DAVID J. WILLIS ATTORNEY
Copyright © 2013. All rights reserved worldwide.
Builder Statutory Warranties in Texas
The Texas Residential Construction Commission and the SIRP Process
by David J. Willis
Attorney at Law
Note: Readers should be aware that the 81st legislature declined to renew the Texas Residential Construction Commission (the "TRCC," formed under Title 16 of the Property Code) which expired September 1, 2009. This is a setback for the Texas consumer. No new complaints or requests for SIRP inspection are being accepted. Under the Sunset Act, the TRCC will continue to operate until Aug. 31, 2010. It is likely that Title 16 statutory warranties and commission-adopted performance standards will remain in effect until then. After Aug. 31, 2010, the law will revert to its pre-Title 16 status - ie., causes of action based on the implied warranty of good workmanship in construction and the implied warranty of habitability will apply. Note that the Residential Construction Liability Act (Ch. 27 of the Property Code), which requires 60 days notice and opportunity to cure before filing suit against a builder, is unaffected by the sunsetting of the TRCC. For more information, visit http://texasrcc.com/ See also our companion article on this site, "Builder Liability in Texas." Because of the foregoing, much of the following article is of historical interest only.
The Texas Residential Construction Commission Act ("TRCCA," or the "Act," found in Title 16 of the Texas Property Code) established limited statutory warranties by builders that replace any implied warranties that were previously applicable under common law or case law. Abolished are implied warranties of habitability, good and workmanlike construction, and good and workmanlike repair. An owner or builder may still buy a separate warranty from a warranty company, or even agree to stricter standards than those in the statute, but this does not relieve the builder of the obligation to meet minimum statutory requirements. These requirements are:
- 1 year warranty for workmanship and materials;
- 2 year warranty for mechanical delivery systems;
- 10 year warranty for major structural components of the Home; and
- 10 year warranty of habitability.
A more detailed description of these warranties may be found at the Residential Construction Commission’s website, www.trcc.state.tx.us
. Specific performance standards were mandated for homes started after June 1, 2005. Sec. 430.006 states that the statutory warranties “supersede all implied warranties” and are the “only warranties that exist for residential construction.”
Proper maintenance of the home by the owner is required to ensure that the limited statutory warranties remain in effect. The statutory warranties do not include remedies for defects or damages caused by normal wear and tear during normal usage, use for a purpose not intended, improper or insufficient maintenance, modifications performed by the owner or others retained by the owner, or abuse.
The Act provides for a state-sponsored inspection and dispute resolution process ("SIRP"). Pursuant to Sec.426.005, the owner MUST comply with SIRP before initiating an action for damages or other relief arising from an alleged construction defect.
The TRCC Rules state that the SIRP process applies to a dispute that "is the result of alleged construction defects that were discovered on or after September 1, 2003." Generally, homes built before September 1, 2003 do not carry the statutory warranty. They have only the warranties, if any, that came with purchase of the home.
The owner MUST commence SIRP on or before the second anniversary of the date of discovery of the conditions claimed to be evidence of the construction defect(s), but not later than the 30th day after the date the applicable warranty period expires. Sec. 426.006 of the TRCC Act requires that SIRP "must be requested on or before the second anniversary of the date of the discovery of the conditions claimed to be evidence of the construction defect but not later than the 30th day after the date the applicable warranty period expires." There are therefore two applicable limitations periods - 30 days after the warranty expires, but not later than two years after discovery of the defect. If the complaint relates to a structural issue, the limitations period could be as long as 10 years plus 30 days.
If a dispute between the owner and the builder arises out of an alleged construction defect, SIRP requires that the owner first provide the builder with written notice of each construction defect the owner claims to exist. After this notice is provided, the builder and builder's designated consultants, if any, must be given a reasonable opportunity to inspect the home. If the owner and builder are unable to resolve the dispute within 30 days from the date of written notice of the alleged defect(s), then the owner or the builder may submit to a written request to the Texas Real Estate Construction Commission for state-sponsored inspection and dispute resolution. This request must (1) specify in reasonable detail the alleged construction defect(s); (2) state the amount of any known out-of-pocket expenses and engineering or consulting fees incurred by the owner in connection with each alleged construction defect; (3) include any evidence that depicts the nature and cause of each alleged construction defect and the nature and extent of repairs necessary to remedy the construction defect, including experts reports, photographs, and videotapes; (4) include payment of required fees which are currently $350 for workmanship and materials claims, $450 for structural claims, and $650 for a combined structural and unrelated workmanship and materials claims plus $550 for a plan of repair if a structural defect is found; and (5) state the name of any inspector who has inspected the home in connection with the alleged construction defect(s).
The statutory scheme includes provision for inspection of the home by a neutral inspector approved by the Commission. The inspector's recommendation must address only the alleged defect(s) and may not include an estimate of what it will take to remedy the defect(s).
The SIRP process does not conclude with an order or other mandatory result. It is nonetheless an important tool in promoting settlement.
The Residential Construction Liability Act ("RCLA"), found in Chapter 27 of the Texas Property Code, also applies to new home construction. If an owner has a complaint concerning a construction defect that was not corrected through the SIRP process, the owner may pursue remedies under the RCLA. The Owner must, within sixty (60) days prior to filing suit in a court of law, provide written notice of the defect to the builder by certified mail, return receipt requested. The notice should therefore refer to the RCLA and must give detail about the construction defects about which the owner complains. If requested by the builder, the owner must also provide the builder an opportunity to inspect and cure any alleged defects.
The best legal strategy is to give the SIRP notice and the RCLA notice at the same time.
Information in this article is proved for general educational purposes only and is not offered as legal advice upon which anyone may rely. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well. This firm does not represent you unless and until it is retained and expressly retained in writing to do so.
Copyright © 2013 by David J. Willis. All rights reserved. David J. Willis is board certified in both residential and commercial real estate law by the Texas Board of Legal Specialization. More information is available at his web site, http://www.LoneStarLandLaw.com.