Basics of construction defects law in brief
- Construction defect law can apply to both residential and commercial buildings.
- A construction defect is any flaw in the design, materials, or workmanship causing a failure in some portion of a residential or commercial building.
- The objective of this area of law is to determine the parties responsible for defects and hold them liable (legally responsible) for correcting or compensating the owner(s) for the problems, including loss of property value.
- They can be minor and easily and inexpensively repaired, or they can render a structure unusable or uninhabitable.
The following information is provided by Michael Ballases, a Texas attorney and expert in construction defects law, awarded best lawyer designation in 2023 and 2024.
Construction defects law in Texas
Under the Texas Business and Commerce Code (Title 4, Chapter 59, Section 59.051), contractors and subcontractors are responsible only for the actual construction work itself, not for the design.
Texas law holds contractors liable for defects proximately (those that are reasonably foreseeable) caused by actual physical damage, failure, or danger to inhabitants (Property Code Title 4, Section 27.003). For a breach of contract claim, a plaintiff has four years from the contract execution date to file a lawsuit, with an exception allowing the clock to start after discovery of the defect. Also, in some circumstances, the allowable period is six years.
Otherwise, a contractor or subcontractor may not grant a warranty for design documents furnished by any architects or engineers. Nevertheless, Texas law (Title 6, Chapter 130, Section 130.0021) requires architects and engineers to meet a legal standard of care in their work requiring “the professional skill ordinarily provided by competent architects or engineers practicing under the same or similar circumstances and professional license.” Hence, for design defects, generally a building owner may bring an action only against (sue) a designer.
An exception occurs when a contractor fails to notify a building owner in writing of any design defects within a reasonable time of knowing of the defects or after the contractor should have known of the defects. A failure of timely disclosure may impose liability on the contractor.
Other exceptions apply as well, although in less common circumstances. An attorney experienced in construction law can advise on the details.
Residential construction defects law
The object of residential construction defect law is to hold the party responsible for the defect by correcting the mistake and compensating the property owner. Defect disputes can escalate into lawsuits when negotiations fail.
Construction defects can be particularly troublesome for new-home buyers having to live with the flaws. For this reason, some states impose a builder warranty on new homes, which requires builders to correct defects in components ranging from furnaces to windows to electrical systems to plumbing. Texas does not require such a warranty.
The coverage period usually spans from one year for general workmanship and materials, to two years for HVAC, plumbing, and electrical. Some builders also grant coverage for up to 10 years for major structural defects. Unfortunately, most coverage does not cover out-of-pocket expenses such as for renting another residence during repairs.
However, sometimes defects are not discovered until years after purchase or construction. Construction defects can appear during a property purchase or due to remodeling and repair work. They may take years to become evident due to slow material deterioration. Defects can reduce property value and even make a home uninhabitable.
A construction defect may affect an individual buyer of a home or a group of buyers in property developed by a real estate company. Large development companies can be represented by an army of lawyers equipped to defend against property owners’ claims, sometimes tilting the playing field against lesser resourced individual or small-group plaintiffs.
On the other hand, homeowners may also coalesce in a large group to bring a joint action against a more modestly financed developer.
Commercial construction defects law
Construction defect law and lawsuits can become quite complex for large commercial projects involving a multitude of general contractors and specialist subcontractors. The larger the project, the more likely disagreements will develop as to responsibility for any defects.
Construction defects may be the result of a single party’s work or the legal consequence of multiple parties. For example, a general contractor may not have had direct involvement in the work of an electrical subcontractor but may still be legally liable for electrical defects in one or more of three ways.
- Although not common, a general contractor may be found vicariously liable for having closely supervised the subcontractor directly responsible for a defect, thus establishing the subcontractor as the general contractor’s agent. Much depends on the general contractor’s extent of control over the subcontractor.
- Conversely, general contractors can be held directly liable for having negligently selected and supervised a subcontractor or for involvement in the work creating the defect.
- A third type of construction liability is contract liability. Most general contractor-subcontractor contracts include indemnification clauses, which release either party from liability for the acts of the other party. However, these clauses and their applicability can themselves become the center of disputes.
Construction defects claims & liability
To file a claim of construction defect, a property owner must identify the type of defect. Categories of defects are those related to design, materials, construction, and subsurface issues such as when a builder ignores shifting soil in the ground the building is on.
The job of a real estate attorney is to sort out the responsible party. In addition to involved contractors and subcontractors sometimes numbering in the dozens or more, materials suppliers and manufacturers may have contributed or caused defects. Hiring a construction engineering expert may be necessary to help investigate and build the best case.
Legal claims of defects can range from leaking roofs and windows to soil erosion to collapsing foundations to abandoned projects, particularly after a contractor or subcontractor has already been paid. Here are two areas of disputes arising from defects.
Breach of contract
A lawsuit against a builder, supplier, or other party will seek to establish that a promise to the property owner, whether that is in countertop installation or ceiling joist integrity, has been broken. This is breach of contract, whether that was a specific written contract on countertop specifics or on promised quality of building materials. An important factor in Texas law is the statute of limitations on breach of contract, which expires after four years.
Filing a breach of warranty is another option. Builders often provide warranties specifying quality of aspects of construction for a period of time. Some warranties can be implied in building construction.
Claims of negligence
A negligence claim is an alternative to breach of contract and can have broader applications. A claim of negligence can assert that the builder failed to follow standard construction practices. Several requirements must be met, such as the existence of legal standards the builder failed to satisfy that resulted in the construction defect and that the property owner suffered economic loss. This has a two-year statute of limitations in Texas.
Bringing a lawsuit for construction defects is often a complicated process involving knowledge of construction details and processes, as well as local laws and building code requirements.
About T. Michael Ballases, Texas trial attorney
Anyone entering a construction contract can benefit understanding the difference between direct liability and vicarious liability. Let a legal expert help. With more than two decades of legal experience, T. Michael Ballases has a 90% courtroom win rate and a practical, common sense approach. His philosophy is simple: Determine what the client seeks and focus on attaining it by utilizing a big-picture methodology and avoiding meaningless clutter.
Learn more about Michael Ballases.
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