Summary of the new law as it pertains to builders of new homes:
The existing 10-year statute of repose for builders of new homes (the ultimate cut-off date for filing suit) has been shortened to 6 years if the builder provides a 1-2-6 written warranty (1-year workmanship and materials; 2-year plumbing, electrical and HVAC; 6-year structural).
Extended time to bring suit if written claim presented during the period of repose:
If a written claim for damages, contribution, or indemnity is presented to the builder during the applicable limitations period and the 6-year statute of repose applies, the time to sue is extended one year from the date the claim is presented. In practical effect, this means that if a written claim is presented and the statute of repose expires before suit is filed, suit may still be filed provided it is within one year of the date the written claim was made.
When the new law goes into effect:
The new law is effective as of June 9, 2023 and applies to suits commenced on or after that date. However, if the contract under which the claim is brought was entered into before June 9, 2023, the former 10-year version of the statute of repose applies. In other words, the statute applies to contracts entered into on or after June 9, 2023, if the contract has at least a 1-2-6 warranty.
Under the Texas Civil Practice & Remedies Code § 16.009, persons who construct or repair improvements to real property cannot be sued for defective or unsafe conditions of the property or deficiencies in the construction or repair of the improvement later than 10 years after substantial completion of the improvement, except in certain narrow circumstances. This statute is known as the “statute of repose.” The statute applies not only to suits for construction defects, but also personal injury, wrongful death, contribution, and indemnity.
The statute of repose was amended to, among other things, shorten the time period from 10 years to 6 years for claims against certain contractors who issue a written warranty with the following minimum terms:
- 1-year warranty for workmanship and materials;
- 2-year warranty for plumbing, electrical, heating, and air-conditioning delivery systems; and
- 6-year warranty for major structural components.
The new 6-year statute of repose applies to a “Residence,” which is defined as the real property and improvements for (1) a detached one-family or two-family dwelling, (2) a townhouse not to exceed three stories above grade plane in height with a separate means of egress, or (3) an accessory structure not more than three stories above grade plane in height. Note that condominiums do not fall within the statute’s definition of “Residence.”
The statute incorporates the Residential Construction Liability Act’s definition of “Contractors” (Texas Property Code Section 27.001) to whom the statute of repose applies. This definition has been partially amended, but the amendment does not take effect until September 1, 2023. Both the prior version of Section 27.001 and the new version include in the definition of a “Contractor,” a builder who contracts with an owner for the construction or repair of a new residence, as well as a builder who contracts with an owner for the repair or alteration of, or an addition to, an existing residence, or appurtenance to a new or existing residence. The pre-September 1, 2023 definition also includes any person contracting with a purchaser for the sale of a new residence constructed by or on behalf of that person; this definition is amended as of September 1, 2023 to be any person contracting for the sale or construction of a new residence constructed by or on behalf of that person.
If you have any questions about this new law and how it impacts your business, please contact Kim Altsuler, chair of P&A’s residential and multi-family construction practice.
*This client alert is not a comprehensive discussion of Tex. Civ. Prac. & Rem. Code 16.009, but rather a summary of amendments pertinent to homebuilders.