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Texas Construction Defects

Damages in a Texas Construction Defect Case

If your new home has serious defects, you will want to know what a claim can actually pay for. In Texas, the answer is largely set by the Residential Construction Liability Act (RCLA), which lists the types of damages a homeowner can recover for a residential construction defect.

What the RCLA allows you to recover

In a case covered by the RCLA, a homeowner can generally recover these economic losses, as long as they were caused by the construction defect:

  1. Repair costs. The reasonable cost of the repairs needed to fix the defect.

  2. Damaged belongings. The reasonable and necessary cost to repair or replace personal property in the home that the defect damaged.

  3. Engineering and consulting fees. Reasonable and necessary fees for engineers and other consultants.

  4. Temporary housing. Reasonable expenses for temporary housing that is reasonably necessary while repairs are being made.

  5. Lost value, but only for structural failures. The drop in your home’s market value after the defect is repaired, but only if the defect is a structural failure.

  6. Attorney’s fees. Reasonable and necessary attorney’s fees.

  7. Arbitration costs. Reasonable and necessary arbitration filing fees and your share of the arbitrator’s fees, if your case is in arbitration.

The RCLA’s definition of economic damages excludes damages for physical pain, mental anguish, bodily injury and similar personal harms.

A closer look at some of these

Temporary housing is limited to the repair period

The temporary housing allowance covers housing while repairs are being made. It is not a general award for delay. In one Texas case, a homeowner sought the rental value of his home for the period a builder unreasonably delayed finishing construction. The court held the RCLA did not allow that recovery, because the temporary housing provision covers only the repair period.

Lost market value requires a structural failure

Many homeowners worry that, even after repairs, their home will be worth less because of its history. The RCLA allows recovery for that loss of value only when the defect is a structural failure, and the loss is measured after the repairs are made.

Repair cost or loss in value?

Texas courts generally use one of two measures for damage to the home:

  • Cost of repair, when the defects can be fixed without unreasonable economic waste; or

  • Difference in value, the difference between what the home is worth as built and what it would have been worth without the defects, when fixing it would require changing the structure in a major way or would be extremely expensive.

These two measures do not always duplicate each other, depending on how the loss in value is calculated.

What about the Deceptive Trade Practices Act?

Homeowners sometimes bring claims under the Texas Deceptive Trade Practices Act (DTPA) alongside their defect claims. The DTPA can allow more than the RCLA does:

  • If the builder acted knowingly, a homeowner may recover mental anguish damages, and the judge or jury may award up to three times the economic damages.

  • If the builder acted intentionally, the award can be up to three times the economic and mental anguish damages combined.

  • A homeowner who wins a DTPA claim is entitled to attorney’s fees.

However, when the DTPA and the RCLA conflict, the RCLA controls, and the RCLA can limit DTPA remedies in construction defect cases. Whether enhanced DTPA damages are available depends heavily on the facts, including the builder’s conduct and how it handled the pre-suit settlement process.

How the builder’s settlement offer affects your damages

Before you sue, Texas law gives the builder a chance to inspect and make a settlement offer. That process affects what you can recover:

  • If you reject a reasonable offer, your recovery can be capped at the value of the builder’s last offer, and your attorney’s fees are limited to those incurred before you rejected it.

  • If the builder fails to make a reasonable offer, it loses the benefit of the RCLA’s limits on the types and amounts of damages. In one Texas case, a builder that failed to make a reasonable settlement offer could not rely on the RCLA’s damage limits.

What you have to prove

You must show that your damages were caused by the construction defect. Keep good records from the start:

  • repair estimates and invoices;

  • hotel, rental and moving receipts during repairs;

  • engineer and consultant invoices and reports;

  • photos of damaged belongings and receipts for replacing them; and

  • dated photos and notes showing how the problem developed.

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.