Learn how to successfully navigate residential disputes within the RCLA framework, and draft effective contract clauses. This presentation will provide you with an outline on how you can utilize the RCLA procedures to effectively neutralize risk.

1. Residential Construction
Liability Act: A Primer
Presented by: Jonelle L. Oldacre, Associate Attorney at The Cromeens Law Firm, PLLC
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2. Session Agenda
• Introduction/The Cromeens Law Firm, PLLC
• Residential Construction Liability Act (“RCLA”)
• Closing and Interactive Q/A Session
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3. Introduction
• About The Cromeens Law Firm, PLLC
• Founded in 2006, we are a full-service, Houston-based law firm serving clients across
the state of Texas;
• Focused on business, construction, and real estate law;
• Clients include: Design/Engineering professionals, Contractors, Suppliers, Real Estate
Developers, Owners and Managers, Start Up and Established Business, and
Individuals/Personal Matters;
• Results driven, cost-effective and personalized representation for every client.
Adhering to the highest standards of honesty and ethical behavior, our mission is to
truly understand each client’s unique needs and go beyond expectations to exceed
those needs.
• Free consultations, unique legal concierge services, Spanish translation available,
credit cards accepted.
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4. RCLA
• Where can I find the Residential Construction Liability Act?
• The full text of the Residential Construction Liability Act is located in Chapter
27 of the Texas Property Code.
• Purpose
• The purpose of RCLA is to promote settlement.
• How does it accomplish its purpose?
• RCLA provides a framework for homeowners to bring claims against builders.
It acts as a buffer between the actual dispute and expensive litigation by
including notice provisions that must be followed prior to the filing of a
lawsuit and potentially limiting a builder’s damages.
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5. Broad Application
• When does RCLA apply?
• RCLA applies to “any action to recover damages or other relief
arising from a construction defect, except a claim for personal
injury, survival, or wrongful death or for damage to goods.”
• A construction defect is defined by Chapter 27 as “…a matter
concerning the design, construction, or repair of a new residence,
of an alteration of or repair or addition to an existing residence, or
of an appurtenance to a residence, on which a person has a
complaint against a contractor. The term may include any physical
damage to the residence, any appurtenance, or the real property
on which the residence and appurtenance are affixed proximately
caused by a construction defect.” Sec. 27.001(4).
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6. Defenses (Sec. 27.003)
A contractor is not liable for any percentage of damages caused by:
• Negligence of a person other than the contractor or an agent, employee, or
subcontractor of the contractor.
• Failure of a person other than the contractor or an agent, employee, or
subcontractor of the contractor to mitigate damages or maintain the
residence.
• Normal wear, tear, or deterioration.
• Normal shrinkage due to drying or settlement.
• The Contractor’s reliance on written information relating to the residence
obtained by official government records, if false or inaccurate.
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7. Frivolous Suits/Harassment
• A party who files a suit under chapter 27 that is groundless and brought in
bad faith or for purposes of harassment is liable to the defendant (contractor)
for reasonable and necessary attorney’s fees and court costs. Sec. 27.0021.
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8. Notice Requirements
• RCLA Letter: Before a homeowner can file a lawsuit, the
homeowner must provide the contractor with 60 days written
notice (CMRRR) of the alleged defects.
• Inspection: Within 35 days after the contractor receives the notice
letter, a contractor may submit a written request to inspect the
property. The inspection provides the contractor with an
opportunity “to determine the nature and cause of the defect and
the nature and extent of repairs necessary to remedy the defect.”
Sec. 27.004(a). The Homeowner is required to provide a
reasonable opportunity for the contractor to inspect the property.
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9. Exceptions to Notice Requirements
Statute of Limitations
• A homeowner does not have to provide notice to the contractor if the
homeowner is attempting to prevent the expiration of the statue of limitations.
Counterclaim
• If a contractor initiates a lawsuit against a homeowner, the homeowner may
bring his/her defects claims as a counterclaim in the pending action. At that
time, the RCLA period for inspection is extended to 75 days after service of the
lawsuit.
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10. Statute of Limitations (“SOL”)
Two years:
• Negligence
• Negligent Misrepresentation
• Products Claims
Four years:
• Breach of Contract
• Breach of Warranty
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11. Exceptions to SOL
Discovery Rule
• The “discovery” rule defers a cause of action until the plaintiff knows, or by
exercising reasonable diligence should know, of the facts giving rise to the claim.
It is an exception to the legal injury rule and only applies in circumstances where
“it is difficult for the injured party to learn of the negligent act or omission.”
Fraudulent Concealment
• Fraudulent concealment defers an action’s accrual period until the plaintiff
discovers or should have discovered the deceitful conduct or facts giving rise to
the cause of action. It defers a cause of action’s accrual because a party cannot
be allowed to avoid liability for its actions by deceitfully concealing wrongdoing
until the limitations period has run.
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12. Contractor’s Offer of Settlement
• The contractor has 45 days after receipt of the RCLA letter to make a written
offer of settlement.
oThe offer must be sent to the homeowner’s last known address or to
his/her attorney by CMRRR.
oMay include an agreement by the contractor to repair or to have repaired
any construction defect. The repairs must be described in reasonable
detail.
oUpon the homeowner’s acceptance of the offer of settlement, the
contractor has 45 days to complete the repairs.
oHomeowner has 25 days to accept or reject the offer.
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13. Rejection
What if the homeowner rejects the offer of settlement?
• Upon rejection, the contractor has 10 days to supplement the offer of
settlement.
• The homeowner may initiate a lawsuit; however, if the homeowner rejects a
reasonable offer, the homeowner may not recover more than the fair market
value of the contractor’s last offer of settlement; or amount of reasonable
monetary settlement or purchase offer. Additionally, can only recover
attorney’s fees incurred before offer was rejected.
• If the contractor fails to make a reasonable offer, the limitations above do not
apply.
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14. Make a Reasonable Offer!
Failing to make a reasonable offer puts the contract at risk of:
• Loss of contractor defenses.
• Loss of limitations on damages for the homeowner.
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15. What is reasonable?
What constitutes a reasonable offer?
• Case by case.
• Supported by evidence.
• Attempts to make repairs.
• Willingness to bear at least a portion of the costs to repair.
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16. Damages Allowed by RCLA
• The reasonable cost of repairs necessary to cure any construction defect.
• The reasonable and necessary cost for the replacement or repair of any
damaged goods in the residence.
• Reasonable and necessary engineering and consulting fees.
• The reasonable expenses of temporary housing reasonably necessary during
the repair period.
• The reduction in current market value, if any, after the construction defect is
repaired if the construction defect is a structural failure.
• Reasonable and necessary attorney’s fees.
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17. Mediation
• RCLA authorizes the contractor or the claimant to compel mediation if the
damages arising from the construction defect are greater than $7,500. To
compel mediation the claimant or contractor need only file a Motion to
Compel Mediation by the 90th day after the date the suit is filed. Tex. Prop.
Code. § 27.0041.
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18. Interactive Q&A
This concludes the presentation. The rest of the session is open for any
questions or comments you may have.
• Questions and Answers
• Comments
• Concerns
• Copies of Presentation/Additional Information
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19. Thank You!
Karalynn Cromeens, Managing Partner
The Cromeens Law Firm, PLLC
P: 713-715-7334
karalynn@thecromeenslawfirm.com
www.thecromeenslawfirm.com
This presentation is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent
jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.
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