Working in the construction industry in Texas can be challenging. Securing the right to payment — on any project — can include a number of different notices, requirements, and deadlines. And missing any of these could lead to the loss of rights and potential penalties. As for Texas residential construction contracts, there are additional notices and requirements that must be met — in particular, the Residential Disclosure Statement.
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What counts as a ‘residential’ project?
Residential projects include projects for the construction or repair of a new or existing residence, including improvements in “secondary buildings” to the residence. This includes single-family houses, duplexes, triplexes, quadruplexes, or units in a multi-unit structure used for residential purposes. Improvements in secondary buildings would include work on things such as pool houses and separate garages.
What needs to be included in my Texas residential construction contract?
Under Subchapter K of the Texas Property Code, homeowners have certain rights on residential construction projects. For one, they have the right to know and obtain references for their contractor and request the contractor’s license number (if required). They also have the right to have a written agreement with the contractor that includes a description of the work, the required or estimated time for the completion of the work, the cost of the work or how it will be determined, and the procedure and method of payment. So it’s best to go ahead and include all of this information from the get-go.
In addition to these requirements, there are other notices and disclosure statements that must be provided as well under a contract for the improvement of residential property in Texas.
The TX Residential Disclosure Statement
In Texas, a general contractor is generally not required to give any preliminary notice. However, when a project is residential, a GC must provide a Residential Disclosure Statement, among other information. The Residential Disclosure Statement is a lot easier than most other notices. It can basically just be copied and pasted from Tex. Prop. Code § 53.255 and be either included in the contract or provided as a separate document.
Further discussion here: Who must send the Residential Disclosure Statement, and what happens if it isn’t sent?
Wondering what the Residential Disclosure Statement says?
Basically, it informs the property owner of their rights and best practices for handling a construction project. In a disclosure statement, the contractor provides the homeowner with a brief overview of some of their rights, responsibilities, and risks in the construction project transaction. Specifically, regarding risks, it informs the owner that they could potentially become responsible for claims by subcontractors and suppliers if something goes awry.
We like to make life easier for you, so you can download a free copy here: Residential Disclosure Statement.
You may also need to provide a list of subs and suppliers
Under § 53.256 of the Texas Property Code, a contractor may also need to provide a list of subcontractors and suppliers prior to the commencement of work. There’s nothing overly complicated about this list, only that it needs to identify the name, address, and phone number of each subcontractor and supplier the contractor intends to use on the project. Of course, jobs can be unpredictable, and the subs and suppliers can change. But this list must be updated if changes are made. Specifically, if a sub or supplier is added or deleted, the list must be updated and provided to the owner within 15 days.
The list must also contain certain notice language in order to be valid, it should be in at least 10pt, bold font, and read as follows:
NOTICE: THIS LIST OF SUBCONTRACTORS AND SUPPLIERS MAY NOT BE A FINAL LISTING. UNLESS YOU SIGN A WAIVER OF YOUR RIGHT TO RECEIVE UPDATED INFORMATION, THE CONTRACTOR IS REQUIRED BY LAW TO SUPPLY UPDATED INFORMATION, AS THE INFORMATION BECOMES AVAILABLE, FOR EACH SUBCONTRACTOR OR SUPPLIER USED IN THE WORK PERFORMED ON YOUR RESIDENCE.
As you may have gleaned from this notice language, there’s also the ability for the owner to waive this requirement. But it also must be done in a specific form. The waiver can either be included in the contract or can be provided in writing afterward. It also needs to be in at least 10pt, bold font and read:
WAIVER OF THE LIST OF SUBCONTRACTORS AND SUPPLIERS. AN OWNER IS NOT REQUIRED TO WAIVE THE RIGHT GRANTED BY SECTION 53.256, PROPERTY CODE, TO RECEIVE FROM THE CONTRACTOR AN ORIGINAL OR UPDATED LIST OF SUBCONTRACTORS AND SUPPLIERS.
BY SIGNING THIS DOCUMENT, I AGREE TO WAIVE MY RIGHT TO RECEIVE FROM THE CONTRACTOR AN ORIGINAL OR UPDATED LIST OF SUBCONTRACTORS AND SUPPLIERS.
I UNDERSTAND AND ACKNOWLEDGE THAT, AFTER SIGNING THIS DOCUMENT, THIS WAIVER MAY NOT BE CANCELED AT A LATER DATE.
I HAVE VOLUNTARILY CONSENTED TO THIS WAIVER.
Anything else that should be included in my contract?
Yes, in addition to the required disclosure and subcontractor list, there’s another notice that should be included in the contract. Referred to as the TX Residential Construction Liability Act notice. This one deals with construction defects, and more specifically, the notice and opportunity to cure. The specific language can be found under §27.007, and (as you may have guessed) also must be in at least 10pt, bold font; the notice should state:
“This contract is subject to Chapter 27 of the Texas Property Code. The provisions of that chapter may affect your right to recover damages arising from a construction defect. If you have a complaint concerning a construction defect and that defect has not been corrected as may be required by law or by contract, you must provide the notice required by Chapter 27 of the Texas Property Code to the contractor by certified mail, return receipt requested, not later than the 60th day before the date you file suit to recover damages in a court of law or initiate arbitration. The notice must refer to Chapter 27 of the Texas Property Code and must describe the construction defect. If requested by the contractor, you must provide the contractor an opportunity to inspect and cure the defect as provided by Section 27.004 of the Texas Property Code.”
If a contractor fails to provide this notice in the contract, can make the contractor liable to up to $500 of civil penalties, in addition to any other remedies available to the property owner.
Final thoughts regarding homestead properties and lien rights
One final thing to note concerning Texas residential construction projects is the steps one needs to take to secure mechanics lien rights on a homestead property. First and foremost, the contract must be in writing and signed before any work begins on the project. Speaking of signatures, an often overlooked requirement is that if the owner is married; the contract must be signed by both spouses. And lastly, once the contract is signed it should be filed with the county clerk of the county where the property is located. Failure to follow these steps is fatal to a contractor’s lien rights; so be sure to do so!
For more on homestead liens, and Texas liens in general see: Texas Mechanics Lien on Homestead Property: Everything You Need to Know.