Construction Defect Claims in Texas: Liability, Standards, and the RCLA Notice Requirement

By Hank FasthoffJuly 5, 2026

When construction work is defective, responsibility is only the first question. You also need to know what process to follow before you can pursue a claim, what damages you can recover, and how long you have to bring the action. Texas applies different rules to residential and commercial defect claims, and the distinction affects every stage of the dispute from pre-suit notice through trial.

On residential projects, the Residential Construction Liability Act (Texas Property Code Chapter 27) imposes a mandatory pre-suit notice and inspection process that homeowners must complete before filing suit. On commercial projects, no comparable statute applies, and defect claims proceed under standard contract and tort theories. Both types of claims are subject to Texas's 10-year statute of repose, which sets a hard deadline measured from substantial completion, regardless of when the defect is discovered.

Residential Defect Claims Under the RCLA

Chapter 27 of the Texas Property Code applies to any action to recover damages arising from a construction defect in a new residence, an existing residence, an alteration, repair, or addition to a residence, or an appurtenance to a residence (such as a detached structure, retaining wall, pool, or fence). § 27.002(a)(1). It doesn't apply to personal injury, survival, or wrongful death claims, or to claims for damage to goods.

Under § 27.001, a "construction defect" is a deficiency in the design, construction, or repair of a residence or its appurtenances. A contractor is liable for defects that proximately cause actual physical damage to the residence, actual failure or lack of capability of a building component to perform its intended function, or a verifiable danger to the safety of the occupants.

The RCLA Pre-Suit Process

Before filing a lawsuit or initiating binding arbitration against a contractor for a construction defect, the homeowner must complete the RCLA's mandatory notice and inspection process. Failing to follow this process can result in dismissal of the suit, limitations on recoverable damages, or forfeiture of attorney's fees.

Step one is the 60-day written notice. At least 60 days before filing suit, the homeowner must send the contractor a written notice by certified mail, return receipt requested, describing the construction defect and any evidence the homeowner has related to the claim. § 27.004(a). This notice starts the clock on the RCLA process.

Step two is the contractor's inspection. Within 35 days of receiving the notice, the contractor may request a written inspection of the property to assess the defect. Under the 2023 amendments (HB 2022, effective September 1, 2023), the contractor may conduct up to three inspections during this 35-day period. § 27.004(b).

Step three is the settlement offer. Within 60 days of receiving the homeowner's notice (extended from 45 days by HB 2022), the contractor may make a written offer of settlement. The offer must include an agreement to repair the defect at the contractor's expense, to have the defect repaired by an independent contractor at the contractor's expense, or to compensate the homeowner in an amount determined by the contractor. § 27.004(b).

Step four is the homeowner's response. If the homeowner doesn't accept the contractor's offer within 25 days of receiving it, the offer is considered rejected. § 27.004(i). If the homeowner rejects the offer and later obtains a judgment that isn't substantially better than the rejected offer, the court may limit the homeowner's recovery of attorney's fees.

If the contractor doesn't respond to the notice, doesn't request an inspection, or doesn't make an offer within the 60-day window, the homeowner can proceed to file suit.

Damages Under the RCLA

Chapter 27 limits the damages a homeowner can recover in a construction defect action. Recoverable damages include the reasonable cost to repair the construction defect, the reasonable cost to repair or replace any damaged personal property caused by the defect, reasonable and necessary engineering and consulting fees (if the contract allows reimbursement for these costs), reasonable temporary housing expenses during repairs if the residence can't be occupied, reduction in current market value (valued after repair) if the defects are structural, reasonable attorney's fees and litigation costs if supported by the contract or a statute, and reasonable and necessary costs of remediation.

Damages that Chapter 27 bars include mental anguish, delay damages, and treble damages. If another cause of action or statute would allow those types of damages, Chapter 27 preempts them to the extent they arise from or relate to the construction defect.

The 2023 RCLA Amendments

HB 2022 (effective September 1, 2023) made several changes to the RCLA beyond the timeline adjustments described above.

For breach of the implied warranty of habitability, a homeowner must now prove two additional elements. First, the construction defect was latent (concealed or not apparent) at the time the residence was completed or title was conveyed to the original purchaser. Second, the defect has rendered the residence unsuitable for its intended use as a home. § 27.004(g-1). These requirements narrow the implied warranty claim by excluding defects that were visible at completion and defects that, while real, don't make the home unlivable.

HB 2022 also tightened the definition of contractor liability. A contractor is liable only to the extent a defect proximately causes actual physical damage, component failure, or a safety danger. A contractor isn't liable for damage caused by a known defect that the homeowner didn't report to the contractor in a timely manner.

