In 1989, the Texas Legislature enacted the Texas Residential Construction Liability Act[1] (“RCLA”) in response to contractors’ increased exposure to liability for residential construction projects.[2] RCLA was enacted to find a fair and balanced approach to contractor and homeowner dispute resolution.[3] Instead of creating a cause of action itself, RCLA modifies existing causes of action that arise from residential construction defects.[4] It provides defenses for contractors, limitations on damages, and procedural requirements that encourage settlements. However, RCLA resulted in significant procedural hurdles and limitations for homeowners.
Procedural Hurdles and Limitations for Homeowners
Notice. A homeowner seeking damages from a contractor for construction defects must give the contractor 60 days’ written notice before commencing any litigation or arbitration action.[5] The notice must be sent via certified mail, and it must specify the defects in reasonable detail.
Inspection. Once the contractor receives the notice, he has 35 days to request an inspection of the defects.[6] The inspection allows the contractor to determine the nature and extent of the repairs needed.
Settlement Offer. Following receipt of the notice, the contractor has 45 days to make a written settlement offer to the homeowner.[7] The offer may be for the contractor to repair the defects himself or to hire another contractor to do so. Additionally, the offer may be for the full costs of the repairs or just part of the costs. The homeowner then must accept the offer or reject it for being unreasonable.
Getting Around the RCLA – Abandonment
Scope. RCLA’s scope is far reaching. Generally, if the action arises from a matter concerning the construction of a residence, it is governed by RCLA.[8] However, RCLA expressly excludes four categories of actions from its scope: (1) an action to recover damages for personal injury, survival, or wrongful death; (2) an action to recover damages arising from a violation of Section 27.02 of the Business & Commerce Code; (3) an action to recover damages arising from a violation of Chapter 162; and (4) an action to recover damages for a contractor’s wrongful abandonment of a project.[9]
Wrongful Abandonment. In Texas, wrongful abandonment refers to “such an abandonment as would be had without reasonable grounds for believing the act to be lawful, and without legal justification.”[10] Determining whether an abandonment was wrongful is the easy part. The more difficult question is whether the contractor has abandoned the project.
Abandonment of a contract is a matter of intention that needs to be established by clear and satisfactory evidence. Conduct may be sufficient to establish abandonment if the acts are positive, unequivocal, and inconsistent with the existence of the contract.[11]
In Karbach v. Markham, the court concluded RCLA did not apply to a homeowner’s claim for damages because the contractor wrongfully abandoned the project. In concluding that the evidence supports the assertion that the contractor abandoned the project, the court stated that the contractor removed his business sign from the premises, left the project unfinished, and failed to perform much of the work in a good and workman like manner.[12]
On the other hand, Texas courts have held that a contract is not abandoned when there are mutual changes to the construction plans[13] or when the contractor faces financial difficulty and the homeowner assists financially to complete the project.[14]
Conclusion
RCLA imposes far reaching procedural hurdles and limitations on homeowners seeking damages from residential contractors. However, homeowners may be able to avoid RCLA if they can prove the contractor abandoned the project. Thus, homeowners can save time and increase their available damages by showing wrongful abandonment.
[1] Tex. Prop. Code Ann. § 27.001, et seq.
[2] Timmerman v. Dale, 397 S.W.3d 327, 330 (Tex. App.—Dallas 2013, pet. denied).
[3] Id.
[4] Gentry v. Squires Constr., Inc., 188 S.W.3d 396, 404 (Tex. App.—Dallas 2006, no pet.).
[5] Tex. Prop. Code Ann. § 27.004(a).
[6] Tex. Prop. Code Ann. § 27.004(a)
[7] Tex. Prop. Code Ann. § 27.004(b).
[8] Timmerman, 397 S.W.3d at 331.
[9] Tex. Prop. Code Ann. § 27.002.
[10] City of Aransas Pass v. Hamon & Griffith, 104 S.W.2d 893, 894 (Tex. Civ. App.—Fort Worth 1937, writ dism’d).
[11] Mood v. Methodist Episcopal Church S., 289 S.W. 461, 464 (Tex. Civ. App.—Eastland 1926).
[12] Karbach v. Markham, No. 03-06-00636-CV, 2009 WL 2682604 (Tex. App.—Austin Nov. 6, 2009, no pet.).
[13] Mood, 289 S.W. at 464.
[14] Capitol Steel & Iron Co. v. Standard Acc. Ins. Co., 299 S.W.2d 738 (Tex. Civ. App.—Amarillo 1952, no writ).
Sara, a rising third year law student at Baylor Law School, is a 2022 summer associate for West Mermis PLLC. We look forward to having a fun, insightful, and productive summer term with Sara.
