Texas Construction Defect Claims Under the RCLA

By Hank FasthoffJuly 5, 2026

A construction defect claim starts with the building, but it rarely ends there. A cracked slab, a leaking window system, or a failed balcony detail quickly becomes a calendar problem. Texas separates residential defect claims from commercial defect claims, and Chapter 27 of the Property Code changes the process before anyone files suit or starts arbitration.

If your dispute involves a residence, the Residential Construction Liability Act usually controls the first move. You need notice, supporting evidence, an inspection opportunity, and a settlement offer process before the case can proceed. If your dispute involves commercial property, Chapter 27 usually drops out, and the contract, warranties, limitations, and ordinary defect law control the claim.

What the RCLA Covers

Chapter 27 applies to claims for damages or other relief arising from a construction defect in a residence. A construction defect means a deficiency in the design, construction, or repair of a new residence, an alteration, repair, or addition to an existing residence, or an appurtenance to a residence. Appurtenances include garages, outbuildings, retaining walls, and other structures or recreational facilities built in connection with the residence, whether or not they are attached to the dwelling.

Chapter 27 also applies to subsequent purchasers who assert claims against a contractor. A buyer who discovers a defect after closing may have to follow Chapter 27 even without a direct contract with the builder.

Chapter 27 has exclusions. It doesn't apply to personal injury, survival, wrongful death, damage to goods, statutory fraud under Business and Commerce Code § 27.01, wrongful abandonment of an improvement project before completion, or Chapter 162 construction trust fund claims. It also prevails over conflicting common law and DTPA theories to the extent the claim arises from a residential construction defect.

Contractor Liability

Chapter 27 does more than set a notice procedure. It narrows what a contractor can be liable for in a residential construction defect case.

A contractor is liable only to the extent a defective condition proximately causes actual physical damage to the residence, actual failure or lack of capability of a building component to perform its intended function or purpose, or a verifiable danger to the safety of the occupants. A technical departure from plans or code may support a claim, but recovery turns on the statutory harm and causation requirements.

Chapter 27 also protects contractors from damages caused by someone else's negligence, the claimant's failure to mitigate, the claimant's failure to maintain the residence, or the claimant's failure to give timely notice of the defect. Normal wear and tear, normal settlement or drying cracks within building tolerances, and certain reliance on inaccurate government records the contractor couldn't reasonably have known were false also fall outside contractor liability.

Insurers, assignees, and subrogated parties face a separate repair problem. If an assignee or subrogated party repairs before giving the contractor the written notice, inspection opportunity, and offer opportunity required by § 27.004, Chapter 27 can block recovery of the repair cost and the percentage of damages caused by those repairs.

The 60-Day Notice

A claimant seeking damages or other relief from a contractor must send written notice before the 60th day before filing suit or initiating arbitration. The notice must be sent by certified mail, return receipt requested, to the contractor's last known address, and it must describe the defects in reasonable detail.

HB 2022 tightened the evidence requirement in 2023. The notice must include available evidence in the claimant's possession, custody, or control that depicts the nature and cause of the defect and the nature and extent of needed repairs, if that evidence would be discoverable under Texas Rule of Civil Procedure 192. Expert reports, photographs, video, and audio belong in the notice package when they exist.

After receiving notice, the contractor can request an inspection. During the 35-day period after receipt, the contractor must receive a reasonable opportunity to inspect the property and determine the nature and cause of the defect and the repairs needed. If requested, the contractor gets up to three inspections during that period and any agreed or legally extended inspection period.

The Settlement Offer

After notice and inspection, the contractor may make a written settlement offer no later than the 60th day after receiving the notice. The offer may propose repair by the contractor, repair by an independent contractor, repair at reduced cost, a monetary settlement, or purchase of the residence. A repair offer must describe the repairs in reasonable detail and state the completion time if the work will take more than 60 days, and repairs under an accepted offer must be completed by the 60th day after the contractor receives written notice of acceptance unless the claimant or events beyond the contractor's control cause delay.

