Construction defect claims are becoming more expensive for Texas homebuilders and developers. Rising repair costs, aggressive courtroom strategies, large jury verdicts, and claims involving many homes can put an entire project, or even a business, at risk.
The best time to manage that risk is before construction begins. Well-written declarations, bylaws, covenants, maintenance agreements, and other community documents can set clear rules for handling future problems. Our construction defect and injury lawyers at Fee, Smith & Sharp help builders and developers prepare for legal claims that can impact their operations.
Why Planned Communities Create Added Risk
Modern planned communities often include shared features such as:
- Stormwater and drainage systems
- Retaining walls and graded land
- Private roads and sidewalks
- Pools, clubhouses, and parks
- Shared irrigation or water lines
- Entry gates, fences, and community walls
A problem with one shared feature may affect many properties. For example, a drainage issue may lead to claims involving foundations, yards, roads, and retaining walls throughout a neighborhood. An association may also argue that the same defect exists across the entire community, even when the type or amount of damage differs by location. This can greatly increase inspection costs, repair demands, expert fees, and legal expenses.
Clearly Divide Maintenance Duties
Faulty construction is not the cause of every property problem. Damage can happen because routine upkeep was missed, materials wore down over time, bad weather caused problems, or someone made changes or repairs after a property was built. Community documents should spell out who is responsible for maintaining roofs, foundations, balconies, yards, drainage systems, exterior walls, streets, fences, and shared buildings.
Use Written Maintenance Guidelines
The documents can also require property owners and associations to follow basic maintenance instructions. These may cover things like cleaning gutters, sealing decks, landscaping, keeping drainage areas clear, and managing soil moisture around foundations.
These guidelines can make it easier to tell whether a problem started during construction or developed because necessary upkeep was not done. In some cases, Texas law may limit a contractor’s responsibility when damage was caused by poor maintenance, normal wear, or another cause outside the contractor’s control.
Require Notice Before a Claim Is Filed
Builders should not first learn about a defect when they are served with a lawsuit. Community documents can require an owner or association to provide detailed written notice before filing suit or starting arbitration. The notice may identify:
- The property or feature involved
- The claimed defect
- When it was discovered
- Any repairs or changes already made
- Reports, photos, and estimates
- The homes or areas affected
Detailed notice helps prevent vague claims and gives the builder a clearer picture of the problem before legal costs grow.
Give Builders Access to Inspect
The documents can also give the builder, developer, contractor, or design professional reasonable access to inspect and test the property. These procedures can work with the Texas Residential Construction Liability Act. Chapter 27 of the Texas Property Code provides a notice, inspection, and settlement process for many residential construction claims. It allows contractors to inspect alleged defects and make a repair or settlement offer before litigation moves forward.
Set Steps for Resolving Disputes
Community documents can require the parties to follow a set process instead of going straight to court. That process may begin with direct talks, followed by mediation and, when appropriate, binding arbitration.
Draft Dispute Terms Carefully
Dispute terms should clearly explain which claims they cover, who must take part, how to select an arbitrator, and who will pay the costs. They should align with the language in purchase agreements, warranties, and construction contracts.
Define the Association’s Authority
Community documents should state which claims an association may bring and which belong to individual owners. An association may have authority over defects involving common property, such as a clubhouse, pool, road, or drainage pond. Claims involving damage inside privately owned homes may belong to the individual owners.
Require Owner Approval for Major Claims
A declaration may require homeowners to vote before the association initiates a lawsuit. This gives residents a say before the association spends money on attorneys, experts, inspections, and court costs.
For certain Texas condominium associations with at least eight units, state law requires an independent engineering report, notice to owners, and approval from owners holding more than 50% of the total votes before a covered construction or design claim is filed.
Address the Transfer of Claims
Some owners may try to assign their legal claims to another person or company. This can allow third parties to collect and combine claims against a builder or developer.
Planned community documents may include anti-assignment language limiting the transfer of construction defect claims. These terms may reduce claim aggregation, but they have to comply with Texas law and may not block every assignment.
Plan for HOA Turnover
The transfer of association control from the developer to the property owner is an important point in the life of a community. A rushed or poorly documented turnover may create suspicion and lead a new board to begin looking for claims. Community documents can create an orderly process that includes inspections, delivery of warranties and records, transfer of plans and contracts, and a list of unfinished or recently repaired items.
Document the Condition of Common Property
Before control of the association is turned over to the owners, an engineer or another qualified professional may inspect the shared areas. The inspection report can describe the condition of roads, drainage systems, retaining walls, pools, clubhouses, and other common property. This creates a record of what was inspected, its condition, and whether any repairs were still needed at the time of turnover.
Any acceptance or release language should be drafted carefully. A broad release may not block every future claim, especially when a condition was hidden or could not reasonably have been found.
Build the Protection Early
Generic HOA forms may not address the design, ownership, shared features, and risks of a specific Texas development. Community documents should be prepared for the actual project and reviewed with purchase contracts, warranties, plats, insurance requirements, and construction agreements.
