By: Taylor Bell –
Until 2010, residential builders were subject to the Texas Residential Construction Commission Act, which required them to provide various statutory warranties to new home buyers. But the Act expired on September 1, 2009 and the governing agency, the Texas Residential Construction Commission, was abolished. Therefore, beginning in 2010, residential builders were no longer required to provide statutory warranties in Texas.
Despite this legislative change, it remains industry standard for builders to provide limited express warranties mirroring the prior legislation, including:
- One Year Workmanship and Materials Warranty;
- Two Year Plumbing, Electrical, Heating, and Air-Conditioning Delivery Systems Warranty; and
- Ten Year Major Structural Components Warranty.
If builders are not legally required to give these warranties, why do they still do it and is it good practice? The answer is that limited express warranties are good practice because they replace the implied warranty of good workmanship and allow builders to define “good workmanship” for themselves.
The Implied Warranty of Good Workmanship
The implied warranty of good workmanship requires work be completed in a “good and workmanlike” manner, such that the quality of work is performed by a builder with the knowledge, training, or experience necessary for the successful practice of a trade or occupation and performed in a manner generally considered proficient by those capable of judging such work. This warranty cannot be disclaimed, but it can be waived when a written agreement provides for the manner, performance, or quality of the desired construction.
One of the most successful ways to waive the implied warranty of good workmanship is to insert a waiver clause, then define the manner, performance, and quality in a separate limited express warranty. This may look similar to the following:
At closing Builder will deliver to Purchaser, Builder’s standard form of Homeowner’s Limited Home Warranty against defects in workmanship and materials, a copy of which is available to Purchaser. PURCHASER AGREES TO ACCEPT SAID HOMEOWNER’S WARRANTY AT CLOSING IN LIEU OF ALL OTHER WARRANTIES, WHATSOEVER, WHETHER EXPRESSED OR IMPLIED BY LAW, AND INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTY OF GOOD WORKMANLIKE CONSTRUCTION. PURCHASER ACKNOWLEDGES AND AGREES THAT BUILDER IS RELYING ON THIS WAIVER AND WOULD NOT SELL THE PROPERTY TO PURCHASER WITHOUT THIS WAIVER.
But having a limited express warranty does not mean builders must mirror expired legislation. Builders have freedom to define what they want to include in their limited express warranty and for how long they cover the included items. For example, a builder may decide to cover “Major Structural Components” for six years, and define Major Structural Components to include only the foundation and roof.
Other Warranties in Texas
In addition to the implied warranty of good workmanship, Texas common law also imposes an implied warranties of habitability. The implied warranty of habitability cannot generally be disclaimed and requires the builder to provide a house that is safe, sanitary, and otherwise fit for human habitation. This is a “bare bones” protection that is only breached when the conditions of the new home are so defective that the house is unsuitable to be used as a home because it threatens the inhabitants’ health or well-being.
If the contract concerns the sale of materials, builders may be subject to warranties of title, merchantability, and fitness for a particular purpose under the Texas Business and Commerce Code. These warranties may, and should, be disclaimed by a builder in their contracts. A common disclaimer may look like the following:
BUILDER MAKES NO WARRANTY WHATSOEVER WITH RESPECT TO THE GOODS, INCLUDING ANY (A) WARRANTY OF MERCHANTABILITY; (B) WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; OR (C) WARRANTY OF TITLE WHETHER EXPRESS OR IMPLIED BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE, OR OTHERWISE.
We encourage residential builders to take the opportunity to re-visit their contracts with the foregoing in mind.
We can help you with that.
Contact Taylor via email or call her at 469.916.9900 x 123.
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About Taylor Bell
Taylor Bell focuses on supporting clients in a variety of transactional and litigation matters, with a focus in corporate and real estate transactions.
She received her J.D. with a concentration in Business Law from SMU Dedman School of Law in 2022, where she served as Associate Managing Editor of the International Law Review Association.
During law school, she interned with two federal judges and the Federal Trade Commission.
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