The Texas Residential Construction Liability Act

By Capt. Kayli Ragsdale, Fort Bliss Legal Assistance Office

What is the Residential Construction Liability Act?

The Residential Construction Liability Act does not create a cause of action, but provides a framework for homeowners bringing claims against their homebuilder (contractor). The RCLA proscribes detailed procedures for notice, inspection, and settlement of claims arising from construction defects. A homeowner must follow these procedures before filing a lawsuit. The RCLA is codified in Chapter 27 of the Texas Property Code.

When Does the RCLA Apply?

The RCLA applies to “any action to recover damages or other relief arising from a construction defect, except a claim for personal injury, survival, or wrongful death or for damage to goods.” A construction defect is “a matter concerning 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.”

Requirements Prior to Filing a Lawsuit:

1.      Notice: Prior to filing suit or arbitration, a homeowner must give the contractor 60 days written notice, via certified mail, return receipt requested, of his or her complaints. The notice should specify, in reasonable detail, the construction defects that are the subject of the complaint. On request of the contractor, the homeowner must provide evidence that depicts the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect.

2.      Request to Inspect: The contractor may request, in writing, an inspection of the property within 35 days of receiving the notice letter. The purpose of the inspection is for the contractor to determine the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect.

3.      Opportunity to Inspect: The homeowner must then give the contractor a reasonable opportunity to inspect the property.

4.      Offer of Settlement: The contractor has 45 days from the date notice was given to make a written offer of settlement. The offer of settlement may include either an agreement to repair the defect or to have the defect repaired by an independent contractor. The offer of settlement must describe in reasonable detail the kind of repairs that will be made.

5.      Accept/Reject Offer of Settlement: The homeowner must accept or reject the offer of settlement within 25 days. If the homeowner neither accepts nor rejects the offer in the 25 day timeframe, the offer is deemed rejected. If the homeowner rejects the offer, it is advisable to do so in writing, explaining in detail the reasons for the rejection.

6.      Repair/Supplemental Offer of Settlement: If the offer of settlement is accepted, the repairs must be completed within 45 days unless delayed by the homeowner or events beyond the contractor’s control.  If the homeowner rejects the offer, the contractor can supplement the original offer within 10 days.

Damages:

If, after complying with statutory requirements, the construction defect has not been remedied, a claimant may seek damages in court or arbitration. Damages allowed under the RCLA include:   reasonable cost to repair the construction defect; reasonable and necessary cost for replacement/repair of damaged goods; reasonable and necessary engineering and consulting fees;  reasonable and necessary temporary housing expenses during the repair period; reduction in current market value after defect is repaired if defect is a structural failure; and reasonable and necessary attorneys’ fees. Damages do not include moving and storage costs, boarding for pets or livestock, loss of income from the interruption of a homeowner’s home business during periods of temporary housing due to repairs, or mental anguish. The claimant has the burden to prove that the damages sought are reasonable and necessary.

What If The Homeowner Rejected a Reasonable Offer of Settlement?

If the homeowner rejected a “reasonable” offer, the homeowner cannot recover more than the fair market value of the contractor’s last offer of settlement or the amount of a reasonable monetary settlement or purchase offer made. Additionally, the homeowner can only recover the amount of reasonable and necessary attorneys’ fees incurred before the offer was rejected. If, however, the offer was unreasonable then these limitations on damages do not apply.

If you have questions, contact the Fort Bliss Legal Assistance Office at (915) 568-7141 or usarmy.bliss.hqda-otjag.mesg.bliss-legal-assistance-office@army.mil for an appointment to speak with an attorney.