The Texas Residential Construction Liability Act

The Texas Residential Construction Liability Act...what is it and how does it work? 

Unfortunately, residential construction defects can be common. In hopes of addressing these common issues, in 1989, the Texas Legislature enacted Chapter 27 “to promote settlement between homeowners and contractors, and to afford contractors the opportunity to repair their work in the face of dissatisfaction.”   

To make a claim against a builder/contractor, a homeowner must follow the statutory procedures outlined in Chapter 27 of the Texas Property Code. Chapter 27 is a mandatory statute and must be followed to make a valid claim against a builder/contractor. The statute applies to both new home construction and residential remodel projects and is applicable to both the original homeowner and any subsequent home purchaser.  

A chapter 27 claim is initiated by preparing and sending a formal notice to the builder/contractor by certified mail at the builder/contractor’s last known address, specifying in reasonable detail the construction defects and cost to repair, if known. If available, the notice should be supported by evidence, such as inspection reports, photographs, video recordings, and repair estimates.   

In response to a homeowner’s Chapter 27 notice, the builder/contractor, upon written request, has the right to inspect, test, and document the defects. Within no later than 45 days after the builder/contractor receives the notice, the builder/contractor may make a written offer of settlement to the homeowner. The offer may include either an agreement by the builder/contractor to repair the defects or have the defects repaired by an independent contractor at the builder/contractor’s expense. The repairs must be made within 45 days from when the builder/contractor receives notice of acceptance of the offer by the homeowner. If the builder/contractor makes a written offer of which the homeowner deems unreasonable, the homeowner has 25 days to respond in writing to the builder/contractor outlining the basis for the rejection, thereby giving the builder/contractor an additional 10 days to present a counteroffer. If the homeowner rejects a reasonable offer or does not allow the builder/contractor an opportunity to inspect/repair the defects, the homeowner’s potential recovery through a lawsuit and/or arbitration will be limited to the original offer and the homeowner’s attorney’s fees will be limited to those incurred before the reasonable offer was made.  

Chapter 27 limits the nature and type of damages a homeowner may recover against a builder/contractor to the following: (1) the reasonable cost to repair the construction defects; (2) the reasonable cost to repair or replace any damaged personal property caused by the construction defects; (3) reasonable and necessary engineering and consulting fees; (4) reasonable expense for temporary housing incurred during the repairs; (5) the reduction in current market value, if any, after the construction defects are repaired if the defects are structural in nature; and; (6) reasonable attorneys’ fees and litigation costs.  

In sum, when dealing with residential construction defects, it is important to strictly follow the provisions of Chapter 27.