materials, all of which can translate into building challenges and potential defects. To quantify the situation, there were approximately 9,150 new residential construction permits in April of 2022, equating to $2.6 billion in investments, according to HBWeekly.

To protect homebuyers, the Texas Residential Construction Liability Act (RCLA) offers recourse in case of defective or faulty construction. This act essentially provides an authorized procedure for offering notice and formally filing a residential construction defect lawsuit; it resides Chapter 27 of the Texas Property Code.

Timing and Deadlines Are Critical

Many times, defects are not seen immediately by homeowners, that is why the statute of limitations, or the timeframe a homeowner can take legal action, is four years for breach of contract and/or warranty. For claims related to product liability or negligence, the time limitation is two years. For example, if a homeowner has been in their home for one year and finds that the plumbing has a leak due to a defective part, they have two years to initiate a RCLA claim.

The discovery rule can be a critical for calculating limitations.  This rule allows a plaintiff to defer the statute of limitations accrual date when the injury is inherently undiscoverable, and is objectively verifiable.  For example, where a homeowner cannot tell if hidden flashing has been properly installed around the window frames and it is proven that after heavy rainstorms that the windows leak, the discovery rule may allow the accrual of the statute of limitations to begin when the party first notices the leaks, as opposed to when the window installer improperly installed the windows.

Important First Steps for Homeowners

Prior to filing a lawsuit, a homeowner must make the contractor aware of their intent to file 60 days before, and must include descriptions related to all the known defects. Many times, the contractor will ask for supporting evidence from the homeowner, such as the nature of the defect, along with photos/video.

Contractors Have Response Options

The contractor has 35 days after receiving the initial notice to schedule an inspection of the property. The contractor has several options as to how to respond to the notice: they can make a written settlement offer within a 45-day window, by certified mail, to the homeowner. If the homeowner agrees to accept the offer, the contractor has 45 days to repair the defects after they receive a written notice of acceptance. The offer may be made for the cash value of the necessary remedial efforts, or the contractor can offer to actually remediate the defects.

The Chess Match Continues

If the homeowner declines the offer, they have a 25-day timeframe to reject it, and are required to, in writing, explain in detail why the offer is not acceptable. Once the contractor receives the rejection letter, they have an additional 10 days to offer another written settlement offer. Homeowners must be careful and evaluate the offer before they reject it, as such action can result in lower monetary damages or repairs that are based on fair market valuations that may be inadequate.

Final Word is Reasonable

It is important for homeowners to understand the limitations related to the Texas Residential Construction Liability Act. The type of damages a homeowner may recover are restricted to the following:

• reasonable cost to make necessary repairs to construction defects;
• reasonable cost to replace or repair damaged personal property caused by construction defects;
• reasonable and necessary engineering and consulting fees;
• reasonable expenses for temporary housing if needed during repair period;
• reduction in current market value, if any, after the construction defect results in a structural failure;
• reasonable attorney fees and costs of litigation.

If the defect is structural in nature, it is critical to hire a structural engineer to evaluate the extent of the defect.  Disputes are stressful, especially when the dispute involves something as precious as your homestead, so understanding the process of the RCLA may help homeowners realize how the process works and the steps involved.