For almost five decades Texas has had a single statute of repose which imposed a ten (10) year period for claims against architects, engineers, interior designers, landscape architects, builders, and construction contractors.[1] Texas has imposed a ten-year statute of repose on suits against builders or contractors who construct or repair improvements to real property. It requires plaintiffs to file construction defect claims against a contractor that arise “out of a defective or unsafe condition of the real property or a deficiency in the construction or repair of the improvement” during the first 10 years after substantial completion of the project or improvement. Failure to do so bars the claim.
The Texas Legislature recently passed House Bill 2024, which amended § 16.009 of the Texas Civil Practice and Remedies Code to create a separate and shorter, six-year repose period for construction defects in detached one- and two-family homes and townhomes.[2] More specifically, the new, 6-year statute of repose applies to “any claim arising out of 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.”[3] Projects like apartments and hotels are not covered by the new law, although whether or not condos are covered is a matter of some controversy. Claims against construction contractors of such new residences are now barred if not brought within six years after “substantial completion.” Importantly, the definition of “Contractors”, found in § 27.001 of the Texas Property Code, is applicable to both statutes of repose, which means the two statutes of repose apply to the same persons.
These two statutes of repose require claims against a contractor that arise “out of a defective or unsafe condition of the real property or a deficiency in the construction or repair of the improvement” to be brought during the first six (6) or ten (10) years (depending on the nature of the construction) after “substantial completion” of the project or improvement. This covers any claims for injury, damage, or loss to real or personal property, personal injury, wrongful death, contribution, and indemnity. The purpose of statutes of repose in general is to protect those who design, install, or construct an improvement from facing never-ending potential liability based on that work.
This shorter statute of repose comes into play whenever a builder or contractor issues a written warranty that provides 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.[4]
If the builder/contractor does not provide the above warranties, the ten (10) year repose period will apply.
The statute of repose period is extended under certain circumstances. For example, if the plaintiff presents a written claim for damages, the time period is extended for one (1) year from the date the claim is presented.[5] If the incident occurs, or the damage is discovered, during the last year of the repose period, then the deadline to file suit is two years from the date of that incident.[6]
Overall, the new amendment will only apply to contracts entered into on or after June 9, 2023, and even then, only if the contract has at least one of the 1-year, 2-year, or 6-year warranties described above and set forth in § 16.009(a-3).
The application of the protection provided to builders by the amendment is limited to a “residence” with a minimum 1-2-6 warranty, so it is likely that we will see more of the 1-2-6 warranties for all residential construction and improvement projects, in order that the builder qualify for same. These legal trends and nuances highlight the need to involve subrogation counsel as early as possible once a residential construction defect has been identified.
With an ever-closing window for making construction defect claims, it is more important than ever to engage subrogation counsel when your insured experiences construction-related damages and claims are made against your policy. For more questions on subrogating construction defect claims, contact Lee Wickert at leewickert@mwl-law.com.
[1] Tex. Civ. Prac. & Rem. Code §§ 16.008 and 16.009.
[2] 2023 Tex. Sess. Law Serv. Ch. 442 (H.B. 2024).
[3] Tex. Civ. Prac. & Rem. Code § 16.009(a-2).
[4] Tex. Civ. Prac. & Rem. Code § 16.009(a-3).
[5] Tex. Civ. Prac. & Rem. Code § 16.009(c)(2).
[6] Tex. Civ. Prac. & Rem. Code § 16.009(d).
