In a Texas construction claim, timing is everything

This article looks at the various notice requirements under the Residential Construction Liability Act.

Every claims asserted by a homeowner related to a construction defect is governed by the Texas Residential Construction Liability Act (RCLA), which is found in Chapter 27 of the Texas Property Code. The RCLA establishes certain procedural requirements for homeowners to pursue a claim against their "contractor" (which includes the homebuilder) for construction defects due to the design, construction, or repair of a new home or the repair, alteration, or addition to an existing home. Accordingly, homeowners and contractors alike must be aware of, and comply with, the timing rules related to notice of claim and offers of settlement under the RCLA. With limited exceptions, homeowners must give timely notice of their claim before filing suit or initiating an arbitration against their contractors. Likewise, contractors have a limited time to inspect the alleged defects to document the condition and a deadline to submit an offer of repair and settlement, which can limit the contractor's liability in connection with the construction defect claim.

Providing notice to the contractor

Under the RCLA, homeowners who intend to file a claim against a contractor must provide that contractor with a notice of the claim at least 60 days before they file suit or initiate an arbitration. The notice must be delivered to the contractor's last known address and be delivered by certified mail. The notice must describe the construction defects in reasonable detail and, if requested, the homeowner must provide evidence that depicts the nature and cause of the defect, as well as the nature and extent of repairs necessary to remedy the defect (if known).

Upon receipt of such notice, the contractor then has 35 days to inspect the conditions complained of with or without their own experts, and may document those conditions (i.e. with photographs or video), preferably under the direction of counsel. Again, the contractor also has the right to request from the homeowner photographs, videos, expert reports, or other evidence of the claimed defects. Within 45 days of receiving the initial notice to file suit, the contractor may make a written offer to the homeowner, which may include repairs, cash settlement in lieu of repairs, or both. Importantly, the offer of repair and settlement may be used as evidence in any subsequent trial or arbitration concerning the construction defect(s).

Making an offer of settlement

The RCLA was intended to reduce the volume of residential construction defect litigation by encouraging homeowners and contractors to discuss and resolve construction defect claims before a lawsuit or arbitration is initiated. Not only is compliance with the RCLA required, there are evidentiary advantages associated with making a reasonable offer of repair and settlement, and disadvantages to homeowners who reject a reasonable offer from their contractor. In fact, homeowners who reject a reasonable offer of repair or settlement can be limited in their recovery of damages arising from the defect even if successful in the litigation. As such, the offer of repair and settlement is a critically important issue for homeowners and contractors alike, and should be handled with care. Once an offer is made, the homeowner and contractor may or may not come to an agreement resolving the alleged construction defect. If not, the offer itself will likely become an important piece of evidence in the trial or arbitration.

However, it is important for contractors to know that if a homeowner rejects a reasonable offer of settlement by the contractor or the homeowner fails to abide by the notice requirements, then the amount of compensation that a homeowner can pursue against the contractor typically becomes more limited.

Help with construction claims

This commentary is not intended to be a comprehensive review of the RCLA, and there are other important provisions for homeowners and contractors alike. If you are a homeowner concerned about a potential construction defect, or a contractor threatened with litigation concerning a construction defect, you should consult a construction litigation attorney immediately. Nowak & Stauch, LLP is a law firm focused on commercial, construction and real estate litigation. If you are faced with a construction defect dispute, contact the attorneys at Nowak & Stauch, LLP at 214-823-2006, or online at http://www.ns-law.net.