3 ways Texas’ RCLA can protect contractors during remodeling boom

Contractors and builders can benefit from an understanding of protections against claims of faulty work by homeowners.

A recent article in The Wall Street Journal predicts that "U.S. investment in residential remodeling and repairs this year will surpass records set during the housing boom" and will continue "growing at a fast clip over the next three years."

This jump in remodeling prospects means opportunity for contractors throughout the country. Many of these projects will result in happy homeowners, but some will not. Contractors that take on these projects can face allegations of defective work from unsatisfied homeowners.

In these cases, it is important to have a basic understanding of how the law works to protect contractors (including homebuilders) from false allegations of defective work. Regardless of the various claims that might be alleged, including breach of contract, breach of warrant, negligence, or even Deceptive Trade Practices Act violations, the law that governs cases involving construction defects is the Texas Residential Construction Liability Act.

What is the Texas' Residential Construction Liability Act?

Disputes between homeowners and builders or contractors generally fall under the Texas' Residential Construction Liability Act (RCLA). This law applies to any dispute involving a construction defect, which is defined as:

[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. The term may include any physical damage to the residence, any appurtenance, or the real property on which the residence and appurtenance are affixed proximately caused by a construction defect. Tex. Prop. Code §27.001(4).

A contractor is defined under this law as a builder contracting with an owner for the repair or alteration of an addition to an existing residence and includes the owner, partners or employees of the contractors. Homebuilders, subcontractors and the neighborhood "handyman" are all "contractors" covered by the RCLA.

How can the RCLA protect contractors?

The RCLA provides a number of protections to contractors who are remodeling properties and later accused of poor or defective work. Three specific examples of how this law can serve to protect contractors include:

Notice. The RCLA has very specific notice requirements. A failure to follow these requirements can result in a dismissal of claims. For example, a homeowner that wishes to pursue a claim must provide the contractor with a written demand by certified mail. This demand must identify the alleged construction defects. Upon receiving this demand, the contractor has 35 days to inspect the work and 45 to propose a repair or settlement.

Exceptions. In addition to the notice requirement, there are several defenses available to contractors under the RCLA. Examples include damage caused by the negligence of someone other than the contractor or one of his or her employees, damage caused by normal wear or tear, as well as damages caused by shrinkage due to normal settling.

Limitation of Damages. The RCLA was enacted to encourage resolution of residential construction defect claims. In the event a homeowner fails to accept a reasonable offer of repair and settlement, the list of damages available to the homeowner, including attorney's fees, may be may be limited from that point forward.

The RCLA can also hold homeowners accountable for filing frivolous suits against contractors, holding them responsible for attorney's fees and court costs in such cases.

What should a contractor do if accused of faulty work?

Any contractor or builder that is accused of defective work should take the allegations seriously. Action must be taken within the allotted statutory time frame in order to preserve the contractor's rights. Contact an experienced construction attorney to discuss your options and proposed response.

The law firm of Nowak & Stauch, LLP has a wealth of experience in representing builders, contractors, and suppliers in construction defect disputes - we are standing by to help.