Commercial Defect Claims

Commercial construction defect claims aren't governed by the RCLA. There's no mandatory pre-suit notice requirement, no statutory inspection period, and no limitation on the types of damages that can be recovered (beyond what the contract and general tort law provide).

Commercial defect claims typically proceed under one or more of the following theories.

Breach of contract. If the construction contract requires the contractor to perform work in accordance with plans and specifications, and the work doesn't conform, the owner has a breach of contract claim. Damages include the cost of repair or the diminution in value caused by the defect.

Breach of warranty. Construction contracts typically include an express warranty that work will be free from defects in workmanship and materials for a stated period (often one year from substantial completion). A defect discovered during the warranty period supports a warranty claim. Even after the express warranty expires, the owner may have claims for latent defects under contract or tort theories, subject to the statute of limitations and the statute of repose.

Negligence. A contractor who fails to exercise the degree of care that a reasonably prudent contractor would exercise under the same circumstances may be liable in negligence for resulting damages. Negligence claims in construction defect cases often require expert testimony to establish the applicable standard of care and the contractor's deviation from it.

Statute of Repose

Texas Civil Practice and Remedies Code § 16.009 sets an absolute outer boundary on construction defect claims. A person may not bring an action arising out of a defective or unsafe condition of an improvement to real property more than 10 years after the date of substantial completion of the improvement. This is a statute of repose, not a statute of limitations, meaning it terminates the right to bring a claim regardless of when (or whether) the defect was discovered.

For residential projects, the 2023 amendments (HB 2024, effective June 9, 2023) created a shorter repose period for contractors who provide a qualifying express warranty. If a residential contractor provides a written warranty meeting the statutory minimum (one year for workmanship and materials, two years for plumbing, electrical, and HVAC systems, six years for major structural components), the statute of repose is shortened to six years from substantial completion. § 16.009. If a claim is presented in writing during the final year of the repose period, the period extends by one year, for a maximum of seven years.

Contractors who don't provide a qualifying warranty remain subject to the standard 10-year repose period.

Design professionals (architects, engineers) are subject to a separate statute of repose under § 16.008, which also runs 10 years from substantial completion.

Statute of Limitations

Within the repose period, standard statutes of limitation apply. Negligence claims must be brought within two years of accrual. Breach of contract and breach of warranty claims must be brought within four years. DTPA claims must be brought within two years.

For latent defects (defects that aren't discoverable through reasonable inspection at the time of completion), the discovery rule may delay the accrual of the limitations period until the defect is reasonably discovered. However, the discovery rule doesn't override the statute of repose. A latent defect discovered in year nine must still be sued on before the 10-year repose period expires.

Practical Recommendations for Property Owners

On residential projects, follow the RCLA process before filing suit. Send the 60-day written notice by certified mail with a detailed description of the defect and all supporting evidence. Don't file suit before completing the process, because failure to comply with the RCLA can result in dismissal, reduced damages, or denial of attorney's fees.

On commercial projects, document defects as soon as they're discovered. Photograph the defect, preserve any evidence (don't repair the defect before the contractor has the opportunity to inspect it unless safety requires immediate action), and notify the contractor in writing. While commercial projects don't have a statutory notice requirement, most construction contracts include a notice-and-cure provision that requires the owner to notify the contractor and allow a reasonable period for repair before pursuing other remedies.

On both residential and commercial projects, don't assume the one-year warranty period is your only window. Express warranty periods and statutes of limitation are independent. A defect discovered in year three may be outside the express warranty period but within the four-year statute of limitations for breach of contract and within the 10-year statute of repose. Consult with a construction attorney to evaluate which claims are available and which deadlines apply.

Practical Recommendations for Contractors

Respond to every RCLA notice within the statutory deadlines. Inspect the property, evaluate the defect, and make a written settlement offer within 60 days. A reasonable offer protects you by limiting the homeowner's ability to recover attorney's fees if the homeowner rejects your offer and later receives a judgment that isn't substantially better.

On commercial projects, maintain your punchlist and warranty records. When a defect is reported during the warranty period, inspect and repair it promptly. A contractor who ignores warranty claims during the warranty period loses the opportunity to control the cost of repair, because the owner will hire someone else and pursue the original contractor for the cost.

Consider providing the qualifying express warranty under § 16.009 on residential projects. A 1-2-6 warranty (one year workmanship, two years systems, six years structural) shortens the statute of repose from 10 years to six, reducing your long-term exposure to defect claims. Weigh the reduced exposure against the warranty obligations you're taking on.