Insights

Texas Construction Defects

Second Owners: Suing the Original Builder in Texas

You bought a home that was a few years old, and now you have found a cracked foundation, failing windows or hidden water damage. You never signed a contract with the builder. Can you still hold the builder responsible?

The short answer

Often, yes. Texas law allows a second (or later) owner to bring construction defect claims against the original builder or developer. But your rights are generally limited to what the first buyer received, and the deadlines are measured from when the home was built, not from when you bought it.

The Residential Construction Liability Act covers later buyers

The Texas Residential Construction Liability Act (RCLA) expressly applies to claims by a later buyer of a home against a contractor. “Contractor” is defined broadly. It includes builders who contract to build a home, anyone who contracts to sell a new home built by them or on their behalf, and anyone who contracts with an owner or developer of a condominium or other housing project to build or sell new homes.

As with any homeowner, a later owner must generally:

  • send the builder written notice describing the defects at least 60 days before filing suit;

  • give the builder a reasonable opportunity to inspect, if it asks in writing; and

  • consider any settlement offer, which may include an offer to repair.

Implied warranties pass to later owners

Texas law includes an implied warranty of habitability in the sale of a new home. That warranty comes from the builder and passes to later buyers. It protects against hidden (latent) defects that make the home unsuitable to live in.

Two important points:

  • The warranty runs from the builder, not the person who sold you the house. If your seller did not build the home, the seller generally does not give you an implied warranty of habitability. Your claim is against the builder.

  • Developers can be responsible too. A Texas appeals court has held that a developer owes an implied warranty to develop property in a good and workmanlike manner, even to buyers who have no direct contract with the developer.

The important limits for later owners

You get no more than the first buyer got

In 2023, the Texas Supreme Court held that because implied warranties pass from owner to owner automatically, a later buyer cannot receive a greater warranty than the original buyer received. If the original contract between the builder and the first buyer limited or replaced the implied warranties, or disclosed certain defects, those terms may affect your claim.

You may be bound by the original contract’s arbitration clause

In the same case, the Court held that the later buyer had to take her implied warranty claims to arbitration under the arbitration clause in the original builder’s contract, even though she never signed it. Because her claims depended on that original contract, she was bound by its arbitration clause.

Claims under the Deceptive Trade Practices Act are less certain

Older Texas cases allowed later buyers to bring implied warranty claims under the Deceptive Trade Practices Act (DTPA), but the Texas Supreme Court has since cast doubt on that rule. Later owners should not count on the DTPA.

The clock started when the home was built

Texas’s statute of repose generally requires a lawsuit to be filed within 10 years after the home was substantially completed, or within 6 years if the builder gave a written warranty meeting minimum statutory standards. That clock starts when construction is finished, not when you bought the home. If you bought a home that was already several years old, you may have less time than you think.

What this means for you

  • Try to get a copy of the original purchase contract between the builder and the first buyer, along with any warranty booklet. These documents may control your rights.

  • Gather your own purchase documents, including your seller’s disclosure and your pre-purchase inspection report.

  • Find out when the home was completed. Your deadlines may depend on it.

  • Talk to a lawyer quickly, especially if the home is more than a few years old.

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.