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By William C. (Bill) Little, Construction Law Attorney, on September 4, 2023
INTRODUCTION:
The Texas Residential Construction Liability Act (RCLA), found in Chapter 27 of the Texas Property Code, establishes a mandatory legal process for builders and property owners to follow concerning residential construction defect claims. For example, the RCLA requires claimants to provide written notice of a claim and gives builders an opportunity to inspect and attempt to remedy any problems prior to the commencement of costly litigation. For construction professionals and builders in Texas, staying informed about legislative changes is crucial to navigate the legal landscape effectively.
On September 1, 2023, significant amendments to the RCLA went into effect. These changes have far-reaching implications for residential construction projects across Texas. This post will summarize some of the key modifications to the RCLA going forward to help builders and property owners be better prepared for the changes ahead.
SUMMARY OF NOTABLE CHANGES:
The following summary discusses several key changes to the RCLA that are now in effect for all claims arising on or after September 1, 2023:
Exclusion of Bodily or Personal Injury: Damages for bodily or personal injury are excluded from the definition of “economic damages.” [27.001]
Limited Liability for Defective Conditions: Liability is now limited to situations where the defect directly causes actual physical damage, actual failure or lack of capability of a building component to perform its intended function or purpose, or a verifiable danger to the safety of the occupants of the residence. [27.003]
Contractors Not Responsible for Normal Cracking or Shrinkage Cracking. Contractors are not held responsible for “normal cracking or shrinkage cracking due to drying or settlement of construction components within the tolerance of building standards.” [27.003]
Owner's Responsibility for Timely Notification: Contractors are not liable for damages caused by an owner’s failure to timely notify a contractor of a construction defect. [27.003]
Breach of Warranty of Habitability for Latent Defects: Claimants must prove that a construction defect was latent in the residence on the date the residence was completed or title was conveyed to the original purchaser and the defect has rendered the residence unsuitable for its intended use as a home. [27.003]
Contractor Inspection Rights: Contractors now have the opportunity to conduct up to three inspections during the 35-day inspection period after receiving notice of a claim. [27.004]
Claimant’s Duty to Produce Relevant Evidence: Claimants 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. [27.004]
Written Settlement Offers: The deadline for contractors to make a written settlement offer to the claimant was increased from the 45th day after the date the contractor receives the notice to the 60th day after that date. The contractor must include in the offer the time for the completion of construction defect repairs if more than 60 days. A court or arbitration tribunal may order that a settlement offer made after the time prescribed is considered timely if the contractor was unable to inspect the property or make an offer because a claimant (a) failed to provide the contractor evidence available and in the claimant’s possession, custody, or control at the time of the original notice depicting the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect, including reports, photographs, videos, or any other evidence; (b) amended a claim to add a new alleged defect; or (c) due to events beyond the contractor’s control. [27.004]
Time to Complete Repairs: The time for contractors to make repairs was extended from the 45th day after the date the contractor receives written notice of acceptance of the settlement offer to the 60th day after that date, unless completion is delayed by the claimant or by other events beyond the contractor’s control. [27.004]
Economic Damages: The amendments added a new category of economic damages recoverable by claimants to include “reasonable and necessary arbitration filing fees and the claimant’s share of arbitrator compensation.” [27.004]
Proof of Causation: Claimants must prove that the construction defect existed at the time of completion of the construction, alteration, or repair, and that the damages were proximately caused by the construction defect. [27.006]
Effect of Arbitration on Statute of Limitations: The amendments provide that submission of an action subject to the RCLA to arbitration has the same effect on the running of a limitations period as a filing in a court in Texas. [27.008]
Voiding of Contractual Waivers: Any attempt to waive the provisions of the RCLA through contracts will be considered void. [27.009]
It is important for construction professionals, builders, and property owners to be well-informed about these changes to ensure legal compliance and to protect their respective interests.
If you are dealing with a residential construction claim in Texas, you are welcome to contact Little & McCool, P.C. at our Hill Country/Central Texas office at (830) 321-0120 or at our DFW/North Texas office at (972) 538-0999 to speak with a construction law attorney.