The Lone Star State’s economy did a much-needed turnaround after the Great Recession, and the construction market was no exception. Developers began busily constructing new homes throughout Texas, and potential buyers can sometimes find wonderful deals on state-of-the-art houses.
Unfortunately, just because a Texas builder promises you a state-of-the-art home does not mean that the final product will be perfect. For a variety of reasons, you may be dissatisfied with the home after you move in. Perhaps the air-conditioning is weak; perhaps the tiles in the kitchen are improperly installed; or perhaps the builder actually misrepresented the size or scope of the home, promising you four full bathrooms when the home contains only three and a half.
These problems are commonly known as “construction defects.” They make living in the home less satisfying than you'd hoped for, and in some cases require expensive repairs and remodeling. And such defects lower the value of your home, should you want to resell. How can you use Texas laws to recover against your developer?
Home development contracts can be complex. Not only are the laws involved complex, but many builders are parts of statewide or nationwide corporations with teams of attorneys to defend them. You cannot be expected to win this fight on your own.
If you believe that significant defects exist in your newly built Texas home, you should consult a local attorney – preferably one with experience in Texas real estate or construction – about your situation.
Suing a developer is different from filing a small lawsuit against a home contractor, for example, which can often behandled without an attorney in Texas’s Small Claims Court. This type of action is ideal for a small dispute with a painter who, for example, fails to complete a specific task. A lawsuit against a developer is a larger project, one that generally requires an attorney’s assistance.
Some construction defects are obvious. Your builder charged you a fixed price for a house with two floors and a swimming pool, but built you a one-story house with no pool.
Other construction defects will not be quite as obvious to the naked eye. For example, what if the builder used a low-quality wood to construct the stairs? Or did not use proper methods to support the deck? These sorts of problems are serious, and lower the value of your home. But to detect them, you may need to invest in an engineering inspection. If you are considering filing a lawsuit against your Texas builder, your attorney may recommend a so-called “expert report,” which will lend objective credibility to your allegations.
Ultimately, your lawsuit against your developer is about its breach of a promise: to deliver you a home as it was described it to you. Buying a newly constructed house is a process that generates lots of paperwork, particularly if the house is within a new planned community. Your builder or developer in all likelihood gave you extensive materials describing your new property. You (and the builder) would have needed to sign a written contract outlining your payment and the builder’s promise to construct the home.
If you end up having to file a lawsuit against your Texas builder, part of your claim will be that it breached this agreement – did not give you what it promised it would. Here, all of the materials the builder gave you, including photos, descriptions of the home inside and out, plans and drawings, and emails describing the work, will be useful to establishing your expectations at the time you entered into the contract.
For example, if the various documents clearly show that you thought you were getting a home with a stucco exterior, and the finished exterior is cheap vinyl siding, this demonstrates the builder’s breach.
One law you'll need to watch out for, however, is Texas's a four-year statute of limitations for breach of contract, under Tex. Civ. Prac. & Rem. Code § 16.004(a)(3). This means that claims based on a contract with the builder must be brought within this period, or they are barred.
However, discovery of the defect can toll (delay) the limitation period in some situations. When a homeowner could not have reasonably discovered the existence of the breach until after the three-year period – for example, if the lights go out after four years because the builder used low-quality wiring and the homeowner couldn’t have reasonably known about it (especially likely, with wires being hidden behind walls) – a court might allow the action to proceed.
Breach of contract isn’t the only basis upon which you might sue your homebuilder. Another useful legal theory is that of ordinary negligence. In this context, the relevant negligence would be the builder’s failure to exercise the correct standard of care in building your home.
To establish a claim for home-construction negligence in Texas, the person filing suit must establish that 1) a particular duty was imposed on the builder or developer by law; 2) the builder failed to conform to that legally imposed standard; 3) there was a causal link between the failure to meet the standard of care and the resulting construction defect; and 4) you suffered actual economic damages as a result of the injury to your Texas home.
Note that Texas has a two-year statute of limitations (a deadline on when you can file suit) for property damage caused by negligence under Tex. Civ. Prac. & Rem. Code § 16.003(a).
Under Tex. Civ. Prac. & Rem. Code § 16.008, a homeowner has a maximum of six years from written acceptance or actual occupancy for design or construction of improvement to real property.
This means that even if you can extend the three-year statutes of limitations on breach of contract or negligence through the doctrine of discovery – that is, when you reasonably could have discovered the problem with your home – six years is the “ultimate” limit. As a homeowner, therefore, you must be diligent in discovering any potential defects.
You and your attorney should carefully read the language of your sales contract. There are a few clauses to watch out for before filing your lawsuit. First, it is common in construction contracts in Texas and elsewhere to find a dispute resolution clause.
A dispute resolution clause may say that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have some relevant experience, most likely with construction law, engineering, or building development.
Your contract may also contain an arbitration clause. This clause would require that you go to arbitration against the builder or developer instead of litigation in a court of law. In arbitration, either one or three individuals – again, typically with experience in construction – will render a final determination on your dispute. The advantage of arbitration is that it is typically quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that the arbitrator's decisions generally cannot be appealed.
Finally, take note of any aspects of the contract that shorten your statute of limitations or ability to make claims. It is not uncommon that construction contracts will shorten the amount of time that you have in which to file a legal claim against your builder.
An attorney with experience in construction defect litigation in Texas will be able to carefully review the document for these sorts of limitations and help strategize how to best seek compensation from your builder or developer.