My Builder's Warranty Expired. Do I Still Have a Claim?

Many homeowners discover a serious problem, pull out their builder’s warranty booklet, and see that the coverage ended last year. It is easy to assume that is the end of the road. Often it is not.

The short answer

Yes, a Texas homeowner can often bring claims against a builder after the builder’s written warranty has expired. Texas law recognizes several claims that do not depend on the written warranty, including implied warranties, breach of contract, fraud and claims under the Deceptive Trade Practices Act (DTPA). These claims still have deadlines, and all of them must go through the pre-suit notice process under the Residential Construction Liability Act (RCLA).

Implied warranties: protections the law adds to your purchase

Texas law reads two promises into the sale of a new home, even if the contract doesn’t mention them:

• The implied warranty of good and workmanlike construction. The home was built with the skill and care of a proficient builder.

• The implied warranty of habitability. The home is fit to live in.

The Texas Supreme Court has held that these are separate warranties. You can recover for poor workmanship even if the home is still livable.

Can the written warranty replace the implied warranty?

Sometimes, partly. The implied warranty of good workmanship is a “gap-filler”: it applies unless the contract sets out its own standard for how the home is to be built. The Texas Supreme Court has said a builder cannot simply disclaim this warranty. A written warranty can replace it only if the contract specifically describes the manner, performance or quality of the work. Whether your builder’s written warranty did that depends on the exact wording of your contract.

What a habitability claim requires

To bring a claim for breach of the implied warranty of habitability, you must show that the defect:

• was hidden (latent) when the home was completed or when the original buyer took title; and

• has made the home unsuitable for its intended use as a home.

Other claims that may still be available

• Breach of contract. If the builder did not build what the contract required, you may have a contract claim. These generally must be filed within 4 years.

• Fraud. If the builder misrepresented the home or hid defects, you may have a fraud claim, generally with a 4-year deadline.

• DTPA. The DTPA covers certain deceptive acts, breaches of express or implied warranties and unconscionable conduct. These claims generally must be filed within 2 years of when the deceptive act occurred or when you discovered it or reasonably should have.

In one Texas case, homeowners’ DTPA claims were too late, but their breach of contract and fraud claims were filed in time under the longer 4-year deadline. Choosing the right claim can make the difference.

Hidden defects and the “discovery rule”

When a defect was truly hidden and could not reasonably have been found, the clock may not start until it was discovered. In one Texas case, the court held that the deadline did not start running until homeowners discovered leaks around their windows, and that the builder’s false statements about repairs raised questions that had to be decided at trial. Courts apply this rule narrowly, so do not rely on it without advice.

A note on negligence claims

Texas’s ”economic loss rule” can prevent a negligence claim when the only harm is that the home itself was not built as promised. That does not affect contract or warranty claims, but it can limit a negligence claim.

The outer deadline still applies

Even claims that survive the warranty are subject to Texas’s statute of repose, an outer limit measured from when the home was substantially completed:

• 6 years if the builder gave a written warranty meeting minimum statutory standards (at least 1 year for workmanship and materials, 2 years for plumbing, electrical, heating and air-conditioning systems, and 6 years for major structural components); or

• 10 years if it did not.

The outer limit does not bar claims based on willful misconduct or fraudulent concealment, or claims on a written warranty that expressly lasts longer.

You still have to give notice first

Whatever claim you bring, the RCLA generally requires you to send the builder written notice by certified mail at least 60 days before filing suit, provide your supporting evidence, and give the builder a chance to inspect. The RCLA does not extend any filing deadline, so build the 60 days into your timeline.

What this means for you

• Don’t assume an expired warranty means you have no claim.

• Gather your purchase contract, warranty booklet, closing documents and all communications with the builder.

• Note when you first saw each problem and when the home was completed.

• Talk to a lawyer promptly. Some deadlines may be close.

This article provides general information about Texas law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case depends on its facts and the law can change. If you have a construction defect problem, talk to a Texas lawyer about your situation.