Can a Builder's Contract Waive Your Implied Warranties in Texas?

Builder contracts are often long and full of fine print. Somewhere in them may be a sentence saying you “waive all implied warranties.” Does that mean the builder doesn’t have to build your home properly? In Texas, generally not.

The short answer

A Texas builder cannot simply disclaim its duty to build in a good and workmanlike manner. The contract can replace that duty with a different standard, but only if it specifically describes how the home is to be built or how it must perform. A bare waiver isn’t enough, and any disclaimer must be conspicuous. The separate implied warranty that a new home is fit to live in is even harder to get around.

The protections the law adds to your contract

Since Humber v. Morton (1968), Texas law has included two promises in the sale of a new home by a builder:

• the home was built in a good and workmanlike manner; and

• the home is fit to live in (the warranty of habitability).

These are independent of each other. A homeowner can recover for poor workmanship even if the home is still livable. Evans v. J. Stiles, Inc., 689 S.W.2d 399, 400 (Tex. 1985). The two warranties can overlap. For example, poor workmanship could compromise the structure and make a home unsafe. But a builder’s failure to use good workmanship is actionable even when the home remains habitable.

The Texas Supreme Court has defined “good and workmanlike” in Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 354–55 (Tex. 1987) as the quality of work done by someone with the knowledge, training or experience needed to succeed in the trade, done in a way generally considered proficient by people capable of judging that work.

This standard applies to new construction and to repair and remodeling work alike. It looks at the manner of the work, not the result. A builder is not required to guarantee a perfect result, but it must do the work the way a proficient builder would.

Replacing the warranty vs. disclaiming it

In Centex Homes v. Buecher, 95 S.W.3d 266, 272–74 (Tex. 2002), the Texas Supreme Court drew an important line.

• The implied warranty of good workmanship is a gap-filler. It applies unless the contract itself sets out how the builder is to do the work or how the home is to perform.

• A builder therefore can’t just disclaim it. The contract must put an actual standard in its place.

In that case, the contract said the builder would provide its standard limited home warranty against defects in workmanship and materials, and the buyers initialed it. The Court found that was not enough, because the language did not itself describe the manner, performance or quality of the construction.

The habitability warranty is treated even more strictly. The Court said it generally cannot be disclaimed with standard form language, although a buyer may waive it as to defects that were adequately disclosed. In practice, that is limited to unusual cases, such as a buyer who knowingly buys a problem house with full knowledge of the defects that affect whether it can be lived in.

The two warranties also differ in purpose. The workmanship warranty looks at how the builder did the work. The habitability warranty is result-oriented: it is based on public policy considerations such as the builder’s greater ability to absorb the cost of defective construction, the buyer’s weaker bargaining position, and the buyer’s difficulty in spotting defects and reliance on the builder’s expertise. It is narrower in scope. It protects the buyer from defects that undermine the basis of the bargain, requiring a house that is safe, sanitary and otherwise fit to live in, but it does not require a flawless one.

What language does it take?

Texas courts look for more than a waiver. The contract must substitute a specific express standard of performance. A clause that only says “all implied warranties are waived” is unlikely to be enough.

Disclaimers must also be conspicuous. In one Texas case, a disclaimer printed in ordinary type, with nothing to draw the buyers’ attention to it, did not effectively remove the workmanlike construction warranty.

Common-law and DTPA claims

In Nghiem v. Sajib, 567 S.W.3d 718 (Tex. 2019), the Texas Supreme Court resolved a prior split among the courts of appeals, definitively holding that the implied warranty of workmanlike repairs is a creature of the common law and that a breach of the warranty can be asserted in a common-law action or under the DTPA—the DTPA is not the exclusive remedy.

Who is protected, and who can be sued

In residential cases, the warranty extends to later purchasers of the home, not just the first buyer. It does not apply to a subcontractor who had no contract with the homeowner (no “privity”), so a claim is generally brought against the builder or contractor the homeowner actually hired.

What about building codes?

Builders are generally expected to comply with applicable building codes unless the contract addresses them. Code violations that make a home structurally unsafe or unfit to live in can also support a claim under the warranty of habitability. Under the Residential Construction Liability Act, a habitability claim requires showing that the defect was hidden when the home was completed or sold to the original buyer and that it made the home unsuitable to live in.

What to look for before you sign

• Phrases like “in lieu of all other warranties”, “waives all implied warranties”, or “as is.”

• A limited warranty booklet that is referenced but not attached. Ask for a copy before you sign.

• Whether the contract describes actual construction standards, or just says implied warranties are waived.

• Whether the waiver is in bold, larger type or otherwise set apart.

• An arbitration clause, which can affect where any dispute is decided.

If you have already signed, don’t assume a waiver clause ends your rights. Whether it is enforceable depends on the exact language and how it appears in the contract.

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 questions about a builder contract or a construction defect, talk to a Texas lawyer about your situation.