For nearly 50 years, Texas has imposed a ten-year statute of repose on suits against builders or contractors who construct or repair improvements to real property. On June 9, 2023, House Bill 2024 amended Section 16.009 of the Texas Civil Practice and Remedies Code to create a shorter, six-year repose period in certain circumstances.
Who does the Amendment Apply to?
The definition of “Contractors”, found in Section 27.001 of the Texas Property Code, applies to both the ten-year period and the amendment’s six-year period, meaning the amendment applies to the same persons covered by the ten-year repose period.
What does the Amendment Apply to?
The amendment 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”.[1] A “residence” is defined as (i) a detached one-family or two-family dwelling, (ii) a townhouse “not to exceed three stories above grade plane in height with a separate means of egress”, or (iii) “an accessory structure not more than three stories above grade plane in height.”[2]
Condominiums do not fall within the statute’s definition of “residence”, so it is unlikely this shorter repose period will apply to individual condominium claims or condominium development claims. The amendment does not apply to quad-plexes, apartment complexes, or hotels.
How is the Amendment Triggered?
To trigger the shortened repose period, a builder or contractor must issue 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.[3]
If the builder/contractor does not issue a 1-2-6 warranty, the default 10-year repose period will continue to apply.
Are There Exceptions to the Amendment?
Yes. If a claimant presents a written claim for damages, then the repose period is extended for one year from the date the claim is presented.[4] 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.[5]
How Does this Affect My Current Claim or Lawsuit?
The amendment only applies to contracts entered into on or after June 9, 2023, and then only if the contract has at least a 1-2-6 warranty.
Takeaways
While the application of the amendment is limited to a “residence” with a minimum 1-2-6 warranty, we anticipate the 1-2-6 warranty will become the new industry norm for all residential construction and improvement projects. These legal trends and nuances highlight the need to involve subrogation counsel as early as possible once a residential construction defect has been identified.
[1] Tex. Civ. Prac. & Rem. Code §16.009(a-2).
[2] Id. at §16.009(a-4).
[3] Id. at §16.009(a-3).
[5] Id. at §16.009(d).
