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Texas Construction Defects

The Implied Warranty of Habitability in Texas

When you buy a newly built home in Texas, the law includes certain promises in the sale, even if they are not written anywhere in your contract. The most important of these is the implied warranty of habitability.

The short answer

Yes. Texas has recognized the implied warranty of habitability for new homes since 1968. It makes builders who build and sell new homes responsible when hidden defects make a home unsuitable to live in. Texas also recognizes a separate implied warranty that the home was built in a good and workmanlike manner. Today, claims under these warranties are governed by the Residential Construction Liability Act (RCLA).

Where the warranty comes from

In Humber v. Morton (1968), the Texas Supreme Court ended the old rule of “buyer beware” for the sale of new homes by builders. The Court held that a builder who builds and sells a new home impliedly promises that the home was built in a good and workmanlike manner and is suitable for people to live in. The Court reasoned that home buyers do not have equal bargaining power with professional builders and cannot be expected to find hidden defects before they buy.

Two separate warranties

Texas recognizes two related but independent implied warranties:

  • Habitability focuses on the result: is the finished home fit to live in?

  • Good and workmanlike construction focuses on the builder’s work: was the home built with the skill of a proficient builder?

The Texas Supreme Court has held that these are independent. A homeowner can recover for poor workmanship without proving the home is uninhabitable.

Who is responsible?

Builders who sell homes

The warranty of habitability applies to builder-vendors, meaning those who both build and sell new homes.

Developers

A Texas appeals court has extended a related warranty to land developers. A developer owes an implied warranty to develop the property in a good and workmanlike manner to buyers who ultimately purchase from a separate builder, even though the buyer has no direct contract with the developer.

Later owners are protected, too

The builder’s implied warranty of habitability extends to later buyers of the home. But the warranty comes from the builder. A homeowner who did not build the home and later sells it does not give an implied warranty of habitability.

Can a builder disclaim the warranty?

Not easily. The Texas Supreme Court has said the warranty of habitability generally cannot be disclaimed with standard, pre-printed contract language. However, a buyer may waive it as to defects that were adequately disclosed before the sale. The workmanship warranty is different: it can be replaced if the contract specifically spells out the manner, performance or quality of the construction.

What a habitability claim requires today

Under the RCLA, to bring a claim for breach of the warranty of habitability, a homeowner must show that the defect:

  1. was latent (hidden) when the home was completed or when title passed to the original buyer; and

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

Texas courts have described this as showing the home is unfit for people to live in.

What builders are, and are not, responsible for

Under the RCLA, a builder is responsible only to the extent a defect causes:

  • actual physical damage to the home;

  • an actual failure of a building component to do its job; or

  • a verifiable danger to the safety of the people living there.

A builder is generally not responsible for:

  • damage caused by someone other than the builder and its employees, agents and subcontractors;

  • an owner’s failure to limit the damage, maintain the home, or tell the builder about a defect in time;

  • normal wear and tear; or

  • normal settlement cracking within building-standard tolerances.

What a homeowner can recover

Under the RCLA, a homeowner can generally recover economic losses caused by the defect, including reasonable repair costs, the cost to repair or replace damaged belongings, engineering and consulting fees, temporary housing during repairs, lost market value after repairs for structural failures, attorney’s fees and certain arbitration costs. Warranty claims can also be brought under the Deceptive Trade Practices Act, which may allow additional damages if the builder acted knowingly or intentionally, but the RCLA controls if the two laws conflict.

What this means for you

  • Report problems to your builder in writing as soon as you find them.

  • Keep maintaining your home. Poor maintenance can limit a builder’s responsibility.

  • Before suing, Texas generally requires 60 days’ written notice to the builder and a chance to inspect.

  • Deadlines apply. Talk to a lawyer promptly.

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.