A late offer can be treated as timely in limited circumstances. An offer made after the 60-day deadline can count when the claimant withheld available evidence from the original notice, amended the claim to add a new defect, or events beyond the contractor's control caused the delay.

If the claimant considers the offer unreasonable, the claimant must advise the contractor in writing by the 25th day after receiving the offer and explain the reasons in reasonable detail. The contractor then has 10 days after receiving that response to make a supplemental offer.

An offer not accepted by the 25th day after receipt is considered rejected. The trier of fact determines whether the final offer was reasonable. If the claimant rejects a reasonable offer, Chapter 27 can cap recovery at the fair market value of the contractor's last offer or the amount of a reasonable monetary or purchase offer. The claimant may also recover only reasonable and necessary costs and attorney's fees incurred before the offer was rejected or considered rejected.

The rejected-offer rule creates the pressure point in the RCLA process. A weak offer may cost the contractor the statutory cap. A reasonable offer may sharply limit the claimant's recovery.

Abatement

If a claimant files suit without following Chapter 27, the contractor can seek abatement. The court or arbitration tribunal must abate the case if the claimant failed to provide the required notice, failed to give a reasonable inspection opportunity, or failed to follow the settlement offer procedures. Abatement can also happen automatically, without a court order, beginning on the 11th day after a verified motion alleging those failures is filed, if the claimant doesn't controvert the motion by affidavit.

Chapter 27 also has a limitations safety valve. If giving pre-suit notice is impracticable because limitations will expire, or if the defect claim is asserted as a counterclaim, the claimant can file first. The claim or counterclaim must describe each defect in reasonable detail, and the inspection and offer process runs after filing, with abatement as the mechanism that provides the contractor that opportunity.

Damages Under Chapter 27

Unless the rejected-offer cap applies, a claimant in an RCLA case may recover only economic damages proximately caused by a construction defect. The recoverable categories are the reasonable repair cost, the reasonable and necessary cost to replace or repair damaged goods in the residence, reasonable and necessary engineering and consulting fees, reasonable temporary housing expenses during the repair period, the reduction in current market value after repair if the defect is a structural failure, reasonable and necessary attorney's fees, and reasonable and necessary arbitration filing fees and the claimant's share of arbitrator compensation.

Economic damages under Chapter 27 exclude exemplary damages, bodily or personal injury damages, physical pain and mental anguish, loss of consortium, disfigurement, physical impairment, and loss of companionship and society. If a plaintiff pleads DTPA, negligence, warranty, and contract theories around the same residential defect, Chapter 27 can limit the damages even when the underlying theory sounds broader.

Habitability Claims

HB 2022 added a specific requirement for breach of the warranty of habitability. To maintain that claim, the claimant must prove the construction defect was latent when the residence was completed or title was conveyed to the original purchaser, and that the defect rendered the residence unsuitable for its intended use as a home.

That standard is narrower than ordinary dissatisfaction with workmanship. A visible defect at completion, a cosmetic issue, or a condition that leaves the home usable may support another claim if the facts and contract allow it, but habitability requires a latent defect that makes the residence unsuitable for its intended use as a home.

Chapter 27 also has a causation rule. The claimant must prove the defect existed at completion of the construction, alteration, or repair, and that the damages were proximately caused by the defect. That rule makes early documentation important for both sides.

Contract Notice

A written contract subject to Chapter 27 must contain the statutory disclosure in 10-point boldface type or the computer equivalent. The notice tells the homeowner that Chapter 27 may affect recovery, that the homeowner must provide certified mail notice before suit or arbitration, and that the contractor may request an opportunity to inspect and cure.

If the contract omits the notice, the claimant may recover a $500 civil penalty in addition to other Chapter 27 remedies. The missing notice doesn't eliminate the RCLA process, but it creates a separate statutory consequence for the contractor. Chapter 27 also contains a no-waiver rule, because § 27.009 makes an attempted contractual waiver of the chapter void.

