Design professionals include architects and engineers. These professionals design buildings and related systems. However, even professionals do not always work as specified, which can result in a defect. An example of a design defect may include an improperly designed roof, which results in water penetration, intrusion, poor drainage, or inadequate structural support.
During the course of construction, a multitude of materials and products are incorporated into the project. On some occasions, the materials used may not be proper for their use and/or application or may even be defective. Common manufacturer problems with building materials can include deteriorating flashing, building paper or waterproofing membranes that are not up to code, inferior asphalt roofing shingles, etc.
As you might imagine, poor workmanship can result in multiple construction defects. These issues typically arise when a contractor performs work that is either not code compliant or not in accordance with the plans, specifications, or manufacturer’s instructions.
Construction defect and design defect claims can be both very costly and complex. The attorneys at J Lowe Law represent both owners seeking legal remedies and contractors or design-build firms defending against construction defect claims. We serve clients in Dallas County, Tarrant County, Denton County, and Collin County. Drawing upon 18-plus years of construction litigation experience, our construction defect attorneys are knowledgeable about design concepts, construction methods and construction industry surety and insurance. We have a sophisticated understanding of the roles and responsibilities of various participants in the construction process, and the contractual and legal rights and remedies of the parties. We take claims to trial if it serves our clients’ goals, but we encourage them to exhaust all out-of-court solutions, including mediation and arbitration, to resolve design defect or construction defect disputes.
If contractors and suppliers do not get paid on a construction project in Texas, they can file a mechanics lien to secure payment. A mechanic’s lien is a legal tool that provides the unpaid party with a security interest in the property. In Texas, original contractors (GCs), subcontractors, material suppliers, specialty material fabricators, design professionals, and landscapers all have the right to file a mechanic’s lien if they do not receive payment. Parties who contracted directly with the owner of the property in Texas can file a constitutional lien. There are no notice or filing requirements for a constitutional lien, but claimants must meet specific requirements.
On residential projects in Texas, an action to enforce the lien must be initiated by the later of a) 1 year after the last date on which the lien claimant could file the lien, or b) 1 year after termination, completion, or abandonment of the project.
On non-residential projects, an action to enforce the lien must be initiated by the later of either: 1) 2 years after the last date on which the lien claimant could file his lien, or 2) 1 year after termination, completion, or abandonment or the project.
Note: Effective on all original contracts entered into on or after 1/1/22, the enforcement deadline for all Texas liens will be one year from the last date the claimant could file a lien.
To enforce a mechanic’s lien, a petition is filed with the civil court, whereby the contractor, etc. seeks to foreclose on the mechanic’s lien. As part of that petition, other causes of action are asserted, such as breach of contract, quantum meruit, promissory estoppel, etc. In addition to seeking to foreclose upon the mechanic’s lien, a claim for the recovery of attorneys’ fees and costs is also asserted in the petition.
The lien laws in Texas are complex, and because of those complexities, contractors, subcontractors, suppliers, and others may sometimes file a mechanic’s lien that is not valid. Obviously, a lien being filed on your home/property can be overwhelming and cause great financial harm to both you and your home/property. The question then becomes whether you have a basis to challenge and remove the lien.
Some of the reasons a mechanic’s lien may be invalid, and therefore subject to challenge, include, but are not limited to, the following:
If a valid basis exists to challenge the lien, an owner may send the lien claimant a demand to remove the lien. If the lien claimant fails and/or refuses to remove the lien, the owner can then file a formal lawsuit to remove the lien. As part of the lawsuit, a summary motion to remove the lien is filed, which, if granted by the Court, would entitle the owner to not only the removal of the lien but also the recovery of their attorneys’ fees and costs to remove the lien. In addition, if it can be shown that the lien claimant knowingly filed an invalid lien with the intent to cause harm, then the Court may award a minimum $10,000.00 in sanctions or actual damages.
Unfortunately, residential construction defects can be common. In hopes of addressing these common issues, in 1989, the Texas Legislature enacted Chapter 27 “to promote settlement between homeowners and contractors, and to afford contractors the opportunity to repair their work in the face of dissatisfaction.”
To make a claim against a builder/contractor, a homeowner must follow the statutory procedures outlined in Chapter 27 of the Texas Property Code. Chapter 27 is a mandatory statute and must be followed to make a valid claim against a builder/contractor. The statute applies to both new home construction and residential remodel projects and is applicable to both the original homeowner and any subsequent home purchaser.
A chapter 27 claim is initiated by preparing and sending a formal notice to the builder/contractor by certified mail at the builder/contractor’s last known address, specifying in reasonable detail the construction defects and cost to repair, if known. If available, the notice should be supported by evidence, such as inspection reports, photographs, video recordings, and repair estimates.
In response to a homeowner’s Chapter 27 notice, the builder/contractor, upon written request, has the right to inspect, test, and document the defects. Within no later than 45 days after the builder/contractor receives the notice, the builder/contractor may make a written offer of settlement to the homeowner. The offer may include either an agreement by the builder/contractor to repair the defects or have the defects repaired by an independent contractor at the builder/contractor’s expense. The repairs must be made within 45 days from when the builder/contractor receives notice of acceptance of the offer by the homeowner. If the builder/contractor makes a written offer of which the homeowner deems unreasonable, the homeowner has 25 days to respond in writing to the builder/contractor outlining the basis for the rejection, thereby giving the builder/contractor
an additional 10 days to present a counteroffer. If the homeowner rejects a reasonable offer or does not allow the builder/contractor an opportunity to inspect/repair the defects, the homeowner’s potential recovery through a lawsuit and/or arbitration will be limited to the original offer and the homeowner’s attorney’s fees will be limited to those incurred before the reasonable offer was made.
Chapter 27 limits the nature and type of damages a homeowner may recover against a builder/contractor to the following: (1) the reasonable cost to repair the construction defects; (2) the reasonable cost to repair or replace any damaged personal property caused by the construction defects; (3) reasonable and necessary engineering and consulting fees; (4) reasonable expense for temporary housing incurred during the repairs; (5) the reduction in current market value, if any, after the construction defects are repaired if the defects are structural in nature; and; (6) reasonable attorneys’ fees and litigation costs.
Payment bonds guarantee payment of subcontractors, laborers, and suppliers, while performance bonds guarantee completion of the contract in accordance with all specifications, terms, and conditions. A payment and performance bond combines both forms of protection in a single bond—though payment bonds and performance bonds can also be purchased separately. These bonds offer financial protection for project owners, assuring project owners that their completed projects will be free of all liens.
Any failure to live up to the terms and conditions of the bond can result in a claim against the bond. For example, failure to pay a subcontractor on time and in the proper amount gives the subcontractor the right to file a claim against the contractor’s payment bond. As another example, if the contractor defaults on the contract, the project owner can file a claim against the performance bond and collect the funds needed to get the work completed.
When the surety company that issued the bond receives a claim, it conducts an investigation to make sure that the claim is valid. The surety company will then pay the claim—but only as an advance on behalf of the contractor, the principal in the surety bond agreement. The financial responsibility for claims ultimately belongs to the contractor, who must reimburse the surety for claims paid.
A lawsuit must be filed within one year from mailing of the third month notice. If there is a claim for retainage, a notice of claim on retainage is also due within 90 days from the final completion of the entire public work.