Construction defects in Texas — the workmanlike warranty and the RCLA notice you cannot skip

Texas gives a homeowner two implied warranties the contract does not have to mention: that the work will be done in a good and workmanlike manner, and that a new home will be habitable. Neither can be disclaimed by boilerplate.

Wrapped around them is the Residential Construction Liability Act, which is not a cause of action at all. It is a set of procedures layered on top of whatever claim you have — notice, inspection, a settlement offer, and a cap on recovery if you turn down a reasonable one.

What the claim is

A builder, remodeller or repair contractor did the work badly, or a new home has defects the builder will not fix.

Where the right comes from

Common law for the warranties. Melody Home Manufacturing Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987), recognised an implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner. Centex Homes v. Buecher, 95 S.W.3d 266 (Tex. 2002), applied the good and workmanlike construction and habitability warranties to new homes.

Statute for the procedure — Property Code chapter 27, the RCLA.

What a plaintiff has to prove

Implied warranty of good and workmanlike performance

1. The defendant provided services — construction, repair or modification of tangible goods or real property.
2. The work was not performed in a good and workmanlike manner, measured against what a generally proficient contractor in that field would have done.
3. Injury caused by the failure.

The standard is not perfection and not the best available work. It is competence.

Implied warranty of habitability

Applies to the sale of a new home by a builder-vendor: the house must be safe, sanitary and otherwise fit for human habitation. This warranty protects against defects so severe the home is unsuitable to live in, and it cannot be waived except in narrow circumstances.

The disclaimer rule from Centex

The workmanship warranty is a gap-filler. It can be superseded where the parties' agreement specifies the manner, performance or quality of the work in detail. Generic disclaimer language does not do it.

The habitability warranty is a floor. It cannot be disclaimed by agreement.

How long you have to file

Four years for contract and warranty claims, under CPRC § 16.004 and the residual in CPRC § 16.051.

Two years for a negligence claim, under CPRC § 16.003(a).

And a repose that overrides both. CPRC § 16.009 requires a claim against a person who constructs or repairs an improvement to real property to be brought within 10 years after substantial completion — a statute of repose, which runs whether or not the claim has accrued. CPRC § 16.008 does the same for registered or licensed architects, engineers, interior designers and landscape architects who design, plan or inspect the work.

What has to happen before you file

RCLA notice — Property Code § 27.004. In an action to recover damages arising from a construction defect, the claimant must give the contractor written notice by certified mail, return receipt requested, no later than the 60th day before filing suit, specifying in reasonable detail the defects that are the subject of the complaint.

Inspection. Within 35 days of receiving the notice, the contractor may request in writing a reasonable opportunity to inspect the property.

Offer. Within 45 days of receiving the notice, the contractor may make a written offer of settlement — to repair, to pay for repairs, or both.

The cap. If the claimant unreasonably rejects a reasonable offer, or does not permit the contractor a reasonable opportunity to repair, recovery is limited to the fair market value of the offer plus the fees and costs incurred before the offer was rejected.

Failure to give notice does not end the claim, but it will get the suit abated until the process is followed.

What the claim pays

RCLA § 27.004 limits recovery in a residential construction defect action to specified economic losses, including:

• the reasonable cost of repairs necessary to cure the defect;
• reasonable and necessary engineering and consulting fees;
• the reasonable cost of temporary housing during the repair period;
• the reduction in market value, if any, attributable to a structural failure; and
• reasonable attorney's fees.

Outside the RCLA, ordinary contract and warranty damages apply, and the DTPA may supply trebling and mandatory fees where the homeowner is a consumer.

Who can be sued

The contractor, builder or remodeller who performed the work.

Design professionals — architects and engineers — on their own standard of care, subject to the § 16.008 repose and, in many cases, a certificate of merit requirement.

Subcontractors, though a homeowner usually has no contract with them and must proceed in negligence or on the implied warranty.

Common defenses

• Failure to give RCLA notice, which abates the suit.
• A reasonable settlement offer that was rejected, capping recovery.
• The 10-year repose.
• The workmanship warranty was superseded by specific contractual terms about quality.
• Normal settlement, wear, or homeowner-caused damage.
• Limitations.

What people get wrong

The RCLA is not a claim. It is a procedure layered on your contract, warranty, negligence or DTPA claim. You still have to have one of those.

Rejecting a repair offer has a price. If a court finds the offer reasonable and the rejection unreasonable, the recovery is capped at the value of what was offered.

Boilerplate does not disclaim the workmanship warranty. Only terms that specify the manner, performance or quality of the work supersede it.

The repose runs from substantial completion. A defect discovered in year 11 is generally outside the claim no matter when it appeared.

Where it came from

Melody Home in 1987 recognised the workmanlike warranty for repair and modification services, and made it non-disclaimable. The construction industry sought a legislative response, and the RCLA followed.

The Legislature's approach was procedural rather than substantive: rather than abolish the warranty, it required notice, gave the builder a chance to inspect and offer repairs, and capped recovery for homeowners who refused a reasonable offer. Centex Homes v. Buecher in 2002 then drew the line the Act had not — workmanship can be superseded by specific terms; habitability cannot.

Common questions

How long do I have to sue over a construction defect in Texas?

Four years for contract and warranty claims, two for negligence, and no more than 10 years after substantial completion under the statute of repose.

Do I have to notify the builder before suing?

Yes. Sixty days' written notice by certified mail describing the defects in reasonable detail.

What happens if I turn down their repair offer?

If the court finds the offer reasonable and your rejection unreasonable, your recovery is limited to the value of the offer plus fees and costs incurred before you rejected it.

Can the builder disclaim these warranties?

The workmanship warranty can be superseded by contract terms that specify the quality and manner of the work. The habitability warranty cannot be disclaimed.

Can I recover attorney's fees?

Yes. The RCLA lists reasonable attorney's fees among recoverable damages, and a DTPA claim by a consumer carries mandatory fees.

Does this cover commercial buildings?

The RCLA is a residential statute. Commercial construction disputes proceed on the contract, the warranties, and negligence, subject to the same repose.

Where these rules live

• CPRC § 16.004 — Four-year limitations period
• CPRC § 16.003 — Two-year limitations period
• CPRC § 16.008 — Architects and engineers: 10-year repose
• CPRC § 16.009 — Construction or repair: 10-year repose
• CPRC § 16.051 — Residual four-year limitations period
• CPRC § 150.002 — Certificate of merit for design professionals