Limitations and Repose

Chapter 27 doesn't supply one limitations period for every residential defect claim. The claim theory drives the limitations analysis. Negligence and DTPA claims generally use two-year limitations. Contract and warranty claims generally use four-year limitations. The discovery rule, contractual warranty language, and accrual facts can change the analysis.

Section 27.008 adds one useful rule for arbitration. Submitting an RCLA action to arbitration has the same effect on limitations as filing in a Texas court.

A statute of repose sets the outside deadline. Section 16.009 generally requires construction defect suits against a person who constructs or repairs an improvement to real property by the 10th year after substantial completion. Governmental entity claims generally use an eight-year repose period, subject to statutory exclusions.

Residential construction has a separate rule. For claims against a person who constructs or repairs an improvement to real property arising from the design, construction, or repair of a new residence, an alteration, repair, or addition to an existing residence, or an appurtenance to a residence, the default repose period is 10 years. If the contractor provided a qualifying written warranty, the period is six years after substantial completion. The warranty must provide at least one year for workmanship and materials, two years for plumbing, electrical, heating, and air-conditioning delivery systems, and six years for major structural components.

That six-year rule has its own residence definition in § 16.009. It covers the real property and improvements for a detached one-family or two-family dwelling, a townhouse not more than three stories above grade plane with a separate means of egress, or an accessory structure not more than three stories above grade plane. Don't assume every Chapter 27 residence receives the six-year repose period.

Written claims can extend the repose period. For claims under the general 10-year rule, a written claim during the repose period extends the period for two years from the date the claim is presented. For governmental entity claims and residential claims under § 16.009(a-2), the extension is one year. Separate rules apply when the injury or damage occurs during the last year of the applicable period, and § 16.009 doesn't bar claims based on longer written warranties, actual possession or control, willful misconduct, or fraudulent concealment.

HB 2022 and HB 2024 have effective-date rules. HB 2022 applies to causes of action that accrue on or after September 1, 2023. HB 2024 applies to work that commences on or after its effective date, but it doesn't apply to work under a contract entered before that date.

Commercial Defect Claims

Commercial construction defect claims use a different framework. Chapter 27 governs residential construction defect disputes, so a warehouse, office building, retail center, industrial project, or multifamily rental project usually turns on the contract, warranty language, plans and specifications, change orders, notice and cure provisions, limitations, expert proof, and damages clauses.

Commercial owners should read the contract before repairing. Many agreements require prompt notice, an opportunity to inspect, and a chance to correct defective work. Repairing first can create proof problems and may violate the contract's cure procedure.

Commercial contractors should preserve the same records they would want in an RCLA case. Daily reports, submittals, RFIs, inspection reports, photographs, warranty logs, punch lists, repair proposals, and emails about the alleged defect often determine whether the issue is defective work, owner maintenance, design error, normal wear, or damage by another trade.

What You Should Do

If you own a residence and discover a defect, you should document the condition before repair unless immediate safety concerns require action. You should preserve photographs, videos, expert reports, invoices, and communications. You should send the Chapter 27 notice by certified mail with enough detail and supporting evidence to let the contractor evaluate the claim.

If you are a contractor receiving an RCLA notice, you should calendar the 35-day inspection period, the 60-day offer deadline, the 25-day rejection period, and the 10-day supplemental offer window. You should inspect carefully, document the condition, evaluate causation, and make any offer detailed enough for a subsequent reasonableness finding.

If the project is commercial, you should start with the contract. You should identify the notice deadline, cure process, warranty period, consequential damages clause, limitations language, dispute forum, and insurance requirements before anyone repairs the defect or sends a demand.

Process and proof both affect construction defect claims. The defect is the visible problem. The notice, inspection, offer, warranty, and deadline rules determine what the claim is